Industrial Ethernet infrastructure component sales projected to rebound in 2017

IHS estimates industrial Ethernet infrastructure component sales will fall to 4.5%, 2015 to 2016, but the market will improve for 2017 and beyond.

10/28/2016


IHS estimates industrial Ethernet infrastructure component sales will fall to 4.5%, 2015 to 2016, but the market will improve for 2017 and beyond. Courtesy: IHS MarkitThe market for industrial Ethernet infrastructure components market has enjoyed revenue growth at a rate above that of industry in general, driven by the increasing adoption of Ethernet in its various forms as the industrial protocol of choice. However, there have been dips in the growth pattern; the latest research forecasts one of these dips in 2016. The report estimates that the world revenue growth 2014 to 2015 was a healthy 10.1% but forecasts this will fall to 4.5%, 2015 to 2016. However, the horizon looks brighter for 2017 and beyond.

IHS Markit reports that the lull can be contributed to two major reasons for this. The first is the knock-on effect of the lull in investment caused by the oil price crash in late 2014 and 2015. New production facilities and refurbishment programs were reviewed at that time and suppliers, including distributors, have been living off their stock for the business that was about. The signs are that business will return to a more normal growth pattern from 2017 on, assuming of course there are no further major world economic upsets.

The other reason for the lull in sales is believed to be that of confidence in world trading conditions caused mainly by the stability of the European Union and the presidential election in the United States. Factors affecting business confidence in the European Union includes the United Kingdom referendum voting to leave the union. The consequences of taking this action are not clear, which has caused uncertainty in some market sectors.

Other factors include the mass immigration from the Middle East and Africa; and the stability of the euro. Despite this, Germany's strong manufacturing base and the impetus and publicity behind Industrie 4.0 and the Industrial Internet of Things (IIoT) continues to be a stabilizing factor. IHS Markit believes that the lull in component sales is temporary and the revenue growth rates of the past will return.

John Morse is a senior analyst for industrial automation, at IHS Markit. IHS Markit is a CFE Media content partner. Edited by Chris Vavra, production editor, CFE Media, cvavra@cfemedia.com.

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