EnergyNew crude supply in the U.S. and continued strong supply from OPEC and Russia contributed to a global oil glut in 2015. As a result, major oil companies slashed investments in exploration and production. The mining market was also weak in 2015 due to cuts in capital spending as a result of falling commodity prices. The power generation sector was the strongest of the three energy markets in 2015. The energy sector contributed 6 % of sales in the Surface Solutions Segment and 16 % in the Drive Systems Segment in 2015.
Although recovery is not expected in the short term, the worldwide oil market will eventually return to equilibrium and growth. The alternative energy market should experience strong future growth, especially in renewable sources such as wind, due to rising energy demand, replacement of older facilities and environmental concerns. Oerlikon forecasts its targeted market size in this sector to see a CAGR of 3.5 % over the next three years.
The Surface Solutions Segment sees promising opportunities in the alternative energy market as its surface solutions enable turbines used in wind farms and hydroelectric dams to withstand higher stresses. In oil & gas, the recent acquisition of the business of Laser Cladding Services adds to the expertise of the Segment in laser cladding and expands opportunities in the U.S. energy market. Laser cladding improves the corrosion resistance in the base metals used in turbine blades, drilling equipment and pump components, an important benefit at a time of intense cost reduction throughout the sector.
The Drive Systems Segment is a technology leader in gear solutions for the propulsion and rotation of industrial equipment used in oil & gas, such as gears and drives for mud and fracking pumps, marine winches, hoists and jack-up rigs, and stands to benefit when the oil and gas market recovers.