Positive outlook for global automation markets amidst fears of economic slowdown

Citation

(1999), "Positive outlook for global automation markets amidst fears of economic slowdown", Assembly Automation, Vol. 19 No. 3. https://doi.org/10.1108/aa.1999.03319cab.004

Positive outlook for global automation markets amidst fears of economic slowdown

Positive outlook for global automation markets amidst fears of economic slowdown

Keyword: Automation

Despite the Asian economic crisis, prospects for the region's automation market - the world's largest - remain strong, according to a new report from market analysis firm Datamonitor.

The report, Global Control Systems, examines automation markets in 25 countries across three continents, and reveals that the Asian markets for programmable logic controllers (PLCs) and Distributed Control Systems (DCS) will continue to grow faster than markets in Europe and USA to 2003.

The report reveals:

1. 1.

   Despite recent economic pressures, growth prospects in the Asian automation markets remain strong for the next five years.

2. 2.

   The global market for PC-based controllers will be worth over $500 million by 2003.

1. Despite recent economic pressures, growth prospects in the Asian automation markets remain strong for the next five years

According to Datamonitor, Asia currently accounts for 37 per cent of the global market for PLC and DCS hardware, which is valued at over $8.6 billion in 1998 for the 25 countries examined in the report. This makes it the largest global market ahead of Europe and the USA, and follows strong growth over the last five years.

Prior to the economic crash of 1997, Asia had been a leader in economic growth, with several countries maintaining almost double-digit economic growth rates. This trend was mirrored in the automation markets within these countries. Although the value of many markets declined mid- and post-crisis in some Asian countries, the general performance within the region has been strong enough to register average annual growth of 5.6 per cent and 2.6 per cent in the PLC and DCS markets respectively (see Table I).

Although several Asian markets do not expect strong growth this year, for the majority of Asian-based automation companies the longer-term outlook is positive. In particular, the Chinese automation market, unaffected by the financial crisis, will remain a difficult market to beat in terms of organic growth over the next five years (see Figure 2).

Despite its relative maturity, the European automation market grew strongly over the last five years, although this was largely concentrated within the PLC arena. However, according to Datamonitor, the outlook for the next five years is more in line with the dynamics typically associated with mature markets. In particular, the DCS market is forecast to gradually decline in value as competing technologies and falling hardware costs shift evolutionary focus away from hardware and towards software and services.

Figure 2 Forecast growth rates in the global automation markets, 1999-2003

Martin Atherton, Datamonitor Consultant and author of the report, comments:

Automation markets globally have generally proved quite resilient to fears of a global economic slowdown, and there are currently pockets of strong growth across the Americas, Europe and of course Asia. Automation companies have shifted marketing strategies towards emphasising cost of ownership, provision of services, and tailoring of control solutions to individual end-users. This, together with recent product developments which have promoted modularity, flexibility and choice in automation control systems, has extended growth in a way that might not have been envisaged five years ago.

2. The global market for PC-based controllers will be worth over $500 million by 2003

Although the global market for PC-based controllers remains negligible compared to the PLC and DCS markets with which it currently competes, it is set for rapid growth, driven by increasing acceptance by end-users and high profile investment by certain end-user sectors.

Although the current take-up of such technologies is hampered by the persistent negative perception held by many end-users, Datamonitor has detected a marginal "thaw" in general outlook. Coupled with this, the expectation that automation giants such as Siemens and Rockwell will gradually build up the momentum of their respective marketing operations throughout 1999 should provide a boost to the market. Up to now, although PC-based products have been available from such companies, there has been little weight behind marketing strategies.

According to Datamonitor, these factors mean that the PC-controller market will experience average growth of 89 per cent each year till 2003 (see Figure 3), when it will reach a value of almost $550 million. Europe will be the largest market in 2003, worth $278 million. Asia, however, will be the fastest growing, increasing at an average annual rate of 145 per cent to reach a value of $139 million in 2003 (see Table II).

Figure 3 Forecast growth rates of the global PC-based controller market, 1999-2003

Details from Datamonitor. Tel: +44 (0)171 316 0001; Fax: +44 (0)171 316 0002; E-mail: ukinfo@datamonitor.com; Web site: http://www.datamonitor.com