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 many others will help the consumers harness full potential of industrial automation. High performance accompanied with low operational & maintenance costs is expected to a key aspect increasing adoption of industrial automation across various industries. Utilization of IoT technologies will help the businesses achieve lean automated infrastructure which in turn would help to increase output throughput. Growing usage of automation and software solutions in the manufacturing facilities would decrease their 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 comprising IoT, cloud computing and cyber-physical systems. The basic principle here is utilizing machine learning algorithms that requires 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 through 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 become 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 help in achieving lean automation and achieve minimal errors in manufacturing and material handling processes are expected to be the prominent factors that will drive the growth of the segment.
Key growth challenges
Industrial automation may present considerable threat to the global employment landscape as utilization of these technologies may lead to large number of job cuts, specifically unskilled workforce. World Economic Forum has projected that utilization of automation and robotics will lead to a loss of five million jobs across 15 advanced economies by 2020. International Labor Organization study estimates approximately 56% of the jobs at risk in the Philippines, Cambodia, Thailand, Indonesia, and Vietnam. Moreover, limited availability of skilled workforce to harness the automation benefits at its potential will continue to hamper the overall industry. Deployment of industrial automation will lead to two sided results, wherein industry participants will be largely inclined towards the adoption of automated technologies. However, labor associations and employee unions will criticize the adoption of these technologies owing to risk of losing their jobs. On the other hand, concerns regarding human safety alongside automated infrastructure and bots have necessitated the development of safety standards. Some countries have regulated or 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.
Industrial automation currently relies on utilization of open source and cloud technologies, which is susceptible to cyber-attacks. Providing efficient security from proliferating threats from hackers and malpractices will prove to be a considerable challenge to the industry players. High initial capital requirement to establish lean automation model for the industry processes will hinder the venturing investment in the segment. 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 the automated work environment. Growing average labor costs, increasing land accommodation costs, and requirement to lower capital and reap marginal profits are among the major reasons increasing consumer inclination towards industrial automation. U.S and major Europe economies are the prime adopters of the automated processes and control technologies.
Europe accounted for the largest industrial automation market share in 2016, and is expected to continue its dominance through the forecast period (2017-2024). Manufacturing industries account for 15% GDP of Europe. The region is home to some of the largest players across these industries. 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. Moreover, stringent EU regulations that help in maintaining the quality and expertise will provide consistent production demands through the coming years. Some of these directives 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 products quality. Compliance requirement with these directives will eventually drive the overall industrial automation market.
Asia Pacific is comprised of several emerging economies that are projected to present 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 among the major factors influencing growth of the regional segment.
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. Spreading awareness through various exhibitions and presentation and expanding regional presence is expected to be the major focus of the industry participants to acquire strong foothold in the industry. Introduction of advanced portfolio exhibiting increased reliability and performance will remain a part of their key strategies. For instance, in May 2017, Schneider Electric introduced Easy Line of industrial products in the Philippines. The focus of the company through this initiative was to provide innovation ad automation for consumers in the emerging regional segments for better future growth prospects.