Continued infusion of capital for automation drives market growth

JANUARY 3--The worldwide automation market for the discrete industries experienced robust growth as the global economy enjoyed a strong year of expansion with heightened demand from various emerging markets.

By Himanshu Shah, senior analyst, ARC Advisory Group, www.arcweb.com/Newsmag/auto/autodisc122205.asp


JANUARY 3--The worldwide automation market for the discrete industries experienced robust growth as the global economy enjoyed a strong year of expansion with heightened demand from various emerging markets. Manufacturing companies increased expenditures for automation equipment to set up new plants in Asia and expand production capacities globally. The worldwide automation market for the discrete industries is expected to grow at a compounded annual growth rate (CAGR) of 7.0% over the next five years. The market was more than $27 billion in 2004 and is forecast to grow more than $38 billion in 2009.

A primary factor contributing to market growth is the continued infusion of capital for automation in many industries and regions driven by globalization. Although overall capital expenditures have remained flat in previous years, globalization is causing manufacturers to allocate increased investments in automation in order to drive down costs and raise the quality of their manufactured products.

China continues to be the primary country driving automation market growth, while India is also providing increasingly bright prospects for automation. In most Asian countries, end users continue to build new infrastructure, expand their manufacturing base, and modernize many existing plants that have less sophisticated or limited automation. New dynamics in Japan also made an unexpected resurgence, returning to higher growth rates after many years of lagging performance.

Eastern Europe is also experiencing a surge in automation investment with increased consumer demands due to rising real wages in a number of countries, and a stabilizing labor market. New activities in the OEM machine builders segment are pushing high growth in Latin America.

Manufacturing in various industries has become more challenging due to expanding product variations, increasing production speeds, and growing quality requirements at every stage of the production process. Automation equipment, therefore, is continually improving in the areas of functionality, communication capability, size, software, implementation tools, and diagnostics to meet these rising challenges. New automation trends are emerging as manufacturers increasingly demand the use of open standards for interoperability, multi-control discipline functionality to reduce cost of integration, Ethernet-based network technology, and modular architecture for scalability.

The emerging markets are driving growth in traditional hardware based products such as PLCs and AC drives. Production management software is growing very rapidly due to their early product lifecycle phase, and market demand for enterprise integration and real-time information from plant equipment regarding material location and tracking remain strong. GMC and system integration services are also providing modest growth in the worldwide discrete automation market.

More in Boards & Software