Automation market set for recovery

Edited by the Engineeringtalk editorial team Nov 6, 2003

The overall future of automation products serving the discrete industries looks bright over the next five-year period.

After enjoying a period of solid economic growth, the global economy went into a tailspin in 2002.

However, the overall future of automation products serving the discrete industries looks bright over a five-year period.

The total automation business to worldwide discrete industries is expected to grow at a CAGR of 6.1% over the next five years.

The market is forecasted to be over $30 billion in 2007, according to a new ARC Advisory Group study.

With a bottoming of the economy and changing user perspectives on automation and collaborative manufacturing, ARC expects the overall automation market growth will continue.

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

Industries such as building automation, electronics and semiconductor, automotive, and plastic machinery will continue to perform well", according to Senior Analyst Himanshu Shah, the principal author of ARC's "Total automation business for the discrete industries worldwide outlook".

ARC research found that a number of factors will drive the growth in discrete industries.

The average performance for manufacturing plants across many industries can be raised to a much higher level using better controls.

Effective use of modern automation technology presents a major opportunity for manufacturers to increase productivity and reduce cost to stay competitive.

In turn, this also becomes a growth opportunity for the discrete automation products.

The continuous advancements in semiconductor and electronic products will remain an impetus behind automation product revenue growth.

Additionally, automotive manufacturers, facing fierce global competition, will expand adoption of advanced automation technologies in more areas to reduce unit cost and increase quality.

The high cost of energy will also drive increased use of automation products in building automation and manufacturing plants in general.

Major automation suppliers are battered in this challenging time as they try to win customers.

Global competition and downward pricing pressures have eroded margins and reduced revenues for suppliers.

But progressive suppliers are offering more services and broader solutions to offset the decline in revenues.

They are augmenting their deliverables and enhancing functionalities to meet the expanding needs of users.

Top tier companies are firmly establishing themselves by making significant investments in developing facilities outside their home countries.

In addition to global sales and support capabilities, these foreign facilities typically include highly technical staff to support new projects, local industry expertise, fully skilled trainers, logistic centre, customer service centre, and web-enabled support structure.

Demand side indicators for manufacturing remain weak in both North America and Europe during the earlier part of the forecast period.

In Europe, economists are cutting their growth figures for the European Union during the earlier period.

The North American region expects to grow at a faster rate compared with the EMA (Europe, the Middle East, and Africa) region, and Japan will see the least growth during the next five years.

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