Process automation refers to measurement, control, electrification and other application used in processes where the main objective is continuous production.
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Process Automation market frequently asked questions
As per Beroe's market reports, Europe will continue to dominate the process automation market in 2020 in terms of growth prospects. Besides, the MEA region has been growing at the fastest CAGR of 9.5 percent since 2017 and is expected to continue that until 2020.
The major factors that will be driving the growth for the global process automation industry are the need for operational efficiency, fast-growing SMEs, shift towards IoT and cloud-based automation, rising demand for smart factories, mass and supply chain customization, integration of systems, innovation in AI, and advancement in M2M communication technology.
Oil and gas, metals and mining, pharma, paper and pulp, automotive, chemicals are the major end-use industries of the process automation market.
North America and Europe have high market maturity, while the Asia-Pacific region has medium market maturity in the industrial automation market.
According to market analysis and research from Beroe, the global industrial automation market size is expected to reach $178 billion by 2020 from its earlier market value of $138 billion in 2016, growing at a CAGR of 6.6 percent.
The impactful cost components are the raw material prices that constitute about 55 percent of the total cost of manufacturing process automation equipment.
Integrator fees, contract and volume negotiation, and discounts are the key negotiation factors in the global process automation market.
From 2016 Beroe's reports, the global industrial automation industry was estimated to be worth $258 billion with $116 billion in discrete and $138 billion in process industries.
The key players in the process automation industry include Honeywell International Inc., General Electric Company, Mitsubishi Electric, Rockwell Automation, Johnson Controls Inc., ABB Ltd., Samsung Electronics Co. Ltd., Siemens AG, and Schneider Electric.
In the process automation market, OEMs prefer lump-sum pricing, distributors prefer cost-plus pricing, while the integrators prefer market-priced/ milestone based/ time and material-based pricing.
Sourcing from OEMs, integrators, and distributors are the most adopted models globally to attain cost savings by eliminating manpower across tasks and maximizing process efficiency.
Process Automation market report transcript
Process Automation Global Market Outlook
Global Market Size: $130.5 billion (2023 E)
Global Demand CAGR: Approx. 6.12 percent (2023–2025)
Major Market Drivers
Rapid technological change
Emphasis on increasing
Increasing labor rates
Need for safety
Process Automation Regional Market Outlook
Europe is expected to continue to dominate the market, in terms of growth prospects in adopting automation; however, the APAC is expected to witness the highest growth rate during 2022–2025
Increasing focus on adopting automation across all industry verticals and spending more on new technologies are expected to be major drivers in the coming years
Process Automation Demand Market Outlook
The automation industry has been revolutionized by the combination of the digital and physical aspects of manufacturing, aimed at delivering optimum performance. Further, the focus on achieving zero waste production and shorter time to market has augmented the growth of the market.
Automation of manufacturing processes has offered various benefits, such as effortless monitoring, reduction of waste, and speed of production. This technology offers customers an improved quality with standardization and dependable products within time and reduced labor costs.
This is further supported by development of integrated multi-functional control systems that are modular and scalable. All these factors together are estimated to drive the automation systems market globally during the forecast period.
Global Process Automation Market Maturity
The global process automation market is expected to be at $130.5 billion in 2023 and is expected to grow at the CAGR of 6.12 percent until 2025
Europe is accounted for the largest market share, followed by Asia-pacific and North America, respectively. The Asia-Pacific region is expected to witness the highest growth rate of 7.54 percent during the forecast period
Global Process Automation Industry Trends
The market is dominated by established players who have a strong foothold in terms of geography as well as customer base. The growing demand for process automation is augmenting the competitiveness among vendors. Major strategy among the big vendors include new product launches, mergers and acquisitions, partnership and collaboration thus offering end to end multi-location solutions to global buyers
The Industrial Internet of Things (IIoT) and the Industrial 4.0 are at the center of new technological approaches for development, production, and management of the entire logistics chain, otherwise known as smart factory automation and are dominating trends in the industrial sector, with machinery and devices being connected via the internet
Global Process Automation Market
SCADA system plays a crucial role in process automation, since these systems form information modeling engines that can be prototyped into a logical model. These information modeling engines are essential to control and monitor single and multi-plant workflows, and offer greater visibility into various automation processes, workforce, equipment, and documents
Currently, the industries are challenged by an absence of the skills required to efficiently collect and consolidate disparate data from various devices and systems. This reduces the visibility and efficiency across multiple operations
Despite the challenge, companies are integrating the SCADA system to handle most of their operations. For instance, recently, California Family Foods (CFF) upgraded its rice mill operations with modern SCADA, which is expected to compel other similar organizations to adopt to this technology
The advancements in wireless networking technology provides an enormous opportunity for wireless connectivity of field devices, both, in the oil and gas and other chemical processing plants
Supply Market Outlook : Process Automation
Increase in innovation: Global vendors in the automation industry have been continuously striving in a highly competitive environment by bringing in more innovative products as well as enhancing their existing product capabilities
Increase in M&A activities: The automation industry players are focused on mergers and acquisitions to expand their reach to untapped global markets and increase their product and service portfolio
Ensures OEE: An integrator ensures OEE to an end-user when they come in mainly for software integration of all the equipment already procured by the client
Innovation in automation: Some of the integrators also take up the responsibility of innovating in areas wherever possible in order to stay competitive. For instance, recently, B&R automation upgraded the highly advanced and flexible APROL automation platform by adding a powerful system component for Business Intelligence (BI). APROL includes a PAL library of standardized modular software functions for process engineering tasks
Most adopted model globally: Sourcing from OEMs, integrators, and distributors
Why: To attain cost savings by eliminating manpower across different tasks and maximizing process efficiency
Contract length: 2–3 years, with an option of maintenance and spare parts services
Pricing strategy: OEMs prefer lump-sum pricing, distributors prefer cost-plus pricing, while the integrators prefer market priced/milestone based/time and material based pricing
Process Automation Cost Drivers
The cost of automation products and solutions is primarily driven by fluctuations in raw materials and oil prices.
Product Customization & Design
Process automation requirements differ across industries, processes, and client sites
Variation and increased complexity of design in customization increases the cost of a product
Costs involved in designing and testing would also add to the final cost of the product
Labour cost varies from region to region. In order to keep the cost of the product low, global suppliers try to get the products manufactured in low-cost regions like China, India etc.
China is already the largest exporter of process automation equipment in the world
Steel, iron, copper, rubber etc. form the majority of the raw material prices used in manufacturing automation equipment
Fluctuations in these raw material prices have a direct impact on the final cost of the products
Oil Price Fluctuation
It is directly linked to the raw material price hikes. It highly affects indirect transportation cost, as well as ocean freight
Energy contributes almost 20 percent of the production costs of the parts
Proprietary versus Non-proprietary
If the product is proprietary (exclusively manufactured by the OEM), its costs are very high and, generally, manufacturers start producing the spare part after receipt of the order.
Non-proprietary carry less cost, due to availability of multiple sources of supplies
Technology Trend in Process Automation
While a global pandemic that prevents humans from working in a factory, robots and self-directed equipment will be more sought-after than ever in coming years
Process automation companies are investing high into technologies such as artificial intelligence (AI), robotic process automation, industrial internet of things (IIoT), industry 4.0 as they foresee high demand of these technologies across all their end-user industries
In the past, the end-user industries such as oil and gas, chemicals etc., have been resistant to innovation or early adoption of high-end technologies as they preferred to leverage proven technologies and standards to ensure safe, secure and consistent operations over time
However, things have started to change radically with the advent of industry 4.0. The industrial space has been impacted with incremental technology changes, rapid adoption of new systems and augmented networking architectures over the last decade
Why You Should Buy This Report
- It provides information on the global market size, regional outlook, industry drivers, and constraints, and does Porter’s five forces analysis of the process automation market.
- It provides you supply trends and insights, industrial automation hierarchy, supplier profiles, and SWOT analysis of major players like Siemens, ABB Ltd., Emerson Electric Co., etc.
- It provides an insight into the cost structure breakdown and pricing analysis of the industrial and intelligent process automation market.
- The report details the best sourcing, contract, and engagement models of the industrial automation market.
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