Discrete automation continues to grow

Edited by the Engineeringtalk editorial team Dec 24, 2007

The worldwide market for discrete automation systems is expected to grow at a compounded annual growth rate of 6.8% over the next five years.

Discrete industry automation continues to experience solid worldwide growth as manufacturing plants and OEM machine builders continue to invest in automation to improve agility and flexibility of operations to meet market demands.

The worldwide market for discrete automation systems is expected to grow at a compounded annual growth rate (CAGR) of 6.8% over the next five years.

The market was nearly US $17 billion in 2006 and is forecasted to grow to over $23 billion in 2011, according to a new ARC Advisory Group study.

Automation is a ticket to be a participant in this flat world.

"One reason the automation business is doing so well today is the huge list of challenges and changing conditions in the global business environment that manufacturers must respond to".

"These challenges include globalisation, the need to react quickly and with agility to emerging market opportunities, and increasing pressure to improve financial performance", according to Senior Analyst Himanshu Shah, the principal author of ARC's "Automation systems for discrete industries worldwide outlook".

The increased use of automation by manufacturers is vital, due to the environment created by globalisation, which fuels automation market growth.

Therefore, discrete automation products are expected to have robust growth as they are used across industrial segments, ranging from automotive and electronic and semiconductor to machinery and plastic and rubber industries.

Today, discrete automation investment is driven primarily by business goals, as it helps to achieve objectives for improving plant productivity, product quality, product cost, safety, flexibility, agility and delivery performance.

Developing economies all over the world are increasing the demand for industrial machinery at high rates.

Feeding this demand has been a surge of regional machine builders with a vertical specialisation that goes beyond machine performance issues.

Regional OEMs including both domestic and foreign transplants have leveraged their close proximity to the customer to create an understanding of the particular niche their customers operate in and are able to build machines which are more suitable to the regional issues.

Countries like China and India have been traditionally viewed as a location for outsourcing low valued production from countries in North America and Europe.

However, there are indications that India and China are slowly moving toward value added manufacturing services that are producing much higher valued products.

Specifically, ARC sees a move toward foreign domestic machine builders establishing production centres in the Asian market to leverage the increasing vertical specialisation that is expanding in industrial machinery.

In contrast to historical capital expenditure cycles in the discrete automation industries, which are commonly driven by the replacement cycle in the machinery sector, this growth period continues to be fuelled by the increasing wealth in consumers in Eastern Europe and Asia.

Consequently, many industrial automation suppliers concur that the five year capital expenditure cycle is having only a ripple effect on the longer term sustained growth pattern that automation suppliers are currently experiencing.