Machines for industry are hitting a sharp growth spurt for 2014, and they’re positioned for go-go growth over the coming five years.
According to a report from IHS Technology, the growth of machine sales will hit an annual rate of 6.3% in 2014, more than twice the 2.9% increase seen in 2013. As economic conditions continue to improve worldwide, the demand for machines in sectors such as agriculture, packaging, materials handling, and machine tools will push revenues to $1.6 trillion this year, up from $1.5 trillion in 2013.
Strong growth is forecast to continue in the near future, with revenue rising to $2 trillion by 2018. During this period, the machinery market’s annual growth rate will remain impressive, averaging between 5% and 6% each year.
Sales growth for industrial machines in 2014 is being driven in part by higher demand for cars worldwide. That growth is spurring the need for increased spending on tools and robotics, as well as machinery for rubber and plastics. Also, an increase in the worldwide standard of living will benefit food and packaging machinery sales. In addition, rising spending on technology products will boost the demand for robotics, semiconductor equipment, mining, and oil and gas machinery.
Breaking growth into regions
As for the regional breakdown of machinery growth, Asia is expected to see the strongest growth, as it comes back from a sluggish year or so.
“China is returning to stronger growth following a couple of years of overcapacity,” Andrew Robertson, senior analyst at IHS Technology, told Design News. “There is a drive in China toward improving domestic demand, rather than relying too heavily on exports. China has the financial strength to invest in supporting this.”
Part of the increase in industrial machinery in China is coming from the growing acceptance of China’s manufacturing quality. “Made in China is becoming an increasingly acceptable term in the West, as quality and price continue to rise,” Robertson told us. “In the past there was the perception that 'Made in China' meant low cost; however, this viewpoint is becoming less prevalent.”
A weakened yen is helping to increase Japan’s machinery sales. “Output in Japan was inhibited by a very strong yen; as recently as 2011 the Japanese currency reached a record of 76 yen to the dollar, significantly curbing its machinery exports. More recently, Japan has benefited from a weakening yen, which is helping to drive exports of Japanese equipment.”
Continued economic sluggishness in Europe may mean the continent misses out on the coming machinery growth years. “Europe continues to lag behind in terms of growth, as the general economic outlook of the region continues to only gradually recover,” Robertson said.
Economic changes could alter forecast
He conceded that the forecast of growth is predicated on continuing global economic recovery. “The strength of the machinery market is always closely linked to general economic performance, albeit there are other factors influencing the industry -– regulations, currency fluctuations, new trends, and technology. The main factor that can disrupt the forecast would be the general economic health of a region. The demand from the end-market has a big influence.”