Industrial Automation Stays Bullish on Growth

Aug. 8, 2013
The Industrial Automation Market Is Pegged to Grow 6.2% This Year to About $170 Billion

The market for industrial automation equipment (IAE) is pegged to grow 6.2% this year to about $170 billion, helped in part by the recovery of global manufacturing in the first quarter, according to "The World Market for Industrial Automation Equipment" report from IHS/IMS Research.

The more optimistic 2013 outlook contrasts with the anemic market conditions of last year that were aggravated by the interconnected nature of a globally linked space, says Jenalea Howell, research manager for the Industrial Automation service at IHS. "The interdependence of the world's industrial markets came to the fore during 2012, and made its presence felt as weak demand in some regions hit the exports of others, causing revenue from industrial automation equipment (IAE) to grow only 3.7%."

Growth in the U.S. will be a benefit rather than requirement in 2013 as conditions all around have now improved. "For one, leading indicators — including machinery orders and manufacturing activity — point to increasing demand for industrial products during the next six months," Howell reports. "Moreover, progress has been observed in the markets of China, Europe and the United States in the first half this year, fueling confidence that the IAE space is headed toward renewed vigor."

Signs of economic health are likewise springing up in the U.S., where greater growth stemming from a variety of factors — ranging from rising natural gas exploration and production, to strengthening housing markets, to rising exports — will help propel demand for industrial automation equipment and boost the IAE global market, concludes Howell.

The IAE market slowdown in 2012 created a more cautious approach to spending within the industry, as many fear the prospects of another recession and as investors are now more aware of market risks. Perhaps heeding the lessons of a spendthrift past, many industrial automation companies are now holding record levels of cash — money that could be made available to support lean inventory operations should such a need arise.

The current trend has one downside, however. While more high-functionality automation products are set to launch, less functional products entering the market also will make their impact felt. The result overall could be a slowing down in revenue growth moving forward.