CMYK Setting a new trend- The world over The biggest changes affecting automation technology over the last 10 years have been the need for security, the increase in energy costs that have driven the need to monitor usage/efficiency in manufacturing, and increased public awareness of industry s impact on the environment. 62 PURCHASE February 2011
The automation industries market has not been immune to recession. The downturn that started in 2007 had an impact on the industry. The manufacturing sector was initially insulated in 2008 but it soon began to feel the heat and dropped to the survival mode. Throughout 2009, the negative growth continued but revival started last year. As we enter a new decade, increasing energy costs, growing pressure to improve profitability, and awareness of increased climate protection all mean that industry will focus more and more on concepts for energy-optimized machines and drives. A Quick Recap There have been some incidents that have sparked off changes in the global automation industry market. The increase in energy costs is one such inevitability that has made industries look for more energyefficient alternatives. Also increasing awareness about global warming and the environment has urged the industry to invest in greener options. During the past decade, globalization made a quick march. New plants have been built in the US and Europe, and the focus of automation business growth shifted to the international arena. Also in the last 10 years innovation cycles have become increasingly short. This has put the industry under severe competition in the global arena. Businesses, more than ever before, have to produce goods inexpensively and affordably, quickly and with high quality standards. However, the recession almost dampened spirits. Consumers cut down on spending. As a consequence, industries like automotive, aerospace and consumer durables suffered. This is especially true in developed countries. Economies like India and China weathered the turmoil better than most and continued to show moderate growth. Now for the silver lining; some innovations have indeed given industrial automation new surges of growth. The chief among these is the programmable logic controller (PLC) to replace relaylogic; it generated growth in applications where custom logic was difficult to implement and change. The PLC was a lot more reliable than relay-contacts, and much easier to program and reprogram. Poised for growth As the economic condition improves, manufacturers will face challenges to raise productivity and lower production costs. Plant operating expenses need to be curbed too. The industries need to improve quality to compete in the global market. Consequently, capital investments for automation are expected to resume across many industries, as automation is vital in overcoming those challenges. As an industry expert points out, the onward march of globalization is changing the world s industrial landscape. Manufacturers have recognized that industrial automation is key to survival in the global economy. While investment in industrial automation had slowed down in the last three years, the effect will soon be over. Consumer spending in emerging economies will expand, leading to the emergence of new demand centers and pockets of manufacturing excellence and innovation. This will result in more competition. Earlier, manufacturing companies had focused on developed markets in Europe and North America. Now they have to cater to consumer demands from emerging markets. 64 PURCHASE February 2011
The Key Global Players: Turkey, Russia and China Turkey has initiated economic reforms and is pushing itself on the growth track. The growth has been fostered by increasing exports and intensive investment. This is just not in public but private sectors too. Istanbul is emerging as a hot seat. It is an important intersection in international passenger traffic particularly for the states of Asia and Europe. The course of modernisation is continuing in Russia. This applies to industry, the public sector and the infrastructure. The country remains extremely important for the global export industry. The three most important advantages of the Russian market are the high potential for growth and profit, the strong consumer demand and the inexpensive cost structures. The UAE too, is emerging as a key market for industrial automation. One of the companies, Emerson posted sales of over US $ 868 and the company also hopes to surpass US $1 billion in the next five years. The West Asian market continues to be strong and more companies are likely to invest. Key factors driving growth The computer based automation market has seen considerable growth in the past few years. The reduced PC size, cost improvement are the major factors driving growth. The vast improvement in CPU technology has brought about many new developments in the PC based automation market. Embedded Windows operating system now provides for ease of programming, flexibility, high driver compatibility, and security enhancement to enable system designers to fully integrate adds-on to the PC based control system. Embedded box computers with fan less designs and no internal cabling have also improved the reliability and ruggedness of PC based automation. The last 10 years have been the decade of multi-domain functionality and convergence in automation. This includes programmable automation controllers (PACs) performing logic, motion, and process control on single platforms. This convergence also includes human 66 PURCHASE February 2011
Industry Watch machine interface (HMI) software performing both visualization and intelligence solutions on single platforms ranging from control room PCs to smart phones. HMI software incorporates production management and manufacturing intelligence information as well as plant floor data. The next decade will see further acceleration in multi-domain functionality and convergence trends. There will be more intelligent systems that promise more. The second generation of intelligent process instrumentation will provide enhanced flexibility and functionality. This includes completely programmable operating parameters, informative process and instrument diagnostics. These will significantly save installation and maintenance costs. The growth to continue The automation industry will continue to see good growth in the coming years. The process automation market will further firm up with an increase in demand for automation equipment. The worldwide market for total process automation is expected to grow at a Compounded Annual Growth Rate (CAGR) of 5.1 percent over the next five years. The market, which was nearly $50 billion in 2003, is now over $64 billion. Also increasing competition will compel most manufacturers to improve their plant machinery and processes in order to stay competitive. PACs offer one programming and engineering tool as well as one programming language and a single tag database for the complete system. Other industry trends impact the development of automation equipment. These are machine safeguarding, energy, and networking and challenges faced by suppliers. Latest trends A recent trend in the industrial automation market is the development of robotics. A few key players in the market are ABB Limited, Adept Technology, Inc., American Robot Corporation, Denso Wave Incorporated, Evolution Robotics, Inc., Yaskawa Electric Corporation Rockwell Automation Inc, ST Robotics among others. The biggest end user of the industry is the automobile industry. However, as recession hit the industry and there was a February 2011 PURCHASE 67
Korea is one of the top three nations in robotics production. Here are a few statistics to show that Korea will retain its position. The production of intelligent robots could reach US $ 29.7 billion. Also investment of US $264 million is expected in the next five years. decline in sales followed by closures of plants and reduction in automobile output, the robotics industry, too, suffered a decline. In fact, the industry hit a speed breaker with the onset of recession in 2008 and 2009. Also the capital goods sector has been hit hard by the recession. As a consequence, the demand for assembly line robots that were required by the industry fell drastically. There are other sectors that collapsed which brought about a decline in sales. However, the industry is staging a sharp recovery. Now companies are increasingly going in for complete automation. Now companies that had stopped giving orders or deferred them are re-investing in plant renovation and capacity expansion. These companies are planning to increase productivity through better technology. Investment in robotics is a viable option for them. Through the looking glass Customers will go for value not for technology as such. Every technology, every system and product will be evaluated under this point of view. Process industries are in tough global competition. There is an urgent need to improve costs. Service oriented architecture will allow the integration of business processes with process control. Global warming, CO2 reduction and energy efficiency will be very important subjects for customers in process industries. To improve here means to understand processes in a better way and to automate further. A main stream of investment will go into these kinds of applications. Countries like Japan and Germany will tend to benefit from their longer-term business perspectives. But, significant competition is coming from many rapidly developing countries with expanding technology prowess. So, marketing speed and business agility will be offsetting advantages. There are three keys that will rule the market. One is that of Proprietary products that can be developed quickly and inexpensively. And the other is that of upgradation of current technology. 68 PURCHASE February 2011