Keywords: Process Industries, Field Devices, Distributed Control Systems, SCADA Systems, General Motion Control, Asset Management, AC Drives, PLC, Global Market Research Study
Growth in process automation shipments during 2014 slowed slightly compared with that of previous years. Slower growth will become the new normal, as softening demand in orders reported by many of the key suppliers during 2014 will have implications for the market for at least the next several years. This is primarily due to the dramatic decline in oil and other commodity prices in the latter half of 2014. It is not only participants in the oil & gas industry that have put projects on hold and cut their budgets, but various other industries are also moving with caution in an uncertain economic environment.
“While growth in the process automation market has been relatively steady in recent years, the future outlook is clouded by the precipitous drop in commodity prices during the second half of 2014. Furthermore, slower economic growth in China, once an engine of growth for the automation market, is also having a significant impact on current and expected expansion of the market,” according to Senior Analyst Allen Avery, the principal author of ARC Advisory Group’s “Automation and Software Expenditures for Process Industries Global Market Research Study”.
Once Hot Industries Have Cooled
In recent years, upstream oil & gas has been the highest growth vertical industry in the automation market. Given the precipitous oil price drop, this trend ended 2015. Spending in the upstream market continues, but the number and value of projects now on hold will eventually impact growth for several automation technologies in 2015 and 2016, only to recover as commodity prices start to trend upward.
The electric power generation vertical industry has also not lived up to prior expectations. The automation spend in electric power was down in 2014, a trend ARC expects to continue over the near term. Since electric power cannot be stored or exported/traded across geographic regions, the electric power industry is de-coupled geographically. It is also highly responsive to energy policies of national governments. The latter factor provides most of the uncertainty in forecasting for the industry.
Emerging Local Competition
While the major global automation suppliers remain headquartered in North America, Western Europe, and Japan, local technology suppliers in China, India, Brazil, and elsewhere have begun to develop solid automation system offerings that often appeal to local end users, particularly those without a global footprint.
Many of the local Chinese suppliers, for example, are expanding their business to other parts of Asia. While these local technology suppliers do not yet represent global competition for the established automation suppliers, this situation will likely change.
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