ARC Machinery Index Update - Q4 2019

Overview

To help keep our clients as up to date as possible under the current, fast-changing market conditions, ARC Advisory Group will be publishing our upcoming Indexes for various segments of the overall automation market as a series of Special Reports in PowerPoint format.

• Process industries were doing well in 2019 with mid-to-high single-digit growth​
• Hybrid markets were also up at mid- single-digits (food processing and packaging)​
• Discrete markets have been hit hard​
• Starting in Q2 2019, automotive investments slowed significantly, and some OEMs report order income drops of -20% or worse, mainly in the machine tool area​
• Electronics and semiconductor investments stabilized at a high level and were starting to recover, but OEM revenues are still down in this area​
• Oil prices are stabilizing at a low level, slowing down growth in this area​
• Big rally in crane hoist monorails (CHM) pushed by infrastructure spending appears to be over and we expect a significant slowdown​
• Oil & gas also enters a phase of stabilization after a light recovery​
• Looking at the more process-focused machine type, growth rates are overall slowing down.  We expect a slowdown in 2020​
• Electronics and semiconductor are increasing, but still negative, we expect them to increase during 2020​
• Robotics seeing the first drop since 2015, largely caused by exchange rate developments, but we expect a recovery in 2020​
• Machine tools are significantly down, as it looks like normal business cycle, we expect a recovery starting Q3 / Q4 2020​

Individual Machinery Automation Types​

Metals and Mining

• Mining experienced huge boom before 2013, when market was consolidating with high resource prices​
• Main mining markets are iron ore, coal, bauxite, and potash, other elements only are responsible for a fraction of the market​
• After three years of market contraction, mining developed to very positive levels around 2008​
• We forecast a further contraction of investments during 2020, but not as sharp as 2009 or long as 2013​
• Rolling mills experienced good growth over the last years, but did not have the big contraction, now almost 50% above 2008 levels​
• For both industries, much depends on the demand development in emerging markets, while demand from developed markets will be more-or-less stable​
• Some of the applications are under pressure, as composite materials and other production methods (additive manufacturing) now replace the more mature technologies​

Buildings:  HVAC and Elevators​

• The construction business globally remained stable with healthy growth​
• Low interest rates should support investments in new projects (elevators in particular)​
• Aside the positive influence from construction and infrastructure, HVAC is negatively affected by process industries, which we expect to enter a downturn​
• Discrete industries refrained from new greenfield projects during 2019 and we also expect the downturn cycle to impact HVAC negatively for 2020​

Table of Contents

• Overview
• Individual Machine Types
• Forecast
• Methodology

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