Continued process automation growth predicted in 2012
The year 2010 was an important year for the overall automation market as it saw a return to growth for many automation products and suppliers. ARC Advisory Group predicts continued annual growth in process automation in 2011 through the forecast period of 2015.
The timing of the 2010 recovery, however, was not felt evenly across the various suppliers and product segments. Orders increased almost unilaterally for all of the major automation suppliers over the course of 2010, but the ability to turn these increased orders into recognized revenues varied significantly across the major suppliers depending on a number of factors including preferred sales channel, vertical market focus, and each supplier’s mix between aftermarket sales and greenfield projects.
Most automation markets saw a rebound in new orders over the course of 2010, with a corresponding increase in order backlogs. Based on the growth in incoming orders for new project business seen throughout the year, ARC expects a rebound to healthy growth for automation shipments to many of the “hot” developing countries for 2011. ARC also expects many of developed regions to rebound to moderate health in 2011 as many suppliers have seen their aftermarket business come back online. Consequently, ARC feels the global automation markets are on track to return to pre-recession shipment levels in 2011, as noted in the ARC research report, “Automation Expenditures for Process Industries Worldwide Outlook.”
Continued growth, if…
The global manufacturing economy seems on track to return to pre-recession shipment levels in 2011, but risks remain. High oil prices due to growing demand from emerging nations and continuing political turmoil in the Middle East could upset growth. U.S. unemployment rates continue to be a deterring factor, as does the European debt crisis. Due to the numerous risks still present and the lag between orders and final shipment for new project business, short-term prospects for the market range widely by region and industry. While most sectors are expected to experience positive growth over the forecast period, growth in the oil and gas and electric power markets will drive the overall market growth positively in 2011 and beyond.
Global manufacturing numbers
The global automation index saw a sizeable jump in Q4 2010, generating a value of 198; a 12-point increase over the Q3 2010 value of 186. The index continued to grow in Q1 2011, registering a value of 205; a 7-point increase from Q4 10. Although the global index is still expanding, it is growing at a decreasing rate, and only one regional index—Asia—witnessed growth in Q1 2011. This decreasing growth rate in the global index is the result of stagnant first-quarter growth in the U.S. index, a significant decrease in the European index, and strong growth in the Japanese index, as first-quarter growth was strong in Japan before the 3/11 crisis.
The growth from Q1 2010 to Q1 2011 is nearly 20% in the global and U.S. indices, 21% in the Asian index, and 14% in the European index. Even though these numbers are encouraging, the double-digit year-over-year growth rates are more heavily influenced by the weak 2010 results than the strong showing in Q1 2011.
David Clayton is a senior analyst for ARC Research whom covers process automation.