Frost & Sullivan: What’s Hot in the Industrial Automation and Process Control Industry

What’s Hot in the Industrial Automation and What’s Hot in the Industrial Automation and

Process Control IndustryProcess Control Industry

Trends, Opportunities, and Challenges through the Eyes of Trends, Opportunities, and Challenges through the Eyes of

Key Players in the Sector Key Players in the Sector

May 2012May 2012

Key Players in the Sector Key Players in the Sector

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Table of Contents

Ø About this Market Insight

Ø Hot Topic Thought Leader

IntroductionIntroduction 5-75-7

6

7

What’s Hot in 2012What’s Hot in 2012 8-268-26

9

10

11

Ø Key Perspectives on Growth in the Industrial Automation and Process Control Industry in 2012

Ø Market Highlights for 2012

Ø Industrial Automation- What Participants see as Hot Topics in 2012

4

11

13

14

16

17

19

20

22

23

25

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Ø Industrial Automation- What Participants see as Hot Topics in 2012

Ø Industrial Automation – Primary Focus Regions

Ø Pumps , Valves and Compressors - What Participants see as Hot Topics in 2012

Ø Pumps , Valves and Compressors– Primary Focus Regions

Ø Welding, Cutting and Joining Technologies - What Participants see as Hot Topics in 2012

Ø Welding, Cutting and Joining Technologies– Primary Focus Regions

Ø Drives and Motors Market - What Participants see as Hot Topics in 2012

Ø Drives and Motors Market – Primary Focus Regions

Ø Industrial Automation and Process Control Market Convergence with other Industries

Ø Global Hotspots Industrial Automation and Process Control Market

Ø Three BIG predictions

About Frost & SullivanAbout Frost & Sullivan 27 - 3227 - 32

Introduction

5

About this Market Insight

Based on a survey of several thousand key companies conducted across Europe in December 2011, this Market Insight highlights the hot topics for growth that have been identified in the industrial automation and process control industry sector for 2012 and beyond.

Data and opinions of key stakeholders, combined with analysis and commentary from Frost & Sullivan industry experts, have been used to present key market highlights, hot growth topics, global and regional hot spots, areas of market convergence, and bold predictions for 2012.

In this study, a summary of the highest growth areas for the industrial automation and process control

6

In this study, a summary of the highest growth areas for the industrial automation and process control

industry is presented for the following key sectors:

• Pumps, Valves and Compressors• Welding, Cutting and Joining• Drives and Motors

MuthuKumar Viswanathan – Hot Topic Thought Leader

Functional Expertise

� 18 years of general management, consulting and market research expertise, which include leading companies with the development and implementation of growth strategies.

� Specific expertise includes:

- Developing market strategies and implementation plans for geographic expansion

- Restructuring loss making businesses

- Implement market channel strategies

Industry Expertise

� Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives in

- Process Manufacturing including industrial automation

- Lab and field instrumentation products and servicesMuthukumar

7

- Test and Measurement and Electronics

What I bring to the Team

� Proven leader developing global teams

� Strategy planning and implementation

� Knowledge in financial management

Career Highlights

� Expertise in marketing and general management across several leading firms:

- TT Electronics Plc, Managing Director India

- Nagman Instruments and Electronics – Export Manager, a leading company in lab instrumentation products

Education

� Masters in Business Administration, University of Madras

ViswanathanDirector

Automation & Process Control

Frost & SullivanLondon

What’s Hot in 2012

8

Key Perspectives on Growth in the Industrial Automation and Process Control Industry in 2012

2Asset management and flexible

manufacturing to drive factory integration

with enterprise

Aggressively leverage technology in

1Sustainability, in terms of energy and

resource efficiency, a key ingredient for

success of global manufacturing industry

9

3

Aggressively leverage technology in

providing automation solutions enabling

end-users to gain a competitive edge in a

global market

4 Smart is the new Green

5High potential for automation and

customised service solutions in industrial

applications Source: Frost & Sullivan analysis

Market Highlights for 2012

• Hybrid products with narrow product differentiation, initially conceived to counter high

competition, is expected to gain end-user recognition.

• Flexible manufacturing to aid regional customisation by aligning product portfolio to suit

market demand.

• The strongest growth is expected in emerging market, especially in the Middle East, South

East Asia, and Eastern Europe. Opportunities connected with modernisation of old

infrastructure exists in developed regions like North America and Western Europe.

• The need for higher productivity and greater efficiency drives organisations to implement

Key Market Highlights

10

drive welding towards a safer future.

• The need for higher productivity and greater efficiency drives organisations to implement

greater interaction between the factory floor and enterprise across all end-users.

• Growing focus on implementation of energy efficient solutions in both process and discrete

industries promotes sustainable manufacturing..

• Factory of the future driven by megatrends like - cyber-security, mobile and wireless

technologies, enterprise ecosystems, cloud computing and sustainability.

• Energy efficiency concerns dominate business in electric motors market, with class IE3 energy

efficiency, a stricter requirement compared to class IE2 energy efficiency, required in 2015.

• Wastewater treatment and handling pumps will dominate traditional water pumps across the

globe.

• Regulatory measures directing increased spending on safety measures - style and innovation

drive welding towards a safer future.

1. Industrial AutomationWhat Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as

Hottest Topic

1 Industrial Competitiveness and Its Impact on "Future of Factory” 40%

2 Strategic Analysis of Automation and Control Solutions in Oil & Gas Industry 40%

3 Impact of Cloud Computing in Industrial Automation Market 30%

4 Programmable Automation Controller (PAC) Market 26%

5 Automation Opportunities from Smart Grid Initiatives 23%

6 Packaging Machinery Market 21%

7 Interfaces and I/O Devices Market 21%

Industrial Automation Markets: Identification of Hot Topics (Europe), 2012

11

7 Interfaces and I/O Devices Market 21%

8 Human Machine Interface Software Market 19%

9 Opportunity Analysis for Automation Vendors in Smart Grid Ma 19%

10 Facility Management Market in Building Automation 17%

11 Mining & Metal Processing Machines Market 15%

12 Substation Automation Market 13%

13 Analysis of the Safety Instrumented Systems Market 11%

14 Analysis of the PLM System Integrators Market 6%

15 The Fashion PLM Market 6%

16 Analysis of the Collaborative PLM Market 2%

17 ACS Market for the Nuclear Industry 2%

Source: Frost & Sullivan analysis

1. Industrial AutomationWhat Participants see as Hot Topics in 2012 (Contd ...)

• The factory of the future will require

paradigm shifts in product formulations,

process planning and manufacturing

methods. This will call for increased

competitiveness from vendors, contractors

and end-users alike.

• Oil & gas industry , a major end-user of

automation products, is a dynamic market

Market Themes for 2012

Industrial Automation Markets: Top 5 Market Topics (Europe), 2012

12

end-user community.

automation products, is a dynamic market

that adopts and deploys the latest

technological products from the IPC market.

• Cloud computing is a megatrend that offers

interesting prospects to the world of

industrial automation.

• The PC-based PLC market or the PAC market is

a major segment of the programmable logic

controller market. It provides an economic,

cost-efficient alternative to high-end PLCs and

has received an excellent response from the

end-user community.


1. Industrial AutomationPrimary Focus Regions

• Exciting and growing opportunities in developed

countries in Western Europe for automation

solutions is expected to boost the European

revenues.

• Emerging economies in the Asia Pacific region

especially China and India requires targeted

solutions on specific segments in these regions.

Geographic Focus for 2012

Industrial Automation Markets: Primary Regions of Focus for EU Players (World), 2012

13


• Middle East & Africa provide exciting and growing

opportunities in the automation field which are

expected to boost the global revenues.


2. Pumps, Valves and Compressor Technologies What Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents

Nominating as Hottest Topic

1 Pumps Market in HVAC Industry 47%

2Strategic Analysis of Pumps Market in Water and

Waste Water42%

3 Centrifugal Compressors Market 37%

4End-user Analysis of Pumps Market (Voice of the

Customer)32%

5 Industrial Valves and Actuators Market 26%

Pumps, Valves and Compressors Markets: Identification of Hot Topics (Europe), 2012

14

5 Industrial Valves and Actuators Market 26%

6Pumps Market in Commercial and Industrial

Buildings26%

7 Pumps Market in Power Generation Industry 26%

8 Process Mixing Equipment Market 21%

9 PD Pumps Market in Food & Beverage Market 21%

10 Artificial Lift Pumps Market 16%

11 Valves Market in Oil & Gas Industry 16%

12Pumps Market in Chemical and Petrochemical

Industry16%

13 Heat Exchangers Market 11%

14 Machine Tools & Cutting Tools Market 5%


2. Pumps, Valves and Compressor Technologies What Participants see as Hot Topics in 2012 (Contd ...)

• The trend of ‘Green Building’ affects

pumps market in HVAC industry to build

strategies that lead to lower energy

consumption and higher performance.

• Greater focus on water purification

techniques and wastewater treatment

generates greater demand for pumps used

in specialised applications.


Pumps, Valves and Compressors Market: Top 5 Market Topics (Europe), 2012

15

in specialised applications.

• Their inherent oil-free nature and high

energy efficiency puts Centrifugal

compressors in good stead for clean air

applications.

• End User perspective and insights on the

key success factors for higher market

penetration rates, and mindshare of the

customer.

• The introduction of digital and wireless

technology have opened new possibilities

for valve manufacturers and end users.


2. Pumps, Valves and Compressor Technologies

Primary Focus Regions

• Eurozone sovereign debt crisis and a mature

market in Western Europe necessitates the

emergence of a robust growth strategy for Central

and Eastern Europe.

• Growing economies in Latin America providing

skilled manpower, lower cost raw materials and

manufacturing are attracting manufacturers to set

up base.


Pumps, Valves and Compressors Market: Primary Regions of Focus for EU Players (World), 2012

16

potential.

up base.

• Strategies to help improve penetration levels in

western Europe as well as new revenue generation

by demonstrating service capability and new

services such as condition monitoring, advanced

diagnostics, and smart pumping.

• Focus on providing pumps for core industries such

as oil and gas in Middle East and mining in Africa.

• Supernormal growth expected from the two fastest

growing economies of China and India augurs well

for Pump manufacturers looking to tap market

potential.Source: Frost & Sullivan analysis

3. Welding , Cutting and Joining Technologies What Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents

Nominating as Hottest Topic

1 Cutting Equipment Market 60%

2 Automation Solutions in the Welding Market 60%

3 Analysis of Safety and Hazardous Procedures 40%

4 World Laser Market 40%

5 Welding Opportunities 40%

Welding, Cutting and Joining Markets: Identification of Hot Topics (Europe), 2012

17

Welding Opportunities 40%

6 Analysis of Welding Market for Automotive and

Transportation40%

7 Welding Consumables Market 20%

8 Emerging Technologies in the Metal Joining

Market20%

9 End-user Analysis of Welding Equipment and

Consumables Market10%


3. Welding , Cutting and Joining Technologies What Participants see as Hot Topics in 2012 (Contd ...)

• End users increasingly being involved in

decision making on effective way to join

materials for structural integrity and

reducing costs.

• Increasing safety measures and need for

standard platform is currently one of the

key reasons for automating manufacturing

process including welding activities.


Welding , Cutting and Joining Technologies Markets: Top 5 Market Topics (Europe), 2012

18

process including welding activities.

• Automation also helps welders focus less

on repetitive tasks, more on quality.

• Fibre laser cutting and plasma cutting

forging ahead with increased demand

from the structural fabrication industry.

• Lasers - New applications expected to

ensure a diversification of customer base

and fibre lasers slowly replacing traditional

lasers anticipated to reinforce growth

trends.


3. Welding , Cutting and Joining Technologies Primary Focus Regions

• Advancing market maturity and a weak economy in

North America and Western Europe – necessity to

observe historical trends ,embrace the future with

aggressive growth plans.

• Need to have targeted strategies for emerging

regions like the BRIC’s and the Middle East. These

economies are pumping high investments into the


: Welding , Cutting and Joining Technologies Markets:

Primary Regions of Focus for EU Players (World), 2012

19

revenues.

economies are pumping high investments into the

construction , automotive and the energy

industries.

• Newer market opportunities in the Asia Pacific

region especially China and India requires targeted


• Exciting and growing opportunities in the field of

welding equipment and consumables in Brazil ,

Turkey and Russia expected to boost the global

revenues.Source: Frost & Sullivan analysis

4. Drives & MotorsWhat Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Electric Drives & Motors Market In Wind & Solar Power

Industry71%

2 Motors Market in Pumps, Fans & Compressors Applications 48%

3 Electric Drives & Motors Market in Oil & Gas Industry 48%

4 Impact of Electric & Hybrid Automobiles on Motors Market 32%

5 End-user Analysis of Motors & Services Market (VoC) 32%

Drives & Motors: Identification of Hot Topics (Europe), 2012

20

6 Automotive Electric Motors Market 26%

7 Soft Starter Market 16%

8 Explosion Proof Motors Market 13%

9 Belt & Chain Drives Market 13%

10 Strategic Analysis of Bearings Market 13%

11 FHP & IHP Motors Market 6%


4. Drives & Motors What Participants see as Hot Topics in 2012 (Contd ...)

• Focus on renewable energy due to shortage in

fossil fuel and rising energy demand in

developing economies resulting from high

industrial growth necessitates research focus on

the drives market in the wind and solar

industries.

• Most of the motors applications in different

industries are in pumps , fans and compressors.


Drives & Motors Markets: Top 5 Market Topics (Europe), 2012

21

industries are in pumps , fans and compressors.

Analysis of the market will provide a new

dimension for the vendors.

• Oil & gas industries demand for drives and

motors is unique with significance on explosion

proof regulation conformance.

• Burgeoning growth of electric and hybrid

vehicles in the automotive market is expected to

augur well for the motors industry.

• Shift of focus to the service segment

necessitates analysis of motors service market.


4. Drives & MotorsPrimary Focus Regions

• Europe is heading into a difficult economic climate,

the research focus is expected to be on the

Western Europe region.

• Eastern Europe provides a higher scope for the

vendors in the drives and motors market as it has

pockets of emerging economies.

• North America is a mature market and the research

focus on this region is likely to provide a content for


Drives & Motors Markets: Primary Regions of Focus for EU Players (World), 2012

22

focus on this region is likely to provide a content for

the vendors to strategise their resources for

consolidation.

• Middle East and Africa are likely to spur demand in

this market owing to improved FDI in these

regions, but the political uncertainties in many

countries is likely to impact business in this region.

Source: Frost & Sullivan analysis.

Industrial Automation and Process Control Market Convergence with other Industries

Key Industries Tracked in Addition to Company’s Core Markets (Europe), 2012

Core Market Cross-interest 1 Cross-interest 2 Cross-interest 3 n

A&D Security 50% ICT 29% Electronics 24% 42

A&T Electronics 24% ICT 19% EPS 12% 86

CMF A&T 40% EBT 36% EPS 30% 53

Electronics M&I 53% EPS 47% IPC 47% 15

EPS EBT 32% IPC 21% A&T 15% 73

23


EBT EPS 58% ICT 15% M&I 15% 26

HC CMF 18% ICT 14% M&I 8% 90

IPC EPS 74% A&T 41% EBT 26% 27

ICT A&T 30% EPS 24% HC 21% 66

M&I EPS 25% EBT 25% IPC 25% 8

PPE A&D 17% CMF 17% EPS 17% 12

Security ICT 39% A&D 33% EBT 33% 18

A&D = Aerospace & Defence

A&T = Automotive & Transportation

CMF = Chemicals, Materials & Food

EPS = Energy & Power Supplies

EBT = Environment & Building Technologies

HC = Healthcare

IPC = Industry & Process Control

ICT = Information & Communication Technology

M&I = Measurement & Instrumentation

PPE = Personal Protective Equipment

Industrial Automation and Process Control MarketsConvergence with other Industries (Contd ...)

• Smart Grid Automation ensures implementation of sustainable environment in utility

industry.

• Expected explosive growth in demand for electric vehicles in the next few years provides

scope for growth in charging station automation.

• High potential to implement modern technologies, including low footprint construction

techniques, smart water solutions, energy-efficiency improvements and a broad range of

opportunities for niche markets of desalination and water reuse.

• The economic impacts on climate change are crucial for water and wastewater industry.

Key Areas of Technology Convergence

24

• The economic impacts on climate change are crucial for water and wastewater industry.

Drought conditions create good opportunities to develop storm water management and

water reuse and to implement progressive strategies for catchment and retention. All of these

techniques would require pumps and pumping systems.

• The growth of renewable energy is set to increase considerably in the next two decades on

account of the growing emphasis on sustainable business practices providing scope for

automation vendors in new power grid integration projects.

• Automotive industry is currently focusing on weight reduction methods and light weight

performance parts for cars, including carbon fibre and fibreglass bonnets, boots and wings-

this is driving new technologies like aluminum welding , plastic welding , laser welding and

other technologies that will create a lower deposit of metals thereby reducing weight.

Global Hot Spots in the Industrial Automation and Process Control Industry

Industrial Automation and Process Control Markets: Global Hot Spots (World), 2012

Industrial markets in Americas which were the

most impacted due to sharp reduction in

consumer spending. also witnessing

postponements of production activities and

shutting down of plants is expected to see

increased activities Russia

Europe

North America

China

The subsequent transition of the

manufacturing base to low-cost Eastern

European countries has opened new

prospects for market sustainability. Many

heavy and light industry plants exist, which,

once modernised, will constitute good bases

for various industrial developments thereby

indicating a huge market for industrial and

automated products

Manufacturing-led

recovery expected to

revive the industrial

automation market in

Russia

The automation industry saw its

strongest sustained growth in China

during the global recession. The

growth drivers for Chinese industrial

automation now include the energy

Ongoing economic

reform as well as

25

Source: Frost & Sullivan

The Middle East

Africa

Latin America

APACIndia

China

Rapid Urbanisation and

Governments’ Initiatives

towards Infrastructural

Development ensure

continued growth for

industrial automation and

process control products

and services

Several opportunities exist in countries

like Brazil which are providing

opportunities for growth post

recession. The industrial automation

industry in Latin America consist of

dynamic developing markets that are

expected to generate large revenues in

the future

Right mix of process

industry in India

provides excellent

growth opportunities

for the entire

spectrum of

industrial automation

and process control

products and systems

automation now include the energy

sector along with oil and gas.

Industrial Automation in

Asia is one such industry

that is poised for potential

development. In these

regions process

applications such as

welding are going to first

witness increasing

automation, then move

toward more sophisticated

applications

reform as well as

increased foreign

investment in Middle

East supports growth of

industrial markets

Three Big Predictions for 2012

Four major spheres of influence that determine business models in future

1BRIC and other emerging economies across the globe are likely to sustain high growth in industrial automation markets

26

2Four major spheres of influence that determine business models in future factories are Integrated Enterprise Ecosystem, Sustainability , Life Cycle Assessment and Eco-efficiency Analysis

3Megatrends such as cloud computing, wireless communication, cyber security are the next growth drivers for industrial markets


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