Process automation set for steady growth

Edited by the Engineeringtalk editorial team Apr 3, 2002

The worldwide market for automation products and services for process industries is expected to grow at a compounded annual growth rate of just over 5% over the next five years.

The worldwide market for automation products and services for process industries, over $44 billion in 2001, is expected to grow at the compounded annual growth rate (CAGR) of just over 5% over the next five years, reaching close to $57 billion in 2006, according to a new ARC Advisory Group study.

"Despite recent economic turmoil, the worldwide market for automation products and services seems to be making a turnaround in the first half of 2002.

While new construction remains depressed, industries such as refining and petrochemicals are trying to drive more out of existing plant assets by purchasing advanced forms of automation.

Meanwhile, hybrid industries such as pharmaceuticals and food and beverage continue to be areas of healthy growth", states ARC Research Director Larry O'Brien, the principal author of ARC's "Total Automation Business for Process Industries Worldwide Outlook, Market Analysis and Forecast Through 2006".

Without question, growth in the worldwide process automation market will be driven by software and services.

Traditional hardware-based markets such as PLCs, valves, analytical, flow, and transmitters will all experience below average growth through 2006.

Total process automation software as an aggregate has the highest growth potential of all process automation product areas through 2006.

Of course, this segment represents both the software and associated services provided by suppliers for implementation, and after sales service and optimisation.

Movements to integrate enterprises, including legacy systems, and improve planning processes based on Internet technologies create more complex systems for manufacturers.

The service segment of process automation has become crucial as users decrease their internal engineering resources to increase profitability and focus on core competencies.

Users often depend on outsource services for assistance in the implementation and support of ever more complex automation technologies.

Project services are the key growth segment of the process automation market in the near future.

Ability to provide a wide range of project services will be a necessary ingredient for survival for any major process automation supplier in the future.

The Asian market continues to face economic hardships and political uncertainties.

While the region seems to have recovered from the financial crisis of a couple of years ago, it seems that the high double-digit growth rates that preceded the crash may never materialise again.

Competition in Asia is also brutal.

Users tend to base their purchasing decisions more on price than anything else.

Suppliers with special relationships, such as Honeywell's relationship with Sinopec, have a better chance at making money, as do suppliers with turnkey contracting capabilities such as ABB.

Latin America shows the most growth potential of any region.

This segment includes the regions of Central America, South America, and Mexico.

The largest purchasers of automation in South America include Argentina, Brasil, Chile, Columbia, Peru, and Venesuela.