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The Process Automation market finally showed signs of recovery with an increase in demand for automation equipment. The worldwide market for Total Process Automation is expected to grow at a Compounded Annual Growth Rate (CAGR) of 5.1 percent over the next five years. The market, which was nearly $50 billion in 2003, is forecasted to be over $64 billion in 2008, according to a new ARC Advisory Group study "Total Automation Business for the Process Industries Worldwide Outlook".
While manufacturers are expected to remain cautious, plant equipment capital expenditures will rise modestly across many industries. Global competition will compel most manufacturers to improve their plant machinery and processes in order to stay competitive. "Fast growing regions, increasing service revenues, broader solutions, regulatory requirements, and expanding scope of applications for automation products due to their low cost and increasing performance will boost the market growth, " according to Senior Analyst Himanshu Shah, the study's principal author.
A number of new dynamics are shaping the global automation market. Manufacturing companies perceive the need to track and improve their plant and enterprise productivity and performance through Real-time Performance Management (RPM). As RPM initiatives take hold, intelligent and fieldbus devices, along with control systems, will be more widely used.
The manufacturing base is shifting to low cost regions as companies realize the competitive advantages that low cost labor and strong local demand provide their worldwide operations. High-growth countries offer opportunities for the use of process automation equipment in manufacturing as well as for the infrastructure industries. While the shift of manufacturing bases to low cost regions is fueling growth in those regions, this growth comes at the expense of growth rates in developed regions.
ARC's research also indicates that the proliferation of commercial-off-the-shelf (COTS) technology and other baseline technologies has been both a blessing and a curse to the industry. This report also identifies over fifteen different trends affecting the automation process market.
Most of the growth in the automation market today is coming from services, and many of these services are directly related to the formation of collaborative partnerships between suppliers and users. Safety systems and software segments represent additional high growth sectors. Suppliers are also focusing on growth industries such as pharmaceuticals, food & beverage, and water & wastewater.
Economic recovery will result in the reasonable revenue growth for industrial products and services sold to the process industries for all five regions of the world. China continues to be the primary growth driver for the market, but India is also providing increasingly bright prospects for suppliers as users there continue to build new infrastructure, expand their manufacturing base, and modernize the many existing plants that have less sophisticated or limited automation.