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...Manufacturing & Engineering

The manufacturing sector is characterised by a wide variety of markets, with exposure to economic cycles.

Manufacturers are looking to increase their operational efficiencies and reduce cost while developing innovative technologies. There is increasing demand for green technologies as a result of more stringent government regulations.

To remain competitive in today’s technology-driven manufacturing environment, innovation is the key.

However, greater competition for talent could limit manufacturers’ abilities to evolve, grow and adopt new technologies.

Key manufacturing industries include:

  • Aerospace - maintenance, repair and overhaul of aircraft and spacecraft (e.g. British Aerospace, Rolls-Royce)

  • Automotive - manufacture of bodies (coachwork) and accessories, engines, components and trailers (e.g. Kia, Skoda, Jaguar/Land Rover)

  • Chemicals - manufacture of paints, toiletries, varnishes, plastics, synthetic rubber and industrial gases (e.g, Akso Nobel)

  • Clothing and footwear - production of leather and textiles for the design and manufacture of clothes and footwear

  • Electrical equipment - including office and computer equipment, TV and radio (e.g. Dyson, DSG International)

  • Electronics - creation, design, production and sale of electronic systems, components and equipment (e.g. Siemens, Sony, Philips, Marconi)

  • Food and drink - including bakery, meat and poultry (e.g. Kellogg's, Bernard Matthews, Heinz, Coca-Cola, Nestlé)

  • Metals and engineered metal products - (e.g. Tata Steel)

Major changes are going on in the industrial equipment market, with the manufacturers focusing intensely on the development of energy-efficient technologies.

Timelines are shrinking and lead times from concept to commercialisation are dropping dramatically. As a result, we encounter a shift on developing new platforms to better integrate all operations, from the assembling of components to the transformation of raw material into finished goods, plus a shift to digital automated factories would help both in increasing productivity and gaining a competitive edge.

The advent of smart manufacturing technologies and industry 4.0 hold promising potential for growth of this market.

The engineering industry is responsible for designing, manufacturing and operating structures and machines.

The engineering sector encompasses the creative application of science and mathematical models that guide design, construction and innovation for machinery, primary and semi finished iron and steel, steel bars and rods, and non-ferrous metals, ceramics, magnets, HVAC, abrasives robotics, hydraulics, pneumatics, materials handling, specialty commercial vehicles, and others.

It helps in providing heavy trucks, heavy machines, heavy hydraulics to almost every industry, and in particular mining, construction, agriculture and energy. The user industries of engineering products and services include power utilities, infrastructure projects, petrochemical plants, mining equipment, construction machinery, equipment for irrigation projects, diesel engines, tractors, transport vehicles, and textile machinery, cement machinery, metallurgical machinery, rubber machinery, mining machinery, dairy machinery, machine tool and material handling equipment.

Engineering includes the manufacture of industrial machinery, machine tools, material handling systems, as well as the manufacture of propulsion and powertrain technologies. China, Japan and Germany were the most important producers of machine tools.

Major areas of application, include machinery manufacturing and vehicle production.

Capacity creation in sectors like infrastructure, power, mining, oil & gas, refinery, steel, automotive, consumer durables drives the general and heavy engineering industry.

The user industries of engineering products and services include power utilities, industrial majors (refining, automotive and textiles), government (public investment) and retail consumers (pumps and motors).

Important groups within the engineering industry include machinery and instruments, primary and semi finished iron & steel, steel bars & rods, non-ferrous metals, and electronic goods.

The industry also produces parts for consumer products, such as for cars and refrigerators.

Heavy engineering (cement machinery, metallurgical machinery, rubber machinery, mining machinery, sugar machinery, dairy machinery, machine tool and material handling equipment) supports the production of high value products such as automotive parts, heavy machines and engineering tools.

In light of growing environmental awareness, alternative propulsion and powertrain technologies are gaining in importance.

Rolling Stock Manufacturing encompasses locomotives, railroad cars, wagons and coaches.
Japan, Switzerland and Hong Kong are leaders in railroad infrastructure and high-speed trains. Asia and Western Europe are the key markets for railway technology.
China’s CNR Corporation, France’s Alstom, Canada’s Bombardier, and Germany’s Siemens are leading manufacturers of railroads and locomotives. Union Pacific, Canadian National Railway and East Japan Railway are ranked among the largest railway companies worldwide.

The market covers industrial and commercial machinery. It also covers services that assemble parts into components, sub-assemblies and complete machines.

The Machinery and Equipment market growth is linked to the increase in the economic activities which increase demand for industrial products.

Industrial Machinery & Equipment solutions provide advanced functionality for various industries including manufacturing, food & beverages, textile, paper & pulp, and metal components among others.

Machines and parts produced are used in other sectors, for example turbines for power projects, fertilizer, cement, steel and petrochemical plants and mining equipment, construction machinery, equipment for irrigation projects, diesel engines, tractors, transport vehicles, cotton textile and sugar mill machinery.

Investment in equipment for agriculture, medical, computer and software and transportation equipment have shown a positive growth over the past few years, with equipment aging being a key factor for equipment acquisition. Construction equipment has also exhibited fast growth with fast urbanization and industrial growth in emerging economies. Regions such as China, Brazil, India, Mexico are emerging as growing markets for industrial equipment.

Challenges to the industry include climbing costs for raw materials and environmental regulations such as emission control.

We encounter a fundamental shift of activity from mature markets like Europe and North America to emerging markets in China, India, Brazil, and Southeast Asia. Industrial companies need to chart a new strategic course in order to position themselves in emerging markets.

This creates new challenges to:

  • address the demands of emerging markets

  • build new capabilities to compete against emerging asymmetric competitors

  • migrate supply chains and infrastructure from mature economies to emerging ones

They need to re-examine their supply chains, manufacturing footprints, currency strategies, R&D spending, and labour costs.

In addition to the challenges of capturing emerging markets they face additional issues like:

  • shortened innovation cycles to maintain product and service advantage

  • advanced product design and manufacturing processes to offset disadvantages in factor cost

  • addressing social cost associated with the industrials sector like CO2

  • growing oligopolistic or political control of raw materials (e.g. iron)

  • competitive distortions from governmental interventions in markets

  • more difficult financing for current operations and growth

What’s more, failure will impact on engineering’s role in providing a lasting legacy for future generations through ensuring the supply of food, clean water and energy – a tough challenge against a backdrop of climate change and ageing populations.

Reducing environmental impact

There are concerns over the low supplies of rare earth metals used in energy-saving fluorescent lamps and hybrid car batteries. It's important that we look at products from conception all the way through to recycling, re-use or remanufacture.

Today's engineers are solving problems in society and innovating in ever more exciting ways that are reducing humanity's impact on the planet through developing new fuels and energy sources, transportation methods, new efficient housing and food production as well as reducing wastes, creating a circular economy and cleaning up pollution.
Peter Finegold, Head of education and skills at the Institution of Mechanical Engineers.

It is also vital that engineers are able to share best practice and are kept abreast of cutting edge developments in different sectors to the ones they are working on. It is very common for solutions in the aerospace industry, for example, to have applications in the power generation sector or healthcare.

Changing business practices and new technology

Technological changes and changes in business practices will also create new growth opportunities and challenges:

  • New business practices, enabled through increased use of ICT and improvements in logistics, have permitted greater outsourcing where individual components are designed and built in different parts of the world prior to final assembly.

  • Also technology improvements can increase efficiency, beyond outsourcing and increased specialisation. For example, by developing more efficient processes/ production, and higher quality or better tailored products to capture higher value added elements. Embedding the new technologies and exploiting the new product opportunities presented can lead to significant growth.

Such changes have an impact on skill requirements as increasing global trade will put pressure on lower skill activities.

The rapid increase in demand for new technologies in communication and leisure, coupled with ever shortening product lifecycles, provide significant opportunities. This includes support for an ageing population, the need for secure and renewable energy, water shortages, climate change and population redistribution.

The future will include disruptive technologies such as artificial intelligence, advanced materials, robotics, and the use of big data. Overall the prospects will be stronger in higher skilled activities, for example in R&D, design and marketing where increased capital investment has been tied to more automation requiring skilled technicians; and where non-routine human interaction is required.

The industry is working to attract a more diverse workforce and encourage more women and people from a wider range of backgrounds to become engineers.

The pace of technological development is such that many of the jobs that engineers will be doing in five or ten years don't exist yet.

Women in engineering: The continued inequality in the uptake and progression of women into engineering remains a problem. Traditionally a male-dominated industry, the engineering sector is doing its best to address the gender imbalance. Though is still failing to show women the crucial and exciting role that engineering plays in creating a sustainable future and addressing the global challenges that we face.

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Manufacturers today, seek to transform their business process operations across their value chain by automating their processes. Technological advancements in industrial automation, process monitoring and control - ranging from robotics, control systems, IT systems and manufacturing execution systems (MES) - have contributed greatly to improve the productivity of the manufacturing industries, by lowering labour and production costs, and increasing production output.

We anticipate high growth for this industry owing to a greater focus on increasing productivity and efficiency through the adoption of intelligent systems and software-run machines.

The global industrial control and factory automation market is estimated to reach 210 billion USD by 2020 growing at CAGR of 6.85% from 2015 to 2020.

The retail automation market was valued at 95 billion USD in 2013 and is expected to reach 280 billion USD by 2020, at a CAGR of 17% between 2013 and 2020.

Global medical automation market was valued at 42.5 billion USD in 2013 and is poised to grow at a CAGR of 9% from 2013 to 2018, to reach 65.5 USD billion by 2020.

Technology is manufacturing globally, with increasing automation of production in sectors such as car-making. In turn, that has increased demand for new skills such as programmers for robots. In the wider economy there have been warnings of large-scale job losses from the so-called fourth industrial revolution. The World Economic Forum has predicted more than 7m jobs are at risk in the world’s largest economies over the next five years as technological advances in fields such as robotics and 3D printing transform the world of work.

Industrial Automation and Process Control

Industrial control and factory automation integrates mechanical engineering, electrical engineering and information technology.

It makes use of information technology and control systems to control and regulate industrial processes.

The demand for automation is expected to continue to increase due to the increased requirement for optimization efficiencies, better production control mechanisms, lower power consumption performance, reduced downtime, and better safety systems.

Process automation and factory automation products, software, and services include supervisory control and data acquisition (SCADA), distributed control system (DCS), programmable logic controller (PLC), manufacturing execution system (MES), remote terminal unit (RTU), human machine interface (HMI), advanced process control (APC), simulation software, security software, plant and asset management software, and communication networks.

Also includes various types of instrumentation which would help automate the manufacturing process, including pressure, liquid and gas analyzers, control valves and flow computers, temperature, level and flow transmitters.

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The increasing emphasis on industrial automation and optimum utilization of resources, is driving the industry control and factory automation market, encompassing industrial robots, sensors, field instruments, machine vision, control valves, HMI, industrial PC, and industrial 3D printing.

Robotics is fast emerging, covering industrial robotics, service robotics, medical robotics, surgical robotics, personal robotics, and home care robots.

Big data and analytics, along with industrial internet of things (IoT), are expected to further revolutionize automation.

Manufacturers are leveraging the potential of emerging technologies such as artificial intelligence, big data and machine learning, and additive manufacturing techniques, to accelerate the process of bringing innovation to market, and make their production processes more intelligent and responsive to emerging consumer needs.

According to IDC, by the End of 2021, 25% of Global Manufacturers will Apply Machine Learning to Data Across Product Development, Supply Chain, Manufacturing, and Service for More Rapid Decision Support, Improved Quality, Differentiated Products, and Innovative Business Models.

Industry 4.0

Industry 4.0 smart manufacturing and industrial IoT, enable manufactures to enhance existing production capabilities in aligning the innovation process with market demands and developing the next generation of resilient, lean production capabilities.

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The adoption of Industry 4.0, as well as the advancements in machine-to-machine learning protocols and the adoption of better industrial interconnect standards, encompassing the smart factory environment, seem to lead the way in next generation factory automation and data exchange in manufacturing technologies, led by advancements in sensors and by integrating real-time operational intelligence in supply chains via artificial neural networks.

Areas benefitting from developments in factory automation include the automotive, semiconductors and electronics, food and beverages, packaging and pharmaceutical industries.

Networking Technologies & Digital Platforms

According to IDC by 2022, 25% of manufacturers will be engaged in cross-industry collaboration, resulting in a 10% revenue increase.

Alongside the growing applications of industrial IoT to connect industrial devices, the integration between IT systems and factory installations and the need for high performance will boost the growth of the Networking technologies, such as wireless and industrial Ethernet.

According to IDC, by 2020, 60% of manufacturers will rely on digital platforms that enhance their investments in ecosystems, experiences and support as much as 30% of their overall revenue.

Supply Chain 4.0

Supply Chain 4.0 - the application of the Internet of Things, robotics, and advanced analytics of big data in supply chain management: place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction - will impact all areas in supply chain management.

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Digital Supply Chain: According to IDC, by the end of 2020, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities in integrating products and services and increasing digital engagement, thus increasing cost efficiency by 10% and service performance by 5%.

Controls, Sensors & Robotic automation

The growing importance of the industrial Internet of Things, Robotic automation and Sensors have redefined manufacturing processes and production.

Smart sensors are used with instrumentation devices with applications in the electronics, communication, and industrial automation industries. Emerging communication technologies such as satellite-based personal networks, and advanced wireless communication technologies such as wireless internet and LAN, are expected to boost the demand of sensors and instruments. The new entrants in the market can gain ground by focusing on. Emerging economies such as China and India are expected to offer the most lucrative sensors markets.

Manufacturing Execution Systems (MES) and robotic automation, are enhancing the prospects in the controls markets.

The advancement of the industrial Internet of Things (IoT), and the increasing adoption of smart grids will drive further demand for factory automation sensors.

The automotive sector will accelerate this market’s growth due to the implementation of regulatory standards for commercial and passenger vehicles.

Electrical systems and components

Electrical systems and components include devices such as switch gears, controls, cables, and circuit breakers, with application in electric systems such as micro-grids and digital substations to eliminate transmission inefficiencies and facilitate the optimum deployment of existing electric power systems.

The Instrumentation market

The instrumentation industry being critical to factory automation has enabled high output with minimum to no defective pieces through proactive solutions to analyze, measure and monitor the performance level of products will encounter sustained growth.

The Drives market

As energy efficiency regulations are calling for energy optimization and efficiency, reduction in operational costs, as well as rising industrialization and urbanization will boost the growth of the drives market - such as alternating current (AC) and direct current (DC) -- is anticipated to grow in near future.

Testing, Inspection and Certification

The testing, inspection, and certification (TIC) services ensure that a product meets the regulatory standards related to quality, technical safety, and performance. The implementation of new regulations & standards to ensure quality & safety are major drivers for the growth of the market.

Major players operating in the industrial control and factory automation market are ABB (Switzerland), Siemens (Germany), General Electric (US), Emerson (US), Schneider (France), Yokogawa (Japan), Endress+Hauser (Switzerland), Honeywell (US), WIKA (Germany), Azbil (Japan), Fuji Electric (Japan), Mitsubishi Electric (Japan), Omron (Japan), Yokogawa (Japan), Fanuc (Japan), Hitachi (Japan), Yaskawa (Japan), 3D Systems (US), HP (US), Vega (Germany), Danfoss (Denmark), Tegan Innovations (Ireland), Krohne (Germany), Rockwell (US), Chaos Prime (US), and Dwyer (US), STRATASYS (US), Progea (Italy).

GE and Microsoft Corp. entered into a partnership to bring together operational technology and information technology to eliminate challenges industrial companies face in advancing digital transformation projects. As part of the union, GE Digital plans to standardize its Predix solutions on Microsoft Azure and integrate the Predix portfolio with Azure’s native cloud capabilities, including Azure IoT and Azure Data and Analytics. The parties will also co-sell and go-to-market together, offering end customers premier Industrial IoT (IIoT) solutions across verticals. In addition, GE will leverage Microsoft Azure across its business for additional IT workloads and productivity tools, including internal Predix-based deployments, to drive innovation across the company.

SAP and Endress+Hauser collaborated in the development of the Industrial Internet of Things (IIoT) applications for the process industry, by integrating the Endress+Hauser field instruments as digital twins into the SAP cloud platform. Both companies want to take advantage of the services and smart apps from SAP’s Leonardo system as well as Endress+Hauser’s IIoT offering. The idea is to tightly integrate master and sensor data, as well as measurement values, into customer business, logistics and production processes and develop new digital services focused on predictive maintenance and predictive quality.

Our reports provide key statistics and analysis on market operating conditions, business challenges, current and historical industry growth trends, and more. They offer an explanation of the structure of the industry and analysis across the value chain, market sizes, revenue growth, market and product trends, demographics, price trends, product/company rankings or comparisons, key players profiles, comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies,designed to provide a better understanding of a market's competitive landscape, and market forecasts, projecting how current trends will influence industry sales and consumption patterns in the future, latest market developments and analyzing the potential effects of regulatory changes in conjunction with the background macroeconomic outlook.

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