ARC expects decline in Field Instrument shipments in 2010

October 22, 2009
ARC Advisory Group
News

Summary

The drop-off in bookings experienced through 2009 is expected to result in a decline for field instrument shipments through 2010 and into 2011.

October 22, 2009 - Field instrumentation shipments remained strong in 2008 but, by the fourth quarter, bookings slowed dramatically signaling the beginning of the current slowdown in the process automation sector. Largely as a result of strong backlogs, field instrument shipments are forecast to increase slightly in 2009 but the drop-off in bookings experienced through 2009 is expected to result in a decline for field instrument shipments through 2010 and into 2011. Much has changed in the market for field instruments over the last 12 months and drastic changes are expected to continue as the world adapts to the new economy. “One thing is certain, however, the need for market information will be needed more than ever to navigate the uncertain field instrument landscape looming at our doorstep. Without accurate, current and forward-looking information, manufacturers could lose their competitive advantage and miss out on future opportunities as economic conditions improve. To satisfy this underlying demand, suppliers should continue making investments in a number of areas including product development,” according to Research Director Wil Chin, the principal author of ARC’s “Field Instrument Expenditures in the Process Industries.” Global Demand for Energy Will Continue to Drive Field Instrumentation GrowthThe world is undergoing a huge shift of economic activity. Growth in demand for energy and basic materials, such as metals and oil, is moving from developed countries to developing ones, especially in Asia. Demand for oil in China and India is growing at an astronomical rate. On the supply side, Asia’s strong demand environment for energy and basic materials, coupled with its low labor costs, means the region will have to increase production of metals, chemicals, and paper. This will be a great boon to a broad range of field instrumentation, which is widely used in the production of these materials. Energy and materials, however, are not the only drivers of field instrumentation growth. Depending upon markets served, suppliers need to consider government stimulus, technology, regulatory compliance, the graying workforce, and many others. Current Global Recession Unlike Any of Its PredecessorsThe current economic recession is unlike any of its predecessors because it impacts every major economy in the world. Before the days of globalization, economic downturns were largely contained to the country or region in which they originated. Unfortunately, this is no longer the case and a sustained global recession will significantly reduce demand for field instrumentation products across the board. Current supplier backlog remains strong and ARC expects this backlog will carry suppliers through much of 2009. However, suppliers are nervous about the uncertain future. Understanding regional and vertical market differences provides suppliers the insight necessary to successfully navigate through the effects of the recession. Despite being coupled, regions will resume growth following their own timetables with unique opportunities for each of the regions. About ARC: Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing, Energy, 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. Learn More

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