SCDigest Editorial Staff
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 ARC notes that most automation investments are planned well in advance and designed to support long-term growth and cost reduction plans, and are often therefore less vulnerable than other spending to short-term economics.
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Perhaps surprising, industrial automation orders looked pretty strong for the latest quarter despite a sagging global economy, according to research by ARC Advisory Group.
In a recent ARC Insight titled Automation Stands Strong Against a Faltering Economy, analysts Allen Avery, David Humphrey, and Larry O’Brien say that in the short term, automation providers seem to be weathering the economic storm OK, and that the longer term future also looks bright due to expected global spending on infrastructure.
“With such bad news about the economy, it would be easy to assume that automation suppliers are also in the throes of hard times,” ARC wrote. “While suppliers to the discrete manufacturing industries are facing some challenges, almost all of the major automation suppliers are still posting year-on-year revenue growth in the double digits.”
ARC notes for example that the Industry division of automation giant Siemens, the leader in many automation market segments, recently cited an order backlog 21 percent higher than the same quarter in 2007, although it did expect growth rates for new orders to decline. Kuka, a leading supplier of industrial robots and welding systems, reported mixed results in Q4, but also mentioned a higher than average order backlog, according to ARC.
Most of that good news is certainly the result of orders placed months ago in better times, given the long lead time between order and delivery for many automation systems.
However, ARC notes that most automation investments are planned well in advance and designed to support long-term growth and cost reduction plans, and are often therefore less vulnerable than other spending to short-term economics.
Nonetheless, it seems almost certain that capital spending for nearly all sectors will be reduced in 2009.
The chart below summarizes ARC’s analysis of the Q3 results for more than two dozen automation suppliers. While not all faired well, the overall news is certainly positive.
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