The global market for motor controls is set to end the year with a modest growth in revenue compared to the disappointing decline of 2012, signaling a new vigor to the space that will carry through to the next few years, according to a new report from IHS Inc.
Global revenue for motor controls by year-end is forecast to reach $23.5 billion, up from $22.4 billion in 2012. The projected 5 percent growth this year is an encouraging improvement from the 0.3 percent decline of last year after the market was hit by a wave of stressful economic conditions. But unlike last year's disheartening results, this year augurs the start of a return to growth, albeit slight, that sets the stage for growth momentum in 2014 and beyond.
In all, revenue will grow at a compound annual growth rate of 8 percent from 2013 to 2017 as expansion continues to spread after the decline of last year, with China accounting for the fastest rate of increase.
The motor control market depends on machinery for industrial automation and other allied technology sectors. In particular, growth of the industry is largely dependent on the global production of machinery and capital expenditures in process markets.
The fastest-growing and most stable sector of the motor control market lies in industries tied to consumers, such as packaging and labeling for food, beverages and tobacco. But the market at large can also be hurt by its cyclical nature, present in high-technology industries covering machine tools, semiconductor equipment and electronics assembly.
Meanwhile, other segments of the motor control space-notably the process sectors in oil and gas-can at times provide growth opportunities, as seen during 2012 and this year, helping to compensate for any negative factors that might be present, such as oversupply in China or Europe's extended economic slowdown.
Europe maintains rank as top region
Nonetheless, Europe remains a strong source of revenue, with the collective Europe-Middle East-Africa (EMEA) territory continuing to represent the largest regional market for motor controls. This year EMEA will account for 33 percent of the market after takings of $7.8 billion. The area, also the largest revenue contributor last year, is showing more positive results for the second half of 2013 as equipment suppliers report increased orders and as the Eurozone shows signs of emerging from its economic woes.
The second-largest group this year is the Americas, with anticipated revenue by year-end of $5.9 billion, or 25 percent of the market. Even so, growth in 2013 will be slower than in 2012, constrained by the machine tool and semiconductor machinery sectors.
At No. 3 is China, a country whose market for motor controls is approaching that of the entire Americas. Revenue from China in 2013 will hit an estimated $5.3 billion, equivalent to 23 percent market share. The Chinese market suffered last year from overproduction after exuberant growth exceeding 10 percent in both 2010 and 2011, and the effects of the glut were felt even this year.
Similar to China as a country that also counts as its own market, Japan is fifth among the territories when this year ends, with revenue forecast to reach $2.0 billion, or 9 percent share of the overall market. Unlike China, however, Japan will be the slowest-growing region moving forward, with a projected compound annual growth rate of 5 percent between 2010 and 2017.
Sandwiched between China and Japan to rank at No. 4 is the rest of the Asia-Pacific region. Revenue here will reach $2.5 billion at the close of 2013, equivalent to an 11 percent market share. Much like in China and Japan, the market for the region showed dynamic growth in 2011 but slowed last year, and then proceeded to recover moderately in 2013.
South Korea and Taiwan are the major markets for the rest of the Asia-Pacific region, with the two countries making up more than 70 percent of revenue in the area in 2012.
Read more >> Industrial Motor Controls Sourcebook - World - 2013