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Industrial machinery growth rate ‘will double in 2014’

16 April, 2014

The global market for industrial machinery will expand by 6.3% this year – more than twice as fast as the 2.9% achieved in 2013 – according to a new report from IHS Technology, which predicts that total revenues will rise from $1.5 trillion in 2013 to $1.6 trillion this year.

The strong growth is forecast to continue for the next four years, with revenues rising to $2 trillion by 2018. During this period, the machinery market’s annual growth rate will average 5–6%.

“The improving economic outlook is a key factor in the strong growth of machinery in the coming years,” says Andrew Robertson, senior analyst for industrial automation at IHS. “The growing populations and the expanding middle classes in developing countries are generating more disposable income. This translates into increased demand across a vast number of sectors.”

IHS suggests that that the sales growth is being driven by several factors, including:

•  higher demand for cars worldwide, which is spurring spending on tools and robotics in the automotive business, as well as in the rubber and plastics segments;

•  a rise in living standards and increasing spending on nutrition, which are benefiting the food and packaging machinery sectors;

•  rising spending on technology products, which is boosting the demand for robotics, semiconductor equipment, mining, and oil and gas machinery;

•  increased demand for housing, infrastructure and commercial buildings, which is benefiting the construction equipment sector; and

•  awareness of green technologies, which is resulting in higher demand for machinery for producing components for photovoltaic and wind turbine systems.

IHS expects the packaging machinery sector, in particular, to expand rapidly in the next few years, as a result of a move to lighter packaging which needs less material, generates less waste, is more energy-efficient to produce, and has improved aesthetic appeal.

Global machinery production revenues (left axis) and growth rates (right axis)
Source: IHS

In addition, advances in packaging – such as wrapping food in ready-to-cook enclosures, cartons that are not pierced until being opened, and aseptic packaging technologies – are driving demand for industrial machines in this sector.

“Whether for convenience, improved shelf life or better taste, new industrial machines are contributing to the continued growth of the packaging market,” Robertson remarks.

For the past two years, the Chinese machinery market has experienced considerable overcapacity, especially in the construction machinery, machine tool and metal-working sectors. Revenue growth from machinery production slowed to 1% in 2012 – a huge fall from the average 20% growth rate experienced a decade earlier. As a result, only a few businesses expanded, while weak investment in 2013 caused many heavy industries to struggle.

But IHS forecasts that growth will return to the Chinese machine-making sector with revenue growth reaching 8.1–10.9% each year in the period to 2018.

In Europe, machinery production revenue declined by 5.6% in 2012, dragging down the global market. Europe increased output last year, but only by 1.1%.

The Americas prospered in 2012, boosted by a significant government investment that caused machinery production revenue to rise by 6.5%. In 2013, however, machinery production growth in the Americas slowed to 2%.

These findings are contained in the Machinery Production Market Tracker, produced by the IHS machinery group.

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