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Just why traditional discrete-focused PLC vendors such as Rockwell Automation and GE Fanuc are so keen to build a presence in process automation is highlighted by two new reports from ARC. “Automation Systems for Discrete Industries Worldwide Outlook” estimates the global discrete automation systems market in 2006 to have been worth nearly $17 billion and has it growing at a healthy 6.8% compound to pass $23 billion by 2011. But “Automation Systems for Process Industries Worldwide Outlook” estimates the equivalent process automation systems market to have been worth almost twice as much at $30 billion in 2006 and has it growing almost half as fast again at 9.6% compound, which will see it worth more than $47 billion by 2011.
Driving that growth is the constant cost pressure in the process industries which “leaves no alternative, but to improve plant performance, and process automation technologies play a key role in achieving this,” says senior analyst Himanshu Shah, the principal author of both reports. “One reason the automation business is doing so well today is the huge list of challenges and changing conditions in the global business environment that manufacturers must respond to,” he says. “These challenges include globalization, the need to react quickly and with agility to emerging market opportunities and increasing pressure to improve financial performance.”
In the specific case of the discrete market, ARC contrasts historical capital expenditure cycles driven by the replacement cycle in the machinery sector with the current pattern in which growth continues to be fueled by increasing consumer power in Eastern Europe and Asia. As a result, automation vendors see the normal five-year capital expenditure cycle having only a ripple effect on the longer term sustained growth pattern.
That is further underlined by the continuing buoyancy of the Chinese PLC market. In a new report, “Programmable Logic Controllers Outlook for China,” ARC estimates its current value at $750 million and has it growing at 12.4% compound over the next five years to reach $1.3 billion by 2011.
Frost & Sullivan broadly agrees in its latest analysis, estimating that the market earned revenues of $541 million in 2006 and expecting it to reach $1.04 billion by 2013. With China poised to become the world’s third biggest economy in 2007, Shah says, “The manufacturing sector’s search for sustainable competitive advantages through continuous productivity improvements will lead to the application of plant level automation across all vertical industries in a major way.”
Manufacturing industry worldwide will spend $2.5 billioin on traditional MES software and services by 2012, according to a new study from Datamonitor, “Linking Plant Floor and Enterprise Systems for Greater Manufacturing Agility.” By 2012, says the report, the worldwide market for traditional MES software and services will reach $2.5 billion, up from $950 million in 2006, without even taking into account newer manufacturing intelligence solutions focused solely on pulling data up from the plant floor.
Datamonitor surveyed 150 companies in North America and Western Europe and found that 61% are either currently planning to link their plant floor and enterprise systems or were already actively investing in doing so. Currently leading the trend are companies in pharmaceuticals, food and beverage and chemicals, but discrete industries are expected to start to join in by 2009.
“A focus on production metrics and manufacturing agility means that manufacturers need better communications between the two system environments,” said manufacturing technology analyst and study author Adam Jura. “As a result, we’re seeing significant expenditure on both traditional manufacturing execution systems (MES), as well as newer manufacturing intelligence solutions. In so doing, companies hope to improve their scheduling, supply-chain interactions and performance monitoring capabilities.”
Although the MES market continues to be highly fragmented with many smaller vendors focused on individual industry processes, mergers and acquisitions will continue as vendors seek to acquire industry functionality, services capabilities and greater overall scale. Vendors focusing on regulated industries will prove the most attractive acquisitions as end users are forced to invest. “…the emerging threat of manufacturing intelligence-only solutions is forcing vendors to develop additional functionality,” says Jura. “As such, the winners in this market over the next few years will be heavily influenced by acquisition strategy, functionality development and services capabilities.”
Frost & Sullivan puts the value of the world market for safety systems in the process industries at $1.0 billion in 2006 and estimates that it will reach $2.1 billion in 2013. End users, it says, are seeking to minimize the trade-off between process uptime and process safety. Increasing the predictability of safety system failure would reduce downtime and have an indirect impact on process efficiency by improving productivity, process uptime and output. Vendors need to educate end users on the benefits of technologically advanced safety systems over home grown solutions. Major opportunities exist in legacy installations and in the retrofit market, where the demand for safety systems remains largely untapped. Solutions with open architecture and the flexibility to adapt to the different systems from various automation suppliers are likely to achieve greater end user acceptance.
Iconics has stolen something of a march on rival SCADA software vendors by obtaining “Certified for Windows 2008” approval for GraphWorX64, a core component of its Genesis64 suite. GraphWorX64 has carried the “Certified for Windows Vista” designation since last July and now claims to be the first industrial automation solution to earn certification for Windows Server 2008. As a result Iconics becomes one of the first companies to receive both certifications.
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