7% annual growth: New automation systems create nimble, more profitable manufacturers

Dedham, MA – Manufacturers investing in automation systems react more nimbly to market opportunities and augment profits, according to a new ARC Advisory Group study that says discrete industry automation continues solid worldwide growth. Increased use of automation by manufacturers is crucial during this period of greater globalization, the report says.

01/02/2008


Dedham, MA – Manufacturers investing in automation systems react more nimbly to market opportunities and augment profits, according to a new

ARC Advisory Group

study that says discrete industry automation continues solid worldwide growth. Increased use of automation by manufacturers is crucial during this period of greater globalization, the report says.

Manufacturing plants and OEM machine builders are investing in automation to improve operations and meet market demands. The worldwide market for discrete automation systems is expected to grow at a compounded annual growth rate (CAGR) of 6.8% over the next five years, said the research firm; the market was almost $17 billion in 2006 and is expected to grow to more than $23 billion in 2011.

ARC’s Automation Systems for Discrete Industries Worldwide Outlook

. “These challenges include globalization, the need to react quickly and with agility to emerging market opportunities, and increasing pressure to improve financial performance.”

Discrete automation products should show robust growth across industrial segments that include automotive and electronic & semiconductor to machinery and plastic & rubber industries, the report said. Discrete automation investment is driven mainly by business goals, since it helps improve plant productivity, product quality and cost, safety, flexibility, agility, and delivery performance.

Developing economies are increasing demand for industrial machinery at high rates, ARC noted. Feeding this has been a surge of regional machine builders with vertical specializations beyond machine performance issues. Regional OEMs, including domestic and foreign transplants, have leveraged proximity to the customer to create an understanding of the niche their customers inhabit and are able to build machines more suitable to regional issues, the report explained.

China and India, known for outsourcing low valued production from North America and Europe, appear to be moving toward value-added manufacturing services to produce higher valued products. ARC also sees a move toward foreign domestic machine builders establishing production centers in Asia to leverage vertical specialization in industrial machinery. The growth period continues to be fueled by increasing wealth in consumers in Eastern Europe and Asia, and many industrial automation suppliers concur that the five-year capital expenditure cycle has only a ripple effect on the longer-term sustained growth patterns of automation suppliers.

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