U.S. and China to Spur Industrial Automation Growth

Source: ControlDesign.com

Jun 16, 2012

Riding on the relative strength of the U.S. and Chinese markets, the global industrial automation market is expected to grow a respectable 9.5% this year to reach a size of nearly $160 billion, according to IMS Research, acquired recently by IHS. The market will reach more than $200 billion by 2015, predict the analysts, who note that healthy economies this year will buoy market growth, despite individual countries in Europe slipping back into recession.

Manufacturing is a key element in a country’s gross domestic product (GDP), and is generally indicative of economic health, noted IMS Research, adding that machinery production output drives demand for nearly half of the total industrial automation equipment market. Early indicators for first-quarter machinery production output show slowed growth in most regions, with the exception of the U.S. market.

“Several countries in Europe have slipped back into recession in 2012, and with the potential of Greece exiting the Eurozone, European markets have continued to be plagued by uncertainty and instability,” said Sarah Sultan, research analyst at IMS Research. “Though austerity measures in Europe and in the U.S. have impacted public investment into automation equipment, large declines in these markets are unlikely as most investment in industrial automation comes from the private sector.”

Austerity measures are actions taken by governments to reduce the amount of money that they spend. In many places around Europe, people have rebelled against tough austerity conditions attached to major bailouts from the EU and International Monetary Fund (IMF), particularly in Greece, Ireland and Portugal.

The U.S. economy has improved substantially, IMS reported, and both machinery production and end equipment markets are performing well. Machinery production in the U.S. grew about 8% year-over-year in the first quarter. The Americas as a whole is set for strong growth in industrial automation equipment in 2012.

“Combined, the Americas and Asia-Pacific regions account for 65% of the global market for industrial automation electronics,” Sultan said. “Asia is the largest consumer of industrial automation products, and the relative strength of its economy in 2012 is predicted to lead to spending of $64 billion, which represents nearly 40% of the global market.”

China’s GDP is expected to grow just over 8% this year, which is the slowest growth China has seen in years. However, activity is expected to pick up in the second half of 2012 as a result of European recovery and governmental policies influencing industrial automation in China, Sultan added. “Resurgence in the Chinese economy will also influence Latin America, which has slowed recently due to a strong reliance on investment from China.”

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