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"Automation trends and market structure" - part 3 of the three-part serial

How the market structure of the suppliers of automation technology has changed and will change in the future

This article accomplishes the threepart article serial. It connects the transition of an ever higher degree of integration of the automation technology with the present and future changes in the market structure of the suppliers of automation technology.

The transition from the first to the second trend in automation technology

Part 3 of the article series.

September 6th, 2010 - The substitution of the electromechanics by microelectronics was the determining trend in the 1980 and 1990 years. At the same time however, this substitution process was stepwise connected with an ever higher degree of integration of microelectronics.

 

Finally around the year 2000 this stepwise ever higher degree of integration came to the fore as main trend in the automation technology replacing the substitution of the electromechanics by microelectronics as main trend.

 

We recall the already mentioned examples of this ever higher degree of integration like

  • PC technology integrating control system and operation/visualisation
  • electronic drives integrating control system („drive PLC“) and finally safety engineering as well
  • Industrial Ethernet integrating information data and control commands for a broad process control
  • control system and drive technology integrated to motion control with integrated software platform, partly completed by robotics.

 

The main trend of the present automation technology exceeds the limit of the machine connecting the integrated automation of the machine with service, maintenance and superordinated process control finally becoming a subsystem of the enterprise control system.

The changes of the market structure of the suppliers with the second main trend in automation

This ever higher degree of integration of microelectronics has again changed the market structure of the suppliers of automation technology. Which substantial changes show up?

  • The know-how and the capital requirement for integrated solutions are higher than with the substitution of the electromechanics by microelectronics.
  • The sales markets for integrated solutions differentiate themselves into markets for integrated partial solutions and for integrated total solutions. The respective markets are smaller than the uniformed sales market the substitution of the electromechanics created for microelectronics.
  • The wave of formation of new suppliers is exhausted. In fact, the young suppliers specialise in integrated solutions.
  • The group of the young suppliers differentiates itself. The majority remains focused on integrated partial solutions. A minority, primarily Beckhoff and Bernecker & Rainer grow into integrated total solutions.
  • Larger enterprises such as Schneider Electric buy up medium-sized suppliers with integrated partial solutions such as Elau or Berger Lahr in order to increase the degree of integration of their solutions.
  • Leading enterprises such as Siemens lose market shares in the machinery industry. The offered degree of integration is relatively expensive as it is calculated related to the broad market. The markets however have differentiated and can be processed more effectively in differentiated manner.

Which type of supplier is favoured at present and in the future?

The answer to this question must combine three trends with one another, i.e.

  1. the internationalisation of production
  2. the present economic crisis
  3. the main trend to an ever higher degree of integration of the automation.

 

The internationalisation of production favours internationally active suppliers with integrated total solutions. So primarily the large, market-leading enterprises benefit thereof. They do not only automate the production plants of large Chinese, Indian, Russian, Brazilian companies but the production plants of the world largest companies, active in nearly all countries, on the highest state of the art.


The internationalisation also favours medium-sized, internationally active suppliers of integrated solutions with certain focus, which do not have to cover a complete system.


The present economic crisis facilitates these internationally acting suppliers to benefit quickly from the temporary chances in dynamic increasing countries such as the BRIC states thus moderating decreases in sales in other countries.

 

Medium-sized suppliers have chances also in the future to develop new integrated partial solutions. Web-based troubleshooting is an example, application-optimised I/O modules another. With low degree of internationalisation dynamic foreign markets cannot be used quickly enough. And the economic crisis constricts the sales markets, increases the cost pressure and intensifies the struggle for consisting and new customers.

 

Finally the present situation favours two types of suppliers in the future:

  • the service provider as outsource partners for machinery industry, automation technology among other things
  • the supplier applying the automation technology for new applications, keywords are applications of logistics, environmental protection, alternative energies.


The three-part serial "Automation trends and market structure":

 

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