I recently spoke with Tim Dawson, vice president of industrial automation research at Interact Analysis, about the major trends driving growth in automation, the role of emerging technologies like artificial intelligence and machine learning, and how companies can leverage these developments to stay competitive. We also discussed the growing importance of automation in various industry sectors and what steps manufacturers should take to scale their operations with innovation and market intelligence.
Key excerpts from the conversation are highlighted below.
Q: What do you see as the key drivers of growth in the automation market?
Dawson: The fundamentals of the automation industry have remained very strong, even through challenging periods like the 2009-2010 economic downturn and the COVID-19 pandemic. While these were tough years for manufacturing, the industry’s long-term growth rate has held steady at around 5-6% on average over the past 15-20 years. Recently, overall manufacturing growth has slowed slightly due to factors like the economic slowdown in China.
However, automation growth tends to outpace general manufacturing growth, driven by increasing adoption in manufacturing processes.
Several factors are fueling automation growth. Technological advancements, such as improved sensor technology and the integration of IoT for smarter manufacturing, have significantly enhanced machinery and robotics, making them more efficient and versatile.
Additionally, AI and machine learning are helping to make automation more accessible, simplifying programming and implementation.
Cost reductions and price pressures are also making automation more affordable, especially for small and medium-sized manufacturers. Although prices are gradually decreasing, the capabilities of these technologies are continually improving, enhancing their price-to-performance ratio. Labor shortages, particularly in developed economies, along with rising wages, are pushing more companies toward automation to maintain or further boost productivity.
Another key driver is sustainability. Automation helps manufacturers reduce energy consumption and waste, aligning with broader sustainability goals. Efficient technologies and processes contribute to energy savings, while improved manufacturing quality reduces waste, supporting companies' environmental objectives. In short, these trends suggest that automation and robotics will continue to grow in importance as they help industries remain competitive, efficient, and sustainable.
Q: What advice would you give to manufacturers as they look to grow their businesses?
Dawson: Even in a challenging market, like we’ve seen over the past couple of years, there are still bright spots of opportunity. My advice to business leaders looking for growth is to embrace innovation, even during uncertain times. Invest in your staff and in R&D and explore emerging technologies.
It’s also essential to stay informed on market trends and economic indicators. Adapting to the market and making informed choices is critical.
Another key point is retaining talent. Automation isn’t about replacing people; it’s about empowering your team to drive innovation and growth. You want the best people by your side as you navigate this journey.
Finally, leverage data and analytics to support decision-making, but do so thoughtfully. Not
all data is valuable, so it’s essential to do your due diligence and rely on trusted sources.
Q: What are your thoughts on mergers and acquisitions activity in the automation space.
Dawson: M&A activity has been vibrant, and we expect it to remain strong, though it’s evolving toward new industries and technologies. Mobile robotics, for example, has grown from a nascent market five years ago to a thriving one with hundreds of vendors — many of which have been or are being acquired. The same goes for vision technology, where fragmentation is leading to consolidation by larger players.
In the future, we’ll likely see more acquisitions of smaller, niche technology companies. Major players like Siemens and Rockwell Automation often acquire these small firms, sometimes just a handful of people, for their specialized expertise. Watching these smaller deals can be a strong indicator of where technology and market opportunities are headed. With ecosystems and app-like platforms, companies like Siemens can quickly spot promising innovations within their networks, making even small players valuable. Integrating into such ecosystems can be a smart move.
Bundy Group is a boutique investment bank that specializes in representing controls and automation, Internet of Things, and cybersecurity companies in business sales, capital raises, and acquisitions. You can learn more at www.bundygroup.com or by contacting Clint Bundy at [email protected]. Bundy Group Securities, LLC, is a registered broker-dealer and member of FINRA and SIPC. This content is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any security.
