Home > Industrial Automation Equipment (IAE) market growth in 2015 despite headwinds

Industrial Automation Equipment (IAE) market growth in 2015 despite headwinds

Editorial

A research note by Alex Chausovsky, senior principal analyst for industrial automation at IHS Technology, indicates market growth for industrial automation equipment in 2015 despite setbacks in the economy.

The global oil and gas industry has been going through some difficult times with oil prices having fallen by approximately 50% since the summer of 2014, and affecting everything from investment and jobs to gasoline prices and consumer consumption.

Significant reductions in capital expenditure ranging from 10% to 40%, announced by the world’s largest oil and gas companies for 2015 are a matter of concern for companies in the industrial automation space. Though these cutbacks are expected to impact growth this year, Alex Chausovsky believes the situation is not so bad.

The Industrial Automation Equipment (IAE) market will continue to grow in 2015 despite facing some resistance in the form of low oil and commodity prices and weakened demand from some developing economies. Overall market revenue growth will be dampened by approximately 1%-2% this year.

Improving global economic growth, particularly in the United States, European Union (EU), Japan and India, will continue to support growing sales of IAE products in 2015. Although slowing growth in China and recessions in Brazil and Russia will limit this expansion, it won’t be enough to counterweigh the improving conditions in the other regions.

Sales growth in the IAE segment will be impacted by the significantly decreased capital investment in the oil and gas and other commodity-related sectors in 2015 and 2016; however, this decline will be offset by growth in other industries such as automotive, food and beverage, packaging, materials handling and robotics.

Of the three major IAE product groups, motors and motor controls will be most hurt by low oil prices as sales into the oil and gas sector comprised nearly 8% of the total revenues for these product categories in 2014. Automation equipment will not be affected as much, with the exception of process controllers, which derived nearly 25% of their 2014 revenues from oil and gas. Power transmission products will be the least disturbed of the lot while hydraulic systems, which is quite reliant on oil & gas industry sales, faces significant declines in 2015.

Overall, the IAE market will continue growing in 2015, with revenue expansion expected to come in at 4.5% over 2014 levels. Oil price recovery, which is widely expected to occur by late 2015, will brighten the outlook for industrial automation suppliers.

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