AC drive demand indicates strong automation market

Robust investments in manufacturing and infrastructure industries worldwide resulted in strong growth this year for the AC drives market.

By Staff -- Modern Materials Handling, 7/7/2008

Robust investments in manufacturing and infrastructure industries worldwide resulted in strong growth this year for the Low Power AC Drives market.  

The worldwide market for these products is expected to grow at a compounded annual growth rate (CAGR) of 8.9% over the next five years, according to a new report from the ARC Advisory Group. The report, “Low Power AC Drive Worldwide Outlook, Market Analysis & Forecast Through 2012,” says this market was over $7 billion in 2007 and is forecasted to be nearly $11 billion in 2012.

Emerging economies, such as those in the BRIC countries (Brazil, Russia, India and China) and Eastern Europe, helped propel this growth. The regional expansion was led by China, where real GDP grew robustly as exports and investment accelerated, and by India, where gains in domestic demand and particularly investment underpinned strong growth.

“Increasing consumer demand from the growing middle class in emerging economies, new infrastructures, a friendly financial environment for capital investments, and a need for producing and saving energy were primary factors for huge market growth,” according to Senior Analyst Himanshu Shah, the report’s principal author.

Despite a softening U.S. economy, automation suppliers continued to post strong revenue growth in the fourth quarter of 2007, propelled by robust greenfield plant construction in developing regions and strong project activity in the oil and gas sector. 

Suppliers reported big project wins in the oil and gas, refining, petrochemical and mining sectors. Significant order back-logs ensure that business will continue at a healthy pace. While the North American market may face some economic challenges in the quarters ahead, demand for automation products will remain strong, thanks to much-needed modernization of the industrial infrastructure that is well under way.