Global industrial automation equipment (IAE) revenues were estimated at more than $160 billion in 2012, and are forecast to continue growing by more than 6 percent in 2013 despite a struggling global economy. Sales of IAE are largely dependent on machinery production in discrete industries and capital expenditure investment in the process industries. Positive developments in both sectors during 2013 are benefitting sales of IAE products and leading to higher growth than the market experienced in 2012.
However, due to persistent uncertainty about the future, manufacturing operations are being kept lean across all regions. This is causing many manufacturing companies not to replace back-up equipment once it is installed. In addition, cautious distributors continue to draw down on already low inventories to mitigate risks. Longer-term, the IAE market is predicted to gradually improve through 2015 as demand stabilizes.
The interdependence of industrial markets has been very evident over the past 18 months. In the most glaring example, weak regional demand in Western Europe led to decreased exports in China, resulting in slower sales of IAE products in both regions during this timeframe. In addition, many manufacturing industries experienced significant overcapacity resulting from several years of rapid expansion. This contributed to a more than 2 percent decline in the global shipments of IAE products in 2012. During the first half of this year restocking efforts seem to have resumed. In the second quarter of 2013, several key automation product markets have seen healthy growth, including motor drives, PLCs, motion control equipment, industrial PCs and operator terminals.
Improved domestic demand has helped to steady the Chinese IAE market in the first half of 2013, but for continued future growth exports also need to return. Unfortunately, demand from a still-struggling Europe remains weak, and as a result Chinese exports are expected to remain vulnerable for some time to come. At the same time, economic growth in Europe also needs demand from China for stabilization in the automation markets to return.
Despite this period of slow growth, industrial automation suppliers have continued developing product lines and meeting ever-increasing customer demands for performance and functionality. This relentless commitment to rise to the challenge has allowed IAE providers to diversify their product offerings and target new, emerging industries and applications. One of the most evident examples of this can be seen in the increasingly automated control of factories through improved industrial networking and increasingly friendly communications protocols.
Jenalea Howell is Associate Director, Industrial Automation, at IHS.
