Automation Update: Brexit effects, SCADA systems growth

June 29, 2016

Brexit could move UK manufacturing to other countries In its blog, ARC Advisory Group said the U.K.’s decision to leave the European Union (EU), known …

Brexit could move UK manufacturing to other countries

In its blog, ARC Advisory Group said the U.K.’s decision to leave the European Union (EU), known as the Brexit, will likely hinder growth in 2016, 2017 and 2018, but more specific scenarios are difficult to predict.

The company said the U.K. will undoubtedly experience the most severe consequences. ARC believes the country will struggle for three to four years, while manufacturing will largely move to Europe and U.K. growth slows.

ARC expects the EU to experience higher and longer short-term frictions, but to ultimately survive without a full recession.

For the rest of the world, the price of gold is expected to increase while private and institutional investors withdraw money from emerging economies. ARC expects the U.S. to struggle with the dollar’s increased value weighed with the Euro’s loss of competitiveness.

MCAA predicts growth for refining, other industries through 2020

The Measurement, Control & Automation Association (MCAA) forecasted the food & beverage, chemicals, electric utilities, pharmaceuticals and refining industries will experience above average growth for the 2015 to 2020 period in its Annual Market Forecast for 2016. MCAA notes the industries will expand from $7.8 billion in 2015 to $9.4 billion in 2020.

The U.S. process instrumentation and automation (PI&A) market grew slowly in 2015 to $11.6 billion, representing a 0.3 percent increase over the 2014 level of $11.1 billion. MCAA attributed the small growth to oil price decline and lower mining and mineral spending because of falling commodity prices. The metals, cement and pulp & paper sectors are also at a surplus, creating lower demand. U.S. domestic demand was reduced by a strong dollar and weak Chinese, Russian and Brazilian economies.

The Canadian process industries are predicted to grow more slowly than in the U.S., largely driven by increased government spending on infrastructure.

New energy requirements boost SCADA systems growth globally

The global market for supervisory control and data acquisition (SCADA) systems in energy and utility industries is on the rise because of the emergence of smart grid projects, according to Frost & Sullivan.

The market earned revenues of $4.55 billion in 2014 and Frost & Sullivan estimates this to reach $7.34 billion in 2021.

Main areas of application for SCADA systems in this area are outage management, demand forecasting and analytics, while the biggest market is the electric power industry with a share of 64.3 percent.

"On the one hand, the escalating energy requirements have created opportunities for greenfield expansions, while on the other, the need to modernize aging pipelines, power grids and water infrastructure have stoked brownfield opportunities," said Frost & Sullivan Manufacturing 4.0 Senior Industry Analyst Piyush Dewangan. "In addition, shale gas exploration activities in North America are accelerating the deployment of SCADA systems."

Although SCADA system vendors appear to be keeping pace with changing trends, advancements in communication technologies will significantly disrupt SCADA architecture, Frost & Sullivan said. Devices now directly communicate with next-generation enterprise software in real-time and all business processes are integrated, meaning there will be a drop in the share of hardware revenue. However, demand for application software will gather momentum.

The ongoing global oil price fluctuations and economic crisis in Europe, the Middle East and Africa will further slow market growth rates. In addition, concerns regarding cybersecurity will shift end user priorities from capacity development to security-related projects, limiting the adoption of SCADA systems.

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