From the use of mobile devices to the latest outlook on China, the IHS Industrial Automation Service has come up with 4 insightful predictions for 2014. Providing some guidance on the key trends and opportunities underlying the global industrial automation space, we hope you find these takeaways useful in planning for the year ahead.
The global industrial automation business is undergoing major transformations. The rise of wireless networking technology is enabling revolutionary developments including the advent of a new era of more flexible factories, while also spurring the growing use of consumer mobile devices to monitor and manage industrial processes.
However, this new age brings new risks, such as security threats arising from the increased use of consumer tablets and smartphones on the factory floor, as well as a data explosion triggered by new flexible manufacturing processes.
Meanwhile, Asia Pacific continues its rise as the center of the industrial automation universe. China has seen its industrial automation market regaining momentum following the economic slowdown. However, the low labor cost advantage that has driven Chinese double-digit growth over the past three decades has been eroded away almost to parity with that of the United States and other developed regions. As a result, there has been much talk about bringing manufacturing back to low-cost locations that are in closer proximity to final end-use markets like Mexico for the United States, Central and Eastern Europe for Western Europe and Southeast Asia for the Asia Pacific region.
To help the market understand these developments, the IHS Industrial Automation Service has come up with insightful predictions for 2014.
Our top predictions are:
MOBILE DEVICES INVADE THE FACTORY FLOOR AS BYOD TREND SPREADS
The bring-your-own-device (BYOD) phenomenon that is reshaping information technology (IT) in business offices now is spreading to the manufacturing sector, with employee-owned smartphones and media tablets playing an increasingly important role in manufacturing settings in 2014 and beyond.
Rising numbers of manufacturing workers are utilizing their own smartphones and tablets to monitor and control industrial equipment. These devices can allow users to manage equipment remotely, observing processes while employees are on the move, or working in another part of the factory. While the trend now is being driven by individuals, companies in the future are likely to accommodate this phenomenon by provisioning employees with ruggedized devices tailored to the rigors of the factory floor.
In many cases, such devices are augmenting the functions of industrial PCs. The global industrial PC market is expected to generate shipments of 4.1 million units in 2016, up from 2.5 million in 2012.
The use of BYOD devices in manufacturing is expected to rise at a rapid rate in the coming years. However, because the movement is being driven by individuals and not at the corporate level, gauging the number of BYOD devices being used or to forecast the growth of the market is difficult. However, anecdotal research conducted by IHS indicates the BYOD trend is expanding in the manufacturing realm.
Into the Ether
The rise of BYOD is being enabled by the increasing networking of industrial automation equipment. A small percentage of this equipment employs standard wireless networking technology. Such standard wireless networking technologies lend themselves to use with consumer mobile devices.
While the penetration of wireless technology in industrial automation equipment remains low, the area holds big growth potential in the coming years.
Bring on the Apps
In some cases, tablets are being mounted on the sides of machines to provide visualization and control of the manufacturing process.
To support the use of mobile devices in manufacturing, leading industrial automation vendors are starting to show apps that work on iOS and Android devices. Many such apps were released in 2013 and more are expected in 2014.
Unlike industrial PCs, consumer mobile devices are not designed to endure the stresses commonly encountered in manufacturing, such as vibration, heat and water. As a result, manufacturing companies in the future may provide workers with tablets and smartphones rated for such environments.
There also are safety and security considerations related to BYOD in manufacturing. If a production line goes down because of a problem with a consumer mobile device, there could be huge implications in lost productivity and time. Even so, with the great usefulness and increased utilization of BYOD in the manufacturing realm, companies will be compelled to deal with these issues in 2014 and beyond.
THE FOURTH INDUSTRIAL REVOLUTION BRINGS BIG DATA CHALLENGE
Enabled by communications and sensor technology, the global manufacturing business is on the verge of what some are calling the fourth Industrial Revolution --or Industry 4.0 -- a new era of highly efficient, flexible and customizable mass production. However, Industry 4.0 faces a major challenge before it can live up to its promise: the development of software and analytical systems that turn the deluge of data produced by intelligent factories into useful and valuable information.
The potential stakes are enormous, with the global industrial automation industry amounting to $170.2 billion in 2013, $182.7 billion in 2014, and expected to rise to $209.4 billion in 2016.
The term Industry 4.0 was coined by the German government to describe the intelligent factory, a vision of computerized manufacturing with processes all interconnected by the Internet of Things (IOT). Some believe that Industry 4.0 is expected to spur fundamental changes on the order of the steam-powered first Industrial Revolution, the mass production of the second, and the electronics and proliferation of information technology (IT) that characterized the third.
Flexing Industrial Muscles
Industry 4.0 carries many meanings, but early developments in this area have involved adding more flexibility and individualization to manufacturing processes.
Flexible, individualized manufacturing processes is an approach likely to find rapid acceptance in the auto-making industry, where manufacturers need to tailor their cars to the needs of individual customers.
With new industrial automation equipment increasingly integrating sensors and wireless communications capabilities, factories are gaining the capability to gather sufficient data. While the penetration of wireless is currently very low, adoption is set to rise robustly in the coming years.
However, to achieve actual improvements in manufacturing efficiency and flexibility, manufacturers will need to be able to manage and analyze huge amounts of data. Because of this, the biggest challenge in implementing individualized manufacturing systems will be on the software side, IHS predicts.
One solution to this challenge may be distributed intelligence, i.e., making pieces of factory equipment intelligent and autonomous enough to determine on their own which pieces of information are valuable -- and reporting that data to decision makers in the organization.
A Continuing Revolution
In light of the challenge of big data and the need to implement new factory automation equipment, companies are likely to implement changes gradually over time. This will give organizations opportunity to develop expertise in managing and analyzing large amounts of data.
In some ways, the trend of manufacturers using technology to add flexibility to industrial processes has been ongoing for a number of years. Companies slowly have been adding more communications and data-gathering technology to their processes.
However, these trends are likely to gain momentum in the coming years, as the need for more individualized production increases.
RISE OF WIRELESS TECHNOLOGY POSES SECURITY RISKS FOR MANUFACTURERS
Increasing networking of manufacturing is opening up factories to the benefits of flexible production and, with wireless, mobile communications. However, this trend to connected devices is also exposing production sites to security breaches and cyber-attacks, compelling companies to seek ways to protect their networks.
Wireless network connections in global factories will rise from 2.1 million in 2012 to 3.4 million by 2017 -- an increase that also magnifies risk factors to manufacturing environments.
Do the Worm
The issue of security in manufacturing networks became front-page news in 2010, when the Stuxnet computer worm afflicted industrial control systems in Iran. Stuxnet was designed to both subvert and engage in the surveillance of supervisory control and data acquisition systems made by Siemens.
While Stuxnet is thought be an intelligence tool, other types of malware are designed simply to infect and cause damage to manufacturing systems. In some cases, hackers have engaged in blackmailing the manufacturing operations of companies, demanding a ransom in order to lift the malware from their systems.
Mobile Malady and Catching Flies
The rising use of wireless networks and industrial Ethernet is leading to a growing trend in the so- called bring- your- own- device (BYOD) movement in the manufacturing business, with workers utilizing their own smartphones and tablets to monitor and control industrial equipment.
However, such devices may lack adequate security, offering hackers easy access to confidential data -- or allowing them to spread malware through factory automation systems.
To counter this threat, manufacturing operations are taking cyber-security measures. Among these is the "honeypot," a site that masquerades as a manufacturing network but is actually an isolated system designed to divert and gather information about hackers.
Wireless Technology Proliferates
Manufacturing networks continue to adopt a wide variety of wireless technologies.
For instance, wireless LAN (WLAN) was the most widely adopted protocol in the industrial space. The technology is highly suitable for many applications because of its advances in the enterprise and consumer sectors, allowing knowledge and technology to filter into industrial applications.
Bluetooth is another protocol extensively used in the consumer space that is also popular for industrial automation networking. Bluetooth's advantage lies in its ability to pair devices, providing greater security and reducing the potential for opportunistic hacking attacks.
WirelessHART and ISA 100.11a are the two major "true" industrial wireless technologies. They compete directly and are more prevalent in process industries compared to WLAN and Bluetooth, which are more commonly used in discrete industries.
Industry Goes Wireless
The current level of adoption of wireless in factory and process environments is low. Nonetheless, the technology's presence is expanding, bringing both benefits -- as well as increased risks from hackers -- to the manufacturing market.
2014 OUTLOOK FOR CHINA'S INDUSTRIAL AUTOMATION EQUIPMENT MARKET IS UP FOR THE YEAR
China's industrial automation equipment (IAE) market comprising automation, power- transmission and motors/motor-control is closely linked to the country's overall economic health.
Because of this, when China's GDP growth slowed to 7.7 percent in 2012, the country's IAE market weakened as well.
Since 2013, IAE revenues have rebounded as China's GDP growth outlook has improved. IHS forecasts 2014 revenues of $42.12 billion for the IAE market, an increase of 10.2 percent over 2013. After 2014, however, IAE revenues -- as with the larger economy -- appear headed for a period of single-digit increases, with growth forecast to ease to 8.4 percent by 2017.
Process Industries Rebound from Recession
Revenues from IAE investment in the oil and gas sector are forecast to grow fastest among the process-industry markets in 2014, increasing 13.6 percent to $2.11 billion. This growth reflects the fact that, as the global economy has recovered from the 2008-09 recession, so too has the demand for oil and gas from China. Additionally, China's domestic oil and gas requirements are increasing as its economic growth improves and its citizens' disposable incomes increase with the pace of urbanization.
Discrete Manufacturing Poised for Moderate Growth
The materials-handling industry is the largest discrete market for IAE equipment in China and includes cranes and hoists, elevators and escalators, conveyors, and forklifts. Cranes and hoists are the largest part of this industry sector, accounting for almost one-third of revenues. After explosive growth from 2010 to 2011, the crane and hoists industry reached overcapacity. While IAE revenues from the materials-handling sector are forecast to increase 9.8 percent in 2014 -- to $2.89 billion -- growth will ease to 8.8 percent by 2017.
Revenues from automotive -- the third-largest discrete manufacturing market for IAE equipment (after machine tools) -- are forecast to grow 10.7 percent in 2014 to $1.58 billion. Already the world's largest car-producing country by a wide margin, China is now the second-largest consumer market for vehicles -- a reflection of the country's rapidly growing middle class.
The continuing growth of China's automotive industry has helped boost the market for robotics. China is now the fastest-growing market for robots in the world as a result of rising labor costs, increasing concern for safety, demand for high-quality products and the falling costs of using industrial robots. IHS forecasts that revenues from sales of industrial automation equipment sold into the robotics sector will increase 11.9 percent in 2014 to $268.8 million.
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