Demand for complete automated systems to trigger growth in automated materials handling equipment markets

Citation

(1999), "Demand for complete automated systems to trigger growth in automated materials handling equipment markets", Assembly Automation, Vol. 19 No. 3. https://doi.org/10.1108/aa.1999.03319cab.003

Demand for complete automated systems to trigger growth in automated materials handling equipment markets

Demand for complete automated systems to trigger growth in automated materials handling equipment markets

Keyword: Materials handling

The European automated materials handling equipment market has reached a stage of maturity in its life cycle. Major evolutionary developments have occurred in the market with the continual development of drive controls and the associated software. This, coupled with the evolution of complete automated solutions, has boosted the popularity of warehouse-type structure throughout Europe, where all required handling solutions can be provided for.

However, new products and systems are less prevalent in the current marketplace, and there already exists a large installed base of the equipment. The development of new applications for the systems occurs at a rate which is symbolic of a market typified by sluggish growth and a certain degree of over capacity. Growth is predicted to arise from the strength of the food and beverages industry, where demand for complete automated systems remain as strong as in previous years.

According to a new study by Frost & Sullivan, the international market consulting company, the current economic uncertainty is expected to affect the European materials handling equipment market to some extent, as end-users will be reluctant to make significant investments during what may be a difficult period for the manufacturing industries.

Mike England, Research Analyst at Frost & Sullivan, adds that increased levels of automation, resumption of constructive investment, fast return on investment, product reliability, increased factory systems flexibility and modular expansion of individual units all represent key factors driving revenues from US$2.34 billion in 1998 to US$2.90 billion in 2005.

Manufacturers of automated materials handling equipment will be expected to keep their prices as competitive as possible. Large suppliers may look towards increasing the modulation of their products, in an effort to keep complete systems prices low. Smaller companies would be expected to focus their endeavours on core competencies, thus ensuring survival through servicing the niche markets.

Gareth Knight, joint author of the study, identifies an overall trend in the automated materials handling equipment market for the sale and purchase of complete integrated systems. The general trend of industry as a whole, throughout Europe, is one of increasing automation, and one of the first factors considered by manufacturers, seeking to maximise profits, is their labour costs. The significance of automation is being increasingly recognised, as even the smallest companies strive to integrate related systems into their production and logistic processes.

The main end-users of automated materials handling systems have been, typically, large manufacturing sectors, such as materials fabrication and automotive industries. Other, smaller industries are now beginning to realise the benefits of materials handling equipment as a means of automating certain processes.

Key issues affecting the overall automated materials handling systems market include the introduction of new computer technologies for the materials handling equipment control systems, and the trend of manufacturers pursuing a more standardised product range in order to meet customer demand for competitive pricing levels.

The automated storage and retrieval systems segment dominates the European automated materials handling equipment market and is expected to retain its position throughout the forecast period. As a result of the versatility and efficiency of such systems and increased end-user awareness, the automated storage and retrieval systems market is expected to have gained in market share by 2005. Ranking in second position is the market for automated conveyors, followed by automated guided vehicles market (see Figure 1).

The German automated materials handling equipment market is currently leading the field and expected to further increase its dominant market share, as the country continues to invest in industrial automation processes.

The market is dominated by a small number of suppliers, who are mainly multinational corporations who are also dominant in other markets throughout Europe, and also worldwide. There are also many small operations who serve niche markets, or concentrate on one particular type of system. By doing so, such companies are able to avoid direct competition with the dominant market participants.

Figure 1 The European market for automated materials handling equipment percent of revenues by product type in 2005

Strategies for the future, especially in light of current economic uncertainty, include increased product ranges, improved research and development, focusing on core competencies, and improved customer care/after-sales services.

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the manufacturing industry for market trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications such as the European Packaging Machinery Market (3439) to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.

Report code: 3690, publication date: January 1999, price: US$3,950.