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ARC predicts automation upswing


March 23, 2010
by PLANT STAFF

DEDHAM, Mass.: The manufacturing recovery has begun, but its continued success depends on the financial markets returning to normal, according to an ARC Advisory Group report, which looks at the automation market from the supplier’s side.

Automation supplier revenues fell throughout 2009 compared to 2008 and ARC believes that year-on-year comparison will experience further decline, with only modest growth in 2010.

Little to no access of short-term capital stresses all businesses and many have delayed capital equipment expansions.

Although the short-term forecast for process industries’ global automation expenditures looks dismal, ARC predicts moderate growth to return within five years.

“Manufacturers will continually face challenges to raise productivity, lower product costs, reduce plant operating expenses and increase return on investment (ROI) to compete globally. Consequently, capital investments for automation should resume across many industries,” says David Clayton, a senior analyst for the Dedham, Mass.-based advisory group and principle author of ARC’s Automation Expenditures for Process Industries Worldwide Outlook.

To remain competitive, automation suppliers need to broaden their scope of services. In such a tough market, many manufacturers are repairing automation equipment, rather than replacing it. ARC says that suppliers can take advantage of this opportunity by being prepared to provide repair and maintenance service, not just on their own products, but also those manufactured by other suppliers.

They can also take advantage of the high level of industrial and infrastructure growth in the Middle East, Eastern Europe and China by improving their distribution channels through sales, service, repair location and production facilities in those regions.

As oil and gas reserves continue to dwindle and environmental concerns take top shelf, there is increased opportunity in alternative fuels.

With the revival of the nuclear industry, LNG liquefaction and gasification plants, the commercialization of cellulose ethanol and clean coal are markets that suppliers could help solve measurement issues with industry specific solutions.
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