Industrial automation refers to the utilization of control systems, computers, IT technologies and robots for handling distinct industry processes and machinery as a replacement for human workforce. Such automation finds wide application across various industries such as oil & gas, chemicals, paper & pulp, pharmaceuticals, metals & mining, food & beverages, electricity generation, fertilizers & petrochemicals and water & sewage management; and discrete industries such as automotive & transportation, machinery manufacturing, electronics, electrical and aerospace & defense. Increasing competition in the market and growing focus of players on enhancing profitability are the chief factors positively influencing the global industrial automation market growth.
IoT Technology to cut automation costs
Ongoing technological advancements through incorporation of high performance processors, vision systems, sensors, advanced communication protocols, analytic software and distributed system architectures among others will help the consumers harness the full potential of industrial automation. High performance accompanied with low operational & maintenance costs is expected to drive the adoption of industrial automation across various industries. Utilization of IoT technologies will help the businesses achieve lean automated infrastructure which would help to increase output. Growing usage of automation and software solutions in manufacturing facilities is expected to decrease the cost of goods and services (COGS) and would in turn help increase profitability.
Industry 4.0 revolves around the current factory data exchange and automation trends such as IoT, cloud computing and cyber-physical systems. The basic principle here is utilizing machine learning algorithms that require minimal or no human interference, in which cyber physical systems monitor the processes and communicate with each other and human interfaces in real time through wireless communication technologies.
Industry 4.0 system considerations include interoperability, information transparency, technical assistance, and decentralized decision-making. Along with these factors, the model also ensures human safety by providing assistance in tasks that are difficult or dangerous. Decision making is also simplified, as these systems can help in contextualizing the information available at levels of the industry processes.
Protection of proprietary information such as production details and statistics becomes increasingly difficult as these systems require integration of added systems with provision of easy access. Moreover, designing and total cost ownership of reliable and robust cyber physical systems present a considerable challenge. In case of system failure or lack of required skills to operate these systems may prove to be a significant barrier to the industrial automation market growth.
Other technologies such as automated/ automatic guided vehicles (AGVs) and mobile robots are expected to gain major traction through 2024. Utilization of these technologies is projected to help companies achieve lean automation, and minimal errors in manufacturing and material handling processes.
Key growth challenges
Industrial automation may present a considerable threat to the global employment landscape as utilization of these technologies may lead to a large number of job cuts, specifically unskilled workforce. World Economic Forum has projected that utilization of automation and robotics can affect five million jobs across 15 advanced economies by 2020. The International Labor Organization study estimates that around 56% of the jobs in the Philippines, Cambodia, Thailand, Indonesia, and Vietnam will be hampered. Moreover, limited availability of skilled workforce to harness the automation benefits at its potential will continue to hinder the industry growth. Deployment of industrial automation will lead to two sided results, wherein industry participants will be largely inclined towards the adoption of automated technologies. However, concerns regarding human safety, as well as automation of infrastructure has necessitated the development of safety standards. Some countries have regulated or are in the process of crafting regulations to protect employment and human safety alongside industrial bots. For instance, Robot Ethics Charter in South Korea, RoboLaw project by the European Union, and ANS/RIA R15.06 Industrial Robot Safety Standard in U.S. and Canada lays out guidelines for 'collaborative operation of robots'.
Industrial automation currently relies on utilization of open source and cloud technologies which are susceptible to cyber-attacks. Providing efficient security from security breach and malpractices will prove to be a considerable challenge to the industry players. Requirement of a high initial capital to establish lean automation model for the industry processes is likely to restrict entry of new market players. However, significant efforts to reduce the automation costs, and the outweighing benefits offered will provide the required boost to the global industrial automation market.
Advanced economies have witnessed increased inclination towards an automated work environment. Growing average labor costs, increasing land accommodation costs, and requirement to lower capital and generating marginal profits are among the major factors that are facilitating consumer demand for industrial automation. U.S and major Europe economies are the leading markets for automated processes and control technologies.
Europe accounted for the largest industrial automation market share in 2016, and is expected to continue its dominance throughout the forecast period (2017-2024). Manufacturing industries account for 15% GDP of Europe. The region has the presence of some of the largest market players. Poland, Slovakia, The Czech Republic, Romania Bulgaria and Hungary are major centers for manufacturing and process innovation activities, and thus, the region is expected to be the main growth engine for the industry. Some of the EU regulations include Transportable pressure equipment (Directive 2010/35/EU), Restriction of Hazardous Substances in Electrical and Electronic Equipment (Directive 2011/65/EU), Construction products (Regulation (EU) No 305/2011), Pyrotechnic Articles (Directive 2013/29/EU), REACH, Good manufacturing practice (GMP0 and Radio equipment (Directive 2014/53/EU) that standardize the quality of products.
Presence of several emerging economies in Asia Pacific is projected to present a substantial growth landscape. Major economies in the region include China, Japan, India, South Korea, Indonesia, Thailand, Taiwan, Singapore, and Hong Kong. Supportive government regulations such as ‘Make in India’ program and supportive FDI reforms in India, ‘Made In China 2025’ program and ‘One belt one road’ in China are expected to facilitate the market growth in this region.
Chief industry participants in industrial automation market include Emerson Electric Company, General Electric Company, Siemens AG, ABB Ltd., Schneider Electric, Honeywell International, Mitsubishi Electric Corporation, Yokogawa Electric, and Rockwell Automation. Key players are adopting promotional strategies such as marketing and showcasing products in exhibitions to expand their market presence. Product development and launches are also impacting the market positively. For instance, in May 2017, Schneider Electric introduced the Easy Line of industrial products in the Philippines in order to provide innovation and automation in emerging markets.