ARC says inductive sensor market to reach $1.25 Billion | Automation.com

ARC says inductive sensor market to reach $1.25 Billion

ARC says inductive sensor market to reach $1.25 Billion
April 26, 2009 - The Inductive Sensors market mirrors the cycles in the overall discrete automation market. The strong results in 2008 were due to an accumulated backlog of orders. This backlog has been worked through the system and suppliers in this sector are anticipating a difficult time ahead. A recovery in 2009 is unachievable in the current economic climate, according to sector leaders. However, beginning stages of a recovery are likely to be seen in 2010. The worldwide market for Inductive Sensors is expected to grow at a compounded annual growth rate (CAGR) of 1.3 percent over the next five years. The market was $1.17 billion in 2008 and, according to the forecasts in a new ARC Advisory Group study, will grow to over $1.25 billion in 2013.

Despite the overall negative growth rates for the next two years, the slowdown in the market for inductive sensors offers suppliers breathing room to strengthen regional positions and develop opportunities to expand into new market segments. European companies dominate the market today and fill the gap between supply and demand in the Japanese market. This is a critical time for suppliers to reassure their key customers in foreign markets of their continued commitment to support. Significantly, only a limited number of industries are expected to remain strong in their demand for sensing products as they depend on these solutions to ensure product quality.

“The market for inductive sensors is mature, yet highly competitive, with suppliers constantly searching for new business opportunities. This has created a market that appears settled, but actually has a lot of movement going on beneath the surface. In this environment, relatively minor technical changes trigger sales growth, since there is not a lot of product differentiation,” according to Analyst Florian Güldner, the principal author of ARC’s “Inductive Sensors Worldwide Outlook.”

Brand Labeling Is Pervasive
Companies are often confronted with the Brand label vs. Make decision. Brand labeling has enabled companies with a limited range of products to concentrate on their core area of expertise, while completing their product portfolio. Brand labeling is heavily used in the inductive sensor market and results in the existence of ‘hidden champions’, sensor manufacturers that have a strong market share, but a weak sales infrastructure. Developing products with little differentiation robs an organization of valuable capital. Acquisitions don’t always add new product capabilities and need to be carefully evaluated for synergies. But brand labeling is a low cost, low risk approach to filling out a product portfolio.

European Companies Dominate the Market
There is no dominant leader in the inductive sensor market. However, one thing is obvious: European companies account for a large percentage of the market share. Europe is headquarters for of the largest sensor companies and regarded by many as the center of sensing. Companies in Germany, Switzerland, Italy, and France benefit from the close proximity to the large machine building industry as well as the automotive OEMs. The latter has proven to be a double-edged sword.

About ARC: Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. No matter how complex your business issues, our analysts have the expert industry knowledge and first-hand experience to help you find the best answer. We focus on simple yet critical goals: improving your return on assets, operational performance, total cost of ownership, project time-to-benefit, and shareholder value.

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