Automation & Process Control

Impact of COVID-19  on Automation & Process Control Industry

Automation Industry Setback by COVID-19 Pandemic, Loses a Year of Key Advancements

The global automation industry has witnessed significant strides through the digital transformation of industrial processes over the years. Additionally, the convergence of technologies, such as cloud computing, artificial intelligence, and industrial internet of things (IIoT), has catalyzed the industry's growth. From 2017 to the outbreak of COVID-19, automation observed several trends that represented significant opportunities for the sectors deploying it, such as manufacturing and automotive. Some of these opportunities are briefly discussed below.

Shift toward software-as-a-Service (SaaS) Models: Global suppliers in the automation industryare observed to be accelerating the software business in their operating business model as it proves to be less time consuming and cost-efficient. This has further resulted in the adoption of SaaS and managed services models among suppliers, wherein industrial firms actively subscribe to digital services by paying an annual/monthly subscription fee. In return, the firms are offered considerable cost savings through the predictive maintenance of industrial components.

Cyber-Security — a Key Focus Area: As a result of the high dependence on software-based business models evolving in the industry, the cloud, and internet of things (IoT) are bringing to light the need for developing and deploying robust cyber-security systems. The scenario has introduced an area of specialization for companies operating in the industry, which is based on creating a healthy and safe operating environment by adopting cyber-security measures.

Introduction of New Industrial Components and Systems: The materialization of concepts and technologies, such as virtual reality (VR), augmented reality (AR), smart devices, advanced networking infrastructure, and IIoT, has resulted in several new systems and components in the industry. For instance, in a manufacturing plant, creating a digital design requires working on the CAD software, which means using a mouse, keyboard, or stylus for input. Additionally, one also needs to use several keyboard shortcuts and regularly rotate and zoom in on the item to visualize it in a 3D space. However, the introduction of VR in this process has made it tactile by enabling the user to physically manipulate the object and move around it in three dimensions to access and assess different parts. 

What Is the Automation Industry Outlook Amid COVID-19?

The pandemic has resulted in the shutdown of many businesses and brought industries to a halt. What further exacerbates the situation is the uncertainty around when economic activities will resume and bring in normalization.

The manufacturing industry is severely hit, with production plants, warehouses, and mines idling at the moment or operating at particle capacities. Many large-scale manufacturing firms, which are critical consumers of automation technologies, have slashed their capital expenditures in response to the collapse in materials and consumer demand during the lockdown.

The impact of COVID-19 on the U.S., the U.K., and the rest of Europe, Japan, and China, which are vital manufacturing hubs, has been devastating in terms of manufacturing data. The Purchasing Managers Index (PMI), a survey-based index that provides a pulse or broad picture of the manufacturing activities conducted in any economy, has recorded historic lows in several industrial hubs. The below table depicts the PMI index for March 2020.

Source: SEMI

As automation suppliers’ operations are significantly dependent on the manufacturing sector's functioning, these suppliers face capital challenges presently. Besides, the year 2020 was foreseen to be progressive for the automation industry as more than 100 conferences were planned on a global scale. These conferences were projected as a medium of brainstorming new technologies and discussing their advantages and attracting investments for further development of automation and associated technologies. However, many of these conferences have been canceled with the outbreak, while some have been postponed to the next year. 

How Are Key Players in the Automation Industry Helping Industries around the Globe during This Phase?

Several players operating in the automation sector offer a hand to different industries, specifically healthcare and pharmaceutical, to help them sustain in these times. For instance, Siemens has made the additive manufacturing (AM) network available with its 3D printers to help health professionals worldwide fasten the design process and produce medical components. The technology enables less complicated and faster production of spare-parts for vital medical equipment, such as ventilators.

Some players are also focusing on developing technologies capable of providing help in emergencies. For instance, Emerson is focusing on technologies that would help boost medical equipment production, such as respirators, testing equipment, hospital beds, and ventilators. Additionally, the company is helping its customers operate in the healthcare sector by providing its ‘Ultrasonic Technology’ to manufacture face masks, hospital gowns, disposable hygienic products, and different types of filter media.

Impact of the COVID-19 Pandemic on the Construction Industry

The COVID-19 pandemic has had an unprecedented effect on stock markets and many industries, with labor-intensive sectors suffering the most. The global construction industry is has come to a standstill with the pandemic seeing mass migration of labor and a complete halt in new projects.

In the U.K., government bodies estimate the construction industry has suffered a severe setback, one direrthan that during the 2007–2009 recession. The U.K.’s construction industry is in shambles, with the Construction Total Activity Index droppingfrom 52.6 in February to 39.3 in March.

Delay in Construction Project Completion to Lead to an Increase in Claims Related to Project Obligations and Other Contract Terms

COVID-19 cases are still on the rise; thus, lockdown and movement restrictions are expected to stay longer. Uncertainty regarding when economic activities will return to normalcy and a general fear among the public have seen workers migrate to their native towns and cities. As a result, today, industries, especially labor-intensive ones, lack the labor to resume daily activities. Ongoing projects are stuck midway, and with no signs of workers traveling back, contractors will be unable to meet project completion deadlines. The scenario will see an upsurge in the number of claims filed related to project scheduling and obligations; mediation, arbitration, and litigation over contract terms, such as delay clauses, force majeure provisions, and liquidated damages; and other conditions.

Long-Term Impact of the Pandemic

The closure of construction sites and lockdown measures is expected to have a severe impact on business activity in the coming period. Construction supply chains are set to focus on providing essential activities, such as infrastructure maintenance, safety-critical remedial work, and support for public services in the weeks ahead. While the pandemic will have a temporary effect on other sectors, the construction sector will be facing a long-lasting challenge, until contractors and clients take adequate measures to protect their linkage with their supply chain partners. Additionally, the industry where cash is king is experiencing a new space by accelerating payments and settling dated debt, thereby reaching a healthy state.