In sharp counterpoint to the news over the past days that many stock analysts are downgrading ROK stock because of slow demand, ARC has published a new report indicating that the PLC market isn't as dead as thought. Here's hoping Himansu Shah at ARC is right on the money! Might could be that some of the Wall Street Analysts covering the automation industry (except for a few, and you know who you are) should be reading this set of tea leaves...
Here's what the ARC press release had to say about their report:
The Programmable Logic Controller (PLC) market experienced healthy growth in 2008. The market, however, is expected to contract severely in 2009. In spite of the current gloom and doom in the global economy, the market growth will resume in 2010 and beyond. Manufacturing and infrastructure industries will invest in automation to save energy, increase productivity, and upgrade existing facilities once the economic turmoil settles. As a result, the worldwide market for PLCs is expected to grow over the next five years, according to a new ARC Advisory Group study.
2008 was not a bad year for automation. The PLC market grew at a moderate rate in spite of the economic trouble that started in the US at the end of 2007. The manufacturing sector, initially insulated, began to feel pain and then contracted severely. As a result, the PLC market experienced a slowdown. “While a severe contraction period is expected in 2009, automation demand is expected to start turning around beginning in 2010 as the manufacturers face increasing global market pressures. PLCs, which are used across all major discrete and process industries, will enjoy growth as the new economy creates increased demand, “according to Senior Analyst Himanshu Shah (email@example.com), the principal author of ARC’s “Programmable Logic Controller Worldwide Outlook” (www.arcweb.com/res/plc).
Globalization Will Refuel PLC Market
PLC market growth started to slow down rapidly at the end of 2008, however, the market is expected to nose dive during the first few months of 2009. After a significant pull back in 2009, the market is expected to rebound somewhat strongly in 2010. Manufacturing and infrastructure industries are keenly reviewing their strategies to employ more automation that reduces the basic cost of operations, which could help them survive better in future economic turmoil and become more ‘sustainable’.
The globalization environment will once again cause manufacturing companies to invest in creating new capacities in developing economies for various industries such as chemical, cement, electrical power, and pharmaceutical. Building automation will also experience growth as commercial, industrial, and residential building projects resume around the world and strive for increased energy saving.
Increased Infrastructure Investments in Near Future
Governments of many countries around the world are injecting money though various stimulus packages to prop up their economy. These packages include major investments in construction projects as well as infrastructure industries, including power and water & wastewater. These programs are expected to create new demands for automation equipment such as PLCs in many industries.
Once China and India resume their GDP growth, it will create demand for a broad range of products, driven by increased consumer consumption and additional infrastructure projects. This will increase the demand for more automation in the oil & gas, metals & mining, and cement & glass industries, as well as many other segments of the process and discrete industries.
In addition to the quantitative assessment of the PLC market, this report provides an insightful analysis of the products and strategies of leading PLC suppliers and explores issues that will impact this business in the future.
For more information on this study, go to: www.arcweb.com/res/plc