After sputtering for the last two years, the global market for industrial automation equipment (IAE) is poised for stronger growth in 2014, aided by strengthening economies as well as technological innovations that will boost demand, according to a new report from IHS Technology (NYSE: IHS).
Worldwide revenue in 2014 for the IAE market will reach a projected $185.3 billion, up 7 percent from $173.0 billion in 2013. This year marks the return of more vigorous activity after the industry managed only middling revenue increases of 1.2 and 3.4 percent in 2012 and 2013, respectively. Prior to those two years, expansion had been in the double digits in a heartening show of force after the recession.
The healthy expansion is set to continue after this year, with industry takings forecast to hit $225.0 billion by 2017, as shown in the attached figure.
“Following two years of weak development in the IAE trade, 2014 will see stronger market conditions that will help generate business opportunities,” said Jenalea Howell, associate director for rotating machines & controls at IHS. “In particular, the stabilizing economies of China and Europe will be beneficial to spurring growth this year in overall industrial automation, allowing the market to outstrip last year’s performance.”
Motors and motor controls will be the largest segment in 2014, accounting for 40 percent of total IAE market revenue. Automation equipment is next with 31 percent, followed by power-transmission equipment with 29 percent.
Among the global regions, Asia-Pacific will lead in growth, followed by the Americas, Japan and then the collective Europe-Middle East-Africa (EMEA) region. EMEA, however, is projected to claim the largest share of revenue at $61.5 billion, followed by Asia-Pacific, the Americas and Japan.
These findings are in the report, “Industrial Automation Equipment Market Tracker – Q1 2014,” from the Industrial, Security & Medical Technology service of IHS.
Individual IAE segments attuned by distinct market forces
In the market’s biggest segment made up of motors, generators and motor controls, energy efficiency continues to be the driver for growth, Howell noted. Energy regulations covering motor efficiency will also be helpful, spurring the development of new energy-saving machinery expected to contribute to a positive bottom line. However, the trends toward sophisticated products are being tempered by the need for more basic functionality.
Meanwhile, the automation equipment sector will be impacted substantially this year by technological innovations, IHS believes. Here demand for more communication and more sophisticated machine control will drive technical advancements, especially in the discrete controller markets. Controllers overall are at the highest risk of cybersecurity attacks, which will prompt product development seeking solutions to forestall or prevent unauthorized incursions altogether.
For the sector covering power transmissions equipment, the market this year will be affected by a general shift from mechanical to electrical equipment. Pneumatic and hydraulic actuation, for instance, will be increasingly replaced by electromechanical solutions. A move to higher-efficiency motors will also boost the importance of gearing, with attention focusing on system efficiency.
Overall, solidifying performance from various sectors will boost IAE market prospects. In particular, the consumption of processed food and the higher income levels of consumers will lead to increased demand for goods and for machinery making those goods. The strongest sectors will include power generation; oil and gas; and food, beverage and tobacco.
Identifying opportunities for the future
Three distinct market developments will help the IAE market continue to grow in the future.
Convergence, a major industry trend, will transform manufacturing from a productivity-driven process to one that is controlled by digital information. 3-D printing could also represent another turning point, offering possibilities likely to alter the manufacturing landscape in sweeping ways.
A third variable, the combination of an aging workforce of skilled engineers along with low rates of replacement, will pose a significant concern for manufacturers, particularly in the West. Increasing levels of automation and semiautonomous robots will ultimately drive a transition to the automatic factory, IHS predicts.