The worldwide gas and oil industry, when a shining beacon of growth, continues to be within gloomy overcast for pretty much annually now. Oil prices have fallen by roughly 50% because the summer time of 2014, and therefore are affecting from investment and jobs to gasoline prices and consumer consumption. Nowhere is that this dynamic felt greater than in Texas, where I'm based, as it's been among the champions from the United States shale revolution.
Of particular concern for businesses within the industrial automation space would be the significant contractions in capital expenditure, varying from 10% to 40%, introduced through the world’s biggest gas and oil companies for 2015. Even though the cuts will definitely affect growth this season, I'm here to reassure these businesses that stop worrying!
The Commercial Automation Equipment (IAE) market continuously grow (although in a contracted rate) in 2015 despite facing some headwinds, mainly by means of low oil and commodity prices and destabilized demand from some developing financial systems. These headwinds will dampen overall market revenue growth by roughly 1%-2% this season.
Enhancing global economic growth, especially in the U . s . States, Eu (EU), Japan and India, continuously support growing sales of IAE items in 2015. Although slowing down development in China and recessions in South america and Russia will limit this expansion, it will not be sufficient to counterweigh the enhancing conditions within the other regions.
It is true that considerably decreased capital purchase of the gas and oil along with other commodity-related industries will hurt sales of IAE items in to these industries in 2015 and 2016, however this decline is going to be offset by development in other industries for example automotive, food and beverage, packaging, materials handling and robotics.
For instance, the gas and oil industry, which paid for for roughly 7% of total IAE sales in 2014, is anticipated to determine a good investment decline of approximately 8% in 2015. This contraction in capital expenditure is going to be somewhat counterbalanced by elevated investing within the cement &lifier glass, chemicals, pharmaceutical drugs, food and beverage along with other industries.
From the three major IAE product groups, motors and motor controls is going to be most hurt by low oil prices as sales in to the gas and oil sector composed nearly 8% from the total revenues of these product groups in 2014. Automation equipment won't suffer just as much, except for process remotes, which derived nearly 25% of the 2014 revenues from gas and oil. Minimal disturbed product type is going to be energy transmission items. However, the marketplace for hydraulic systems, which belongs to the product group and it is quite dependent on oil &lifier gas industry sales, faces significant declines in 2015.
Overall, the IAE market continues growing in 2015, with revenue expansion likely to are available in at 4.5% over 2014 levels. As oil prices start to recover, that is broadly likely to occur by late 2015, the outlook for industrial automation providers is only going to brighten further.