- December 19, 2011
- ARC Advisory Group
ARC says the global automation markets are on track to return to pre-recession shipment levels in 2011.
December 19, 2011 - 2010 was an important year for the overall automation market as it saw a return to growth for many automation products and suppliers. The timing of the 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 the developed regions to rebound back to moderate health in 2011 as many suppliers have seen their aftermarket business come back on line. “Consequently, ARC feels the global automation markets are on track to return to pre-recession shipment levels in 2011,” according to Senior Analyst David Clayton, the principle author of ARC’s “Automation Expenditures for Process Industries Worldwide Outlook.” Now That We’ve Recovered from the Most Recent Economic Crisis, What’s Next? 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. US 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 & gas and electric power markets will drive the overall market growth positively in 2011 and beyond. Global Manufacturing PMIs Show Continued Expansion, Although at a Decreasing Rate The global automation index saw a sizeable jump in Q4 2010, generating a value of 198; a twelve point increase over the Q3 2010 value of 186. The index continued to grow in Q1 2011, registering a value of 205; a seven 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 US 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 percent in the global and US indices, 21 percent in the Asian index, and 14 percent in the European index. Even though these numbers are encouraging, the double digit YoY growth rates are more heavily influenced by the weak 2010 results than the strong showing in Q1 2011. About ARC: Founded in 1986, ARC Advisory Group is the leading research and advisory firm for industry. Our coverage of technology from business systems to product and asset lifecycle management, supply chain management, operations management, and automation systems makes us the go-to firm for business and IT executives around the world. For the complex business issues facing organizations today, our analysts have the industry knowledge and first-hand experience to help our clients find the best answers.Learn More
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