What is Factory Automation?
Factory automation is the inclusion of automation from end-to-end production processes. In manufacturing environments, automation leverages technologies, such as hydraulic systems, pneumatic systems, and robotic arms to offer more consistency, reduce wastage, increase productivity, better quality, and safer working conditions.
The increasing adoption of components, smart systems, machinery, and equipment for the betterment of manufacturing processes through automation has boosted the demand for smart factories for supply chain logistics, planning, and product development.
Factory automation has been adopted in various end-user industries, including automotive, chemicals, pharmaceuticals, food and beverages, mining & minerals, oil and gas, energy & power, paper & pulp, and others. The automotive industry is expected to hold the largest market share.
Factory Automation Market Growth Rate:
The global factory automation market is expected to grow at a high CAGR during the forecasting period 2022-2029.
Industry Drivers:
Modern-day manufacturing practices demand greater efficiency, speed, and cost controls to maximize profits and revenues. Thus, the objectives cannot be met without the large-scale adoption of automation.
Automation greatly increases production speed, especially in conveyor belt-type systems, while delivering efficiency and reducing downtime. The production lines can be run 24/7 with minimal human intervention.
All the steps involved in the modern manufacturing process, including packaging and material handling, can be automated to a high degree, reducing production time, increasing production rates and substantially reducing labor costs. For instance, a case study from a factory located in Dongguan, China, has replaced 90% of human workers with robots. The scenario raised the production by 250% and dropped defects by 80%.
The rising disposable incomes of the middle class have given rise to the demand for higher-priced consumer goods with better quality. Poor consumers typically make purchasing decisions based on price factors alone, whereas middle class with disposable incomes are willing to pay higher prices for significantly better quality.
Industry Opportunities:
The increasing use of automation in industries across various sectors has opened up new opportunities in the factory automation market.
Artificial Intelligence (AI) and other assistive technologies like virtual reality will dramatically reduce costs and increase precision and efficiency.
The automated machinery currently in use is designed and manufactured by various companies that use their proprietary design architecture.
It prevents interoperability and hinders the growth of automation.
The adoption of a single unified design architecture can enhance interoperability and provide a boost to wider adoption of automation.
Impact of COVID-19:
The global factory automation market experienced a decline in 2020, owing to COVID-19's impact. Governments globally imposed strict lockdowns of varying durations starting from March 2020 to curb the spread of the emerging COVID-19 pandemic.
The lockdowns caused disruptions in the operations of end-user industries. Many industries had to scale down or suspend operations owing to government regulations. Factory automation is a capital-intensive process. With reduced revenues, many industries had to scale back, suspend or postpone capital investments due to the effects of the pandemic.
China, one of the largest markets for factory automation, lifted lockdown restrictions by May 2020 and economic activity slowly picked up, reaching pre-pandemic levels by late 2020. Revenues for factory automation companies thus show improvement towards the end of 2020. However, rising cases and the second pandemic hit North America and Europe in late 2020. Thus demand remained subdued from 2020 through early 2021.
Regional Share Insights:
North America is known for the early adoption of the latest technology and growing investments to save energy by adopting new technologies has led to the growth of factory automation in the region.
According to a 2019 analysis from Oxford Economics, U.S. is expected to lose more than 1.5 million jobs to automation over the coming decade. The regional automotive sector has always dominated the way in implementing new technology robotics in its manufacturing processes. Key industry players, like John Deere, are investing heavily in integrating automated technologies into their products and processes.
In adopting vital technological advancements, U.S. has traditionally been a leader. The patterns have been observed to continue. In 2019, Ford began using co-bots (a team of collaborative robots) in its Cologne paint shop.
Brazil is the largest South American market and it economically and commercially dominates the surrounding regions. The manufacturing industry in the country is the third-largest in the region. Manufacturing contributes significantly to Brazil's industries, which account for one-third of the country's GDP.
Brazil also plans to use robotics' benefits as both a manufacturer and a user. As per the Global Federation of Robotics, Brazilian robotics imports are expected to rise in the next years, expanding the adoption of industrial automation and control systems.
The increased use of robots and automation in the European automobile industry is predicted to bolster the factory automation industry in the region. Furthermore, Germany has the highest concentration of automobile OEM plants in Europe. The demand for industrial control systems is likely to rise as the number of OEM sites grows.
Asia-Pacific holds the largest market share in global factory automation market, with China becoming the largest consumer. China is gradually building itself as one of the most prominent automation markets in production and consumption, thus expected to grow the overall factory automation at a CAGR of 10.8% during 2021-2028.
The GCC aims to enter into a new era of manufacturing based on modern industrial society. One of the primary elements driving growth in the region's automation and manufacturing industries is the growing active cooperation between government, regulators and organizations for economic development.
Competitive Landscape Analysis;
Factory automation is the linking up of factory equipment to increase the efficiency and reliability of process control systems. The linking up drives improved quality, increased flexibility, lower costs and less environmental impact. Factory automation uses control systems, such as robots or computers and data technologies, to manage various machinery & processes in the industry to substitute a human being. Earlier, the automation design improved productivity and decreased the cost associated with human operators.
The global factory automation market is slightly fragmented, with various big players accounting for significant shares. The prime companies operating in the global factory automation market are ABB, Rockwell Automation, Inc., Yokogawa Electric Corporation, Hewlett Packard Enterprise Development LP, OMRON Corporation, Honeywell Global Inc, Mitsubishi Electric Corporation, GE DIGITAL, Schneider Electric and Siemens AG.
