Slow growth in process automation

Edited by the Engineeringtalk editorial team Sep 15, 2003

According to a new study, the total automation business to process industries worldwide is projected to grow at a compounded annual growth rate of 4.7% over the next five years.

The process automation market, whose resilience is directly related to prosperity of the industry and the health of the economy, has experienced less than mediocre growth.

However, the total automation business to process industries worldwide is projected to grow at a compounded annual growth rate of 4.7% over the next five years.

The market is forecasted to be over $58 billion in 2007, according to a new ARC Advisory Group study.

With excess capacity globally across many industries, few manufacturers are building new plants now.

However, with expected economic growth, this will be absorbed.

"Although users will remain very conservative in their spending decisions for capital equipment, global competition will compel most manufacturers to improve their plant machinery and process to stay competitive", according to ARC Senior Analyst Himanshu Shah, the principal author of ARC's "Total automation business for the process industries worldwide outlook".

There are still many pockets of reliable growth in the process automation business.

A myriad of process companies use legacy automation systems that do not measure up to the present-day automation requirements of process plants, particularly in the era of collaborative manufacturing.

Process industries such as chemical, drug and pharmaceuticals, pulp and paper, and power have aging plants and systems that are obsolete by today's standards.

Process companies are severely challenged to improve their ROA and must use plant equipment effectively with modern controls for automation.

As suppliers offer migration strategies and provide better interoperability through open standards, many users will embrace newer solutions with current technologies to help them compete in the global marketplace.

To help manufacturers overcome their risk-aversion, suppliers are offering more services and broader solutions.

These services offer growth opportunities in revenues.

Suppliers are augmenting their deliverables, enhancing product functionalities, and offering fieldbus and wireless technologies to meet the expanding needs of users.

They are also focusing on growth industries such as pharmaceuticals and food and beverage.

Growth prospects in some industry segments such as refining and water and wastewater also remain better than average.

The economic slowdown in the USA is having a negative impact on worldwide markets.

In Europe, manufacturers are continuing to be cautious as their economic strength declines.

Japan continues to face the same weak economic conditions it has struggled with for several years.

However, there is opportunity.

Latin America represents the highest growth area for total process automation, followed by the developing region of Asia.

The North American and EMEA (Europe, the Middle East, and Africa) regions will grow at about the same average annual rate, while Japan will see the least growth during the next five years.