Demand for valves to soar as political and economic conditions stabilise in emerging economies!

Emerging Regions Prove Increasingly Profitable for the Industrial Valves and Actuators Market

The increase in oil exploration activities, investments in new refineries, and modernisation of existing facilities will spur the uptake of valves and actuators, particularly in emerging markets such as Africa and Latin America. Demand from the offshore oil and gas industry in Latin America, in particular, is expected to fuel the valves and actuators market. In addition to the demand from the emerging economies, control valve manufacturers will find growth opportunities in North America and Europe due to end-user preference for greater process automation.

New analysis from Frost & Sullivan, Strategic Analysis of the Global Industrial Valves and Actuators Market, finds that the market earned revenues of €14.86 billion (US$19.51 billion) in 2013 and estimates this to reach €19.76 billion (US$25.95 billion) in 2018. The study covers the oil and gas, power generation, chemical processing, mining and metallurgy, and water and wastewater end-user industries.

“The water and wastewater industry will offer significant growth potential for valve and actuator manufacturers in Asia-Pacific, Africa and Latin America,” said Frost & Sullivan Industrial Automation and Process Control Research Analyst Niranjan Paul. “Due to the burgeoning population and rapid urbanisation in these regions, water scarcity and the need to provide purified and portable water for human consumption have led to the setting up of desalination plants, boosting the use of valves and actuators.”

Despite this demand, valve and actuator manufacturers are likely to witness a loss of potential revenues due to the political situation in countries such as Iran, Sudan and Syria. In addition, the global financial downturn has compelled end users to defer projects and focus on the maintenance of existing equipment rather than the purchase of new valves and actuators.

The adoption of aggressive pricing strategies in Asia-Pacific too will reduce the sale of new valves. Vendors must enhance their aftermarket capability to sustain profits as well as meet wide-ranging consumer requirements.

“Valve and actuator manufacturers need to invest in R&D to deliver a comprehensive solution complete with wireless monitoring and advanced valve-condition monitoring capabilities,” recommended Paul. “With subsea exploration in Europe and Latin America projected to rise, widening product portfolios to include double-expanding gate valves will help vendors appeal to a larger consumer base in this high-potential market.”

Developing economies’ growth fuels DCS market in Asia.

The major growth in Distributed Control Systems (DCS) revenues continues to come from developing nations. Growth in countries such as India and China is conspicuous because of sluggish growth rates in other regions of the world. While developed nations are just holding their own (at best) in DCS investments, in developing countries, several recent trends are becoming increasingly important for success in the DCS business. These two countries are undergoing rapid growth and industrialization in Asia. At the time of this report, however, China’s growth is slowing. Even with a slowdown in China, Asia remains a leading growth engine for the global DCS marketplace, representing almost 35 percent of the world market.

ARC expects the top five growth industries in Asia to be oil & gas, mining & metals, cement & glass, water & wastewater, and electric power, in that order, with associated increases in DCS revenues. The growth of these industries is expected to be above average. Demand for oil will continue to increase in the long term despite short-term demand shortfalls. Oil exploration and production is taking the industry into increasingly remote and hostile regions, increasing demand for remote operations and subsea production. The power industry is also growing at a healthy rate over the forecast period. Developing economies, such as India and China, continue to invest in new power capacities and world-class power generation facilities. While pent up demand for mining & metals and cement & glass investments caused sizeable increases from 2010 to 2011, the growth is expected to return to a more moderate level over the forecast period.

ARC Foresees the Robust Growth of DCS in Asia
According to ARC Advisory Group’s research, the total distributed control systems market in Asia will exceed $6,300 million in 2016. ARC’s latest study, “Distributed Control Systems for Asia Market Research Study” provides an in-depth analysis of the DCS business in Asia. In addition to market analysis and forecasts, the study also covers the current market nuances, strategic issues, and the future outlook. The report also highlights the factors that influence the DCS market in Asia and its dynamics.

G. Ganapathiraman, Country Manager, ARC Advisory Group, India and co-author of this study says, “The trends that drive the DCS business in Asia vastly differ from those in developed nations. Due to the economic growth in China and India along with the other BRIC countries, investments in infrastructure, oil and gas production, and in refining are rising, leading to increased demand for DCS.”

In 2011, ARC saw a much larger increase in revenue over 2010 than previously anticipated. The order book started improving at the end of 2009 and was quite strong throughout 2010 and the first half of 2011. Because the DCS business is primarily project based with an average nine month lag time from order book to recognized revenue, this strong order book translated into an excellent revenue year for 2011 with Asia’s revenue up over 4.5 percent from 2010.

Automation in Turkey!

The Gateway to the East Is on the Move

The success story of modern Turkey began in the 1980s with a government-driven economic stabilization program.  This was the beginning of a success story that continues today.  After years of continuous growth, Turkey suffered heavily from the crisis in 2009.  The automotive industry around Bursa and Istanbul was hit hard and the constant stream of foreign direct investment went suddenly dry.  As hard as the crisis hit the country, the faster it went out again, experiencing strong growth through all verticals.

Bridge over the Bosphorus
Connecting Europe with Aisia

Many automotive manufacturers now produce in Turkey not just to service European markets, but also to access nearby Middle East markets. Turkey is increasingly becoming a link between Europe and the Arabic world, since it is part of both cultures.

“Doing business in turkey is challenging. It is a market that has everything: simple machines with only basic control demand as well as high end solutions for industries and line optimization. This creates a ‘hybrid’ market, which is based on solutions from suppliers as well as on products from catalogue distributors,” according to Analyst Florian Güldner, the principal author of ARC’s “Automation Systems Market Outlook for Turkey”. He continues, “But, of course, not only the technology make this country fascinating, business culture is everything from western to eastern and just when you think you know everything, along comes the next surprise.”

The Turkish Market and Doing Business
Turkey’s economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 30 percent of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs adds dynamics.

Business culture is different from the western world. When ARC performed this research, corruption and bribery were not mentioned but the problem exists. Perceptions of the pervasiveness of corruption in Turkey are mixed. ARC is convinced that companies can deal with this problem on a one-to-one basis.

Automation Markets
The Turkish automation markets are in the midst of a structural change. In the 1960s to 1980s, barely any automation equipment was produced or sold in Turkey. Most capital goods and machines were imported from Western Europe and the overall level of automation in manufacturing was comparably low.

The discrete industries in Turkey represent a larger share of the total market than in most other economies. However, we see opportunities coming up in infrastructure markets such as water & wastewater or electric power. The most interesting automation markets are in textiles, electronics & electrical, and automotive.

Turkey’s famous carpet industry evolved to become a flourishing textile industry. Today, Turkey is a world leader in textiles and apparel, which together account for about one fourth of the country’s exports. The Turkish market for textile machinery is already exporting globally – its largest target market is Germany.

Looking at hybrid industries, the pharmaceutical industry has barely any presence in Turkey, but there is a thriving food & beverage industry. The Turkish food & beverage industry offers some interesting opportunities and has unique characteristics. The industry in general benefits from a favorable temperate climate. ARC expects the market for processed food to increase faster than overall food production.

Looking at the process industries, the electric power and oil & gas industry are certainly among the most interesting as they provide large volume in combination with good growth potential. Turkey is a huge market for electric power and is already the sixth largest market in Europe and the fastest growing power market in Europe. The oil & gas industry stands on two pillars in Turkey: local production, and Turkey as a transit country connecting the second largest consumer market (Europe), with the largest producer market (Middle East).

Growth in World SCADA market

The Supervisory Control and Data Acquisition (SCADA) market is among the most rapidly growing control systems markets in the world. Markets in Western Europe and North America will continue expanding over the next few years due to the increasing demand to modernise power and water and wastewater infrastructure. New infrastructure investments in the Middle East, Africa, Asia Pacific, Latin America and Russia in sectors like oil and gas, power, water and wastewater, will also spur SCADA markets to grow rapidly in these regions. The key market challenge manufacturers have to face is ensuring enhanced cyber security.

New analysis from Frost & Sullivan, Strategic Analysis of the World SCADA Market, finds that the market earned revenues of $4,584.5 million in 2009 and estimates this to reach $6,902.4 million in 2016. The following end user sectors are covered in this research: oil and gas, power, water and wastewater and others covering plant level SCADA (food and beverage, pharmaceuticals, chemicals, pulp and paper) and automotive and transportation. Software, hardware and services are some of the product categories covered in this research.

“Oil exploration in Siberia, the North Sea, the Gulf of Mexico and North Western Africa has gained renewed interest,” notes Frost & Sullivan Research Analyst Katarzyna Owczarczyk. “The need to control geographically dispersed assets drives cash rich oil majors to invest in SCADA systems, thereby supporting market expansion.”

Moreover, natural gas is becoming increasingly important in the energy market globally due to its comparatively clean emissions, relatively low price, and abundant availability, therefore being an alternative to oil and coal for electricity generation. The gas pipelines needed to reach end users require SCADA monitoring for leaks, flow, and routing, further promoting market expansion.

“The concept of piped distribution, when implemented, will create numerous opportunities for automation companies in terms of supplying SCADA systems,” remarks Owczarczyk. “Demand for SCADA solutions will surge since distribution will involve the transportation of gas for long distances.”

One of the key challenges that manufacturers face in the world SCADA market is ensuring enhanced cyber security. “A great majority of SCADA vendors have started to address the risks of cyber threats by developing lines of specialised industrial firewall and VPN solutions for TCP/IP-based SCADA networks,” states Owczarczyk. “Additionally, more and more applications are being implemented to the control systems in order to prevent unauthorized application changes without impacting the performances of common antivirus scans.”

Furthermore, the ISA Security Compliance Institute (ISCI) is emerging to formalise SCADA security testing. Standards defined by ISA99 WG4 will supersede the previous industry testing and certification efforts, but probably not before 2011.

“Manufacturers that recognise challenges such as the need for cyber security, flexible and open systems while meeting rising customer expectations for advanced software at competitive prices will survive over the next decade” – concludes Owczarczyk. “Vendors should also educate plant engineers and operators, as well as system integrators and other SCADA developers about the importance of security.”

Revival of market growth for the European positive displacement pumps market

The demand for various types of positive displacement pumps in Europe is expected to witness an apparent increase due to re-initiated many industry projects in the regions recovering from the economic slump. Although, the financial crisis affected most of the end-user sectors across Europe, the demand from them has been sustained through government-aided stimulus packages.

New analysis from Frost & Sullivan, Strategic Analysis of the European Positive Displacement Pumps Market, finds that the market earned revenues of $1,731.6 million (€1,219.72m) in 2009 and estimates this to reach $2,050.3 million (€1,443.68m) in 2016. The products covered in this research service are rotary pumps, reciprocating pumps and peristaltic pumps.

“The maintenance, operating and energy costs of pumps contribute towards a major share of the total life cycle costs, impelling customers to shift their focus on products that offer better energy savings and longer a life cycle advantage,” says their Research Analyst Ram Ravi. “Furthermore, the increased demand from the Eastern European EU countries is expected to attract investments across end-user sectors.”

The prevailing scepticism on customer spending due to the economic recession is expected to increase the emphasis on life cycle and energy costs. Key issues to be addressed in these regions include enhancing waste management, water quality and hygiene standard.

However, competition in this market is likely to be fierce. Traditionally, European pump manufacturers have faced stiff competition from their Asian counterparts. The imposition of stringent regulations also ensures high product quality in Asia. However, there are more growth opportunities in the price-sensitive Eastern European markets.

“The recent economic slowdown has resulted in a shortage of investments across end users,” explains Ravi. “With existing projects being delayed or cancelled due to decline in capital expenditure, equipment suppliers have been facing a decline in demand and the end users are shifting their manufacturing base to low-cost nations.”

Pump suppliers should augment their market penetration in the regional markets with strategic partnerships and acquisitions. Additionally, suppliers should focus on expanding their product and service offerings to cater as a one-stop shop to their customers.

“Intelligent pumps and services offer long-term potential,” concludes Ravi. “Greater awareness results in enhanced adoption among end-users.”

Strategic Analysis of the European Positive Displacement Pumps Market is part of the Industrial Automation & Process Control Growth Partnership Services programme, which also includes research in the following markets: Strategic Analysis of Pumps Market in European Oil and Gas Industry, European Metering Pumps Market, North American Metering Pumps Market, and Strategic Analysis of World Centrifugal Pumps. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

Technical possibilities of PC fuel market

The market for Industrial PCs is driven by an increasing rate of technological advancements in hardware and software according to a study released recently by ARC.  This includes the Atom processor, increased computing power, increased ruggedness, and also failsafe industrial PCs.

Report author Automation Analyst Florian Güldner

The market had enjoyed high growth rates until the economic crisis. The industrial PC market structure is fragmented, with no dominant player on a regional or global level.  While industrial PC technology itself has matured, new applications and requirements will enable differentiation through hardware and software.

“In 2009, the market dropped by 19 percent.  Even though the recovery will start quickly, the level of the boom year 2008 will not be reached again until 2012.  A major factor dampening the recovery is the constant drop in prices that is driven by user demand and a drop in intermediate good prices,” according to Analyst Florian Güldner, the principal author of ARC’s “Industrial PCs Worldwide Outlook”

Industrial PC Market Will Remain Competitive and Fragmented
The market for industrial PCs remains fragmented, the companies above 2% market share represent only 62% of the market.  In addition to industrial PC product specialists such as Stahl HMI, the market includes focused automation suppliers like Phoenix Contact, full line automation suppliers like Siemens and Rockwell Automation, and PC-based automation suppliers like Beckhoff and B&R.  Furthermore, PC specialists like Advantech and Kontron plus hundreds of Taiwanese companies supply industrial PC products either directly to the market or to other industrial PC suppliers.
One of the most important topics discussed in the market is the build vs. buy decision.  Depth of production varies greatly between suppliers.  Many companies use boards from Taiwan in their industrial PCs or brand label industrial PCs.

The Atom Processer Will Boost Industrial PC Business
Various trends within the industrial PC market will affect future growth but Intel’s Atom processor will have the most influence.  The Atom processor provides up to 2 GHz with low thermal design power.  This offers various possibilities to end users and machine builders.  First, the low-cost, low-power Atom enables low-CPU power industrial PCs at a low price and with low energy consumption and low heat.  Size-independent computing power also makes new form factors possible such as flatter panel PCs that are more easily integrated into machines and small wide screen panel PCs.

Asian Markets Are the Most Vibrant Suppliers and Users
Asia has its own dynamics in investment climate and in industrial PC sup-ply and demand.  In Asia’s emerging markets, Taiwanese industrial PC suppliers dominate this price-driven market, which is slowing sharply along with the global economy.  Taiwan hosts a number of different com-panies, which range from component-driven companies that are moving up the supply chain, to established automation suppliers.  ARC believes that China and India will not only demand more automation equipment as wages rise, but will also shift towards more sophisticated systems with greater capabilities for achieving international quality standards.