7 manufacturing technology predictions in 2017

Transcription

1 TECHNOLOGY 7 manufacturing technology predictions in 2017 What the industrial automation market can expect this year

2 By IHS Markit Technology After a disappointing 2016 in automation sales, declining revenues for many equipment suppliers and investment uncertainties in numerous end markets, vendors in industrial automation are hoping for a brighter With changing market conditions filtering down from the macro level to technology adoption, what can the industry expect this year? In this paper, IHS Markit manufacturing technology experts representing a variety of industrial segments provide their predictions on what the 7 biggest trends and developments will be for the market in Global market to grow, despite headwinds The industrial automation equipment (IAE) market is expected to grow in 2017, reversing two consecutive years of contraction. Last year, global industry revenue shrank 1.8% after also falling in The successive annual contractions were unprecedented, and they mirrored a similar decline in global revenue for machinery production and industrial automation capital expenditures during the last two years. This year s growth, projected at 1.5%, will take place despite some headwinds, mainly in the form of low oil prices as well as a reduction in the sales of heavy machinery. Overall, discrete controllers and visualization equipment (as a part of automation equipment) will perform well this year, with global revenue for the segment predicted to grow at a compound annual growth rate of 3.4% faster than the IAE market average. In particular, networking devices, machine-vision hardware, industrial PCs, discrete safety equipment and computer numeric controls (CNCs) will continue in 2017 to grow significantly faster than the IAE average, due in part to the rise of the industrial IoT as well as to rapid growth in robotics. In contrast, the motors and motor control equipment segment of the IAE market is forecast to contract slightly in 2017, repeating the decline seen in both 2015 and The hurdles faced by this troubled segment this year include a slowdown in commodity demand from China and a tighter financial lending environment for commodity producers, with interest rates rising in the United States and abroad. Even so, growth prospects this year for the industry as a whole signal fresh promise. And as oil prices begin to recover and machinery production rebalances, the outlook for industrial automation suppliers will brighten further. Key takeaway: In spite of continuing challenges, the IAE market is forecast to grow in 2017, up 1.5% from last year, and after annual consecutive downturns in 2016 and Comparison of major indices, year-over-year growth (%) 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% % -6.0% -8.0% IAE Index Machinery Production Industrial Production Source: IHS Markit Capital Expenditures Real GDP 2016 IHS 1

3 2 Remote cloud-based analytics to shift to local and edge computing Throughout 2016 a number of cloud platforms were announced or released to support the Internet of Things (IoT) in manufacturing. Many of these have initially been positioned based on the use of a remote cloud, with Microsoft as a common partner and its Azure cloud platform providing a number of solutions for the manufacturing sector. A remote cloud can offer significant advantages in terms of scalability, cost and sheer processing power. However, concerns regarding cybersecurity are foremost for end users, with many remaining reluctant to send data outside the confines of their own four walls. This year will see two shifts in the market. On the one hand, more announcements will be made on the scalability of cloud platforms to support local or in-house data processing. Here edge analytics will increasingly become a viable alternative to solutions hosted on remote sites. At the same time, continued market education will boost confidence in companies to store select data on the remote cloud, allowing them to glimpse the benefits to be gained from cloud analytics. Key takeaway: In-house cloud solutions and edge analytics will gain scalability in 2017, but the continued education of the market will also result in companies gaining increased confidence in the advantages and benefits that can be provided by the remote cloud. 2

4 3 Industrial automation to become more influential in outsourced or relocated manufacturing The disruption of global trade as well as uncertainties on future growth prospects have prompted manufacturers to re-evaluate moves to offshore factories to markets because of inexpensive labor, in a bid to lower production costs. Since 2014, factors including changes in currency exchange rates, falling shipping costs, and the questionable longevity of proposed and existing trade agreements have acted in concert to weaken once-solid justifications for offshoring factories, at least for the time being. Meanwhile, nascent trends within industrial automation have changed the structure of manufacturing operating expenses: maturing Industry 4.0 and IoT technologies, for instance, are transforming the skills required of manufacturing labor, as low-end jobs are replaced by automation and by a smaller, skilled workforce. Although investments in automation and offshoring factories are not mutually exclusive considerations, automating offshore factories faces additional challenges. Compared to developed nations, popular offshore manufacturing destinations typically have smaller skilled-labor markets to support automated factories, which can dilute the benefit provided by cheap unskilled labor the original rationale for offshoring production. Offshore destinations, in general, have also lagged behind developed countries in adopting energy-efficient regulations, which could result in higher operating expenses over the life of an automated factory. Announcements from US-based manufacturers in late 2016 have shown the influence of automation on factory offshoring decisions. Shortly after Carrier announced it would not be relocating an Indiana manufacturing facility to Mexico, due to proposed tax cuts by President-elect Trump, Greg Hayes, CEO of Carrier s corporate parent company UTC, noted in a CNBC interview that the savings from the tax cuts would be used by the company to invest in automation for the reprieved factory, which ultimately means there will be fewer jobs. Despite already owning other manufacturing facilities in Mexico, the Indiana facility was selected for the automation investment, because Hayes points out that these are the kind of jobs that we can do in America because they require high skill and high value add. Similarly, Ford cancelled plans to build a $1.6 billion plant in Mexico that was predicted to provide 2,800 jobs there, deciding instead to invest $700 million in an existing Michigan plant, adding only approximately 700 jobs. The reshoring announcements from the two companies are illustrative of how automation investments can be justified over offshoring factories when global economic forecasts are clouded and free trade is at risk. In 2017, these trends are forecast to strengthen, as the rise of populism in the United States and Europe will promote reshoring manufacturing and the restructuring of trade agreements. Key takeaway: During this time of economic uncertainty, more vendors will choose to invest in automation at US facilities in an effort to leverage tax incentives and a skilled workforce, rather than in offshoring production. 3

5 4 Software-centric solutions to stay competitive The industrial IoT ecosystem is particularly complex, with partnerships assuming a critical role in enabling vendors to offer complete solutions. By and large, partnerships have become a necessity between information technology (IT) companies supporting cloud platforms and analytics on the one hand, and operation technology (OT) companies on the other that provide the deep-domain knowledge and hardware currently utilized by manufacturers. But while partnerships are one route that companies can undertake, a handful of firms last year engaged in the active acquisition of software vendors, introducing new elements or augmenting existing parts to their own smart manufacturing portfolio. These companies included industry leaders such as US-based GE Digital and Honeywell, as well as Siemens of Germany, particularly true for the areas of digitalization, where software is able to create digital twins of physical products, processes and plants; as well as for technologies to support cloud platforms and data analytics. Key takeaway: Expect to see an acceleration in acquisitions and partnerships this year, as automation companies fight over and target software vendors able to expand the smart manufacturing portfolios of the acquiring firms. 4

6 5 Capital equipment markets to consolidate This will be a year of increased market consolidation across several capital equipment markets, such as those for motors, generators, turbines and generator sets. Last year, sales revenues fell in many segments by 2.9% for medium-voltage motors, 4.3% for medium-power generators, 13.8% for steam turbines and 2.3% for generator sets. On top of struggling the past few years, these equipment markets have not seen orders keep pace, even as order backlogs were fulfilled. In fact, most suppliers have had to undergo large cost-cutting measures to remain competitive amid a shrinking global market, and companies have had to resort to rounds of employee downsizing to reduce operating costs. Companies in the equipment markets that have been hardest hit include those focused on the sectors for oil and gas, mining, marine and power generation. For market leaders, maintaining or even expanding market share will remain a high priority, as market growth in 2017 is expected to remain subdued. Key takeaway: With equipment markets down the past few years, some of the very strongest companies will seek to buy up some of the weaker players in 2017, instead of simply trying to ride through the slump. 6 Connectivity standards to prevail The increased prevalence in 2017 of OPC-UA or Open Platform Communications Unified Architecture together with the release of TSN or Time-Sensitive Networking is being touted by some as putting an end to the fieldbus wars. During the first phase of fieldbus rivalries, protocols like Profibus, Modbus, DeviceNet, Foundation Fieldbus and HART competed intensely to gain market share. These protocols delivered deterministic performance, but they were not interoperable. In the second phase, Ethernet protocols like Profinet, EtherNet/IP and EtherCAT were the ones in contention, but these also suffered from lack of interoperability and also were not considered as deterministic as fieldbus networks. With ongoing pressure from end users, combined with opportunities for increased connectivity through industrial-iot-based solutions, new possibilities for standardized communication have come about. One solution, OPC-UA, has been designed to facilitate open connectivity through its interoperability with many major industrial Ethernet protocols. While the effort began in 2016, this year will see a marked increase in the proportion of automation devices enabled with OPC-UA, especially at the controller level. Another development in communications is TSN, which will enhance basic Ethernet technology by providing reliable and real-time connectivity over an Ethernet network. The advancements will not only reduce the cost of networking complex smart manufacturing installations, they will also serve to spur the convergence of information technology and operation technology. And although not yet released, TSN standards are expected to be published toward the end of 2017 or early 2018, with enabled devices to follow thereafter. TSN products won t be available just yet, but the functionality offered by near-real time, deterministic connectivity will be a hot topic in Key takeaway: The prevalence of OPC-UA as well as a TSN release at the end of the year will bring further standardization in connectivity in However, the full impact of these developments may not be seen until 2018 and beyond. 5

7 7 Artificial intelligence to ramp up on the factory floor Technology developments on various fronts in IoT, cloud computing, Big Data, artificial intelligence (AI), machine vision, sensors and semiconductors will all have meaningful impact on traditional industrial robots in To be sure, some of the biggest changes today in industrial automation can be attributed to increased connectivity in all types of devices and manufacturing segments. This year, robots featuring improved connectivity and sensing capabilities will continue to lead in the advancement of smart manufacturing. In particular, the kinds of tasks that robots will be able to execute will broaden greatly, thanks to vast improvements taking place in the pervasive broadband communication capabilities of industrial robots, alongside the incorporation of robots into the manufacturing IT system. All told, these developments will enable robots to share information with other smart devices and robots or with the cloud, at the same time helping to drive the application of AI technologies in robotics. The machine-learning aspect of AI, which has evolved rapidly in the past year, seems to be the area most relevant to the manufacturing industry. Machine learning is dramatically changing the way machines work, as AI robots no longer need to be programmed in order to complete a task and with robots able to learn tasks through self-teaching. As a result, AI is redefining the robot s position and level of responsibility on the factory floor. Although under development for many years, machine-learning technology is far from realizing its full potential in industrial applications. This is because a massive quantity of data is required to develop deep learning algorithms, to say nothing of the difficulty in obtaining such data. However, with the progressive development occurring in industrial communications, sensor technology and IoT, a great volume of data is starting to be collected from production lines, enabling machines to capture patterns as well as information from data sets, in the process paving the way for machines to become more intelligent. Examples can be found today of robots with machine-learning technology performing more complex pick-and-place tasks, as well as helping with more advanced quality control processes and failure detection, altogether resulting in improved efficiency and productivity of manufacturing operations. One leading industrial robot supplier, FANUC of Japan, drew a great deal of interest last year when the company announced it was collaborating with US firms and providers of AI solutions, including Cisco, Rockwell Automation and Preferred Networks. The American companies will work together on the development and deployment of FANUC s Intelligent Edge Link and Drive (FIELD) system and the Zero Downtime (ZDT) system, with the platforms combining connected robots, CNC, peripheral devices, sensors and business processes to deliver analytics that optimize manufacturing production. The systems also ensure that robots are repaired before they break down, in order to minimize disruption. Key takeaway: With the further development of AI in 2017, industrial robots will become more intelligent able to perceive, learn and make decisions on their own in the factory. Contributing to this paper are the following IHS Markit analysts: Brian Arbuckle, Greg Johnson, Kevin Schiller, Nitin Sharma, Mark Watson, Alex West and Jan Zhang 6

8 For more information technology.ihs.com Follow the Americas T E technology_us@ihs.com Emea T +44 (0) E technology_emea@ihs.com Apac T E technology_apac@ihs.com 3337-CD-1016 About IHS Markit IHS Markit (NASDAQ: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 85 percent of the Fortune Global 500 and the world s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth. Copyright 2017 IHS Markit. All Rights Reserved 7