Labor shortages or lack of skilled labor remain critical challenges for many industries around the globe. As per the Bureau of Labor Statistics, approx. 500,000 jobs for skilled labor remained unfilled in the U.S. manufacturing industry in 2018 as a result of the skill gap, and this figure is expected to rise to 2.5 million during 2020–2027. Manufacturers across industries have thus started adopting machines to overcome labor challenges.
The introduction of advanced technologies in automation and process control has disrupted traditional operations in industries. Manufacturers are increasingly resorting to these technologies to alleviate the struggle of finding the right talent and eliminate the risk associated with low skill jobs. The transition demands a skilled workforce to accomplish and puts unskilled or semi-skilled labor at risk of unemployment. The scenario also compels governments to ensure workers are equipped with foundational and specialized skills necessary for modern technologies.
Experts at Straits Research peg Europe as the most vulnerable region in the global movement toward automation. About 14% of the region’s adult population is low-skilled and faces a threat from automation.
In today's digitalization era, manufacturers' data systems are often built on open or standardized technologies to make them more cost-effective and efficient. Hence, they are exposed to online vulnerabilities that were once limited to affecting only office computer systems.Some of the critical security challenges associated with the deployment of automation and process control are:
There is a rising trend in manufacturing environments that tightly integrates production networks with corporate networks, such as supply chain management, sales, and business oversight.In other words, the ‘airlock’ between systems that existed in the past and offered a level of the production line security is now being eliminated.
The evolving technological environment has altered the dynamics of industrial and manufacturing operations such that industries are no longer entirely dependent on a human workforce for simple and complex tasks. The deployment of automation and process control solutions among companies to gain a competitive advantage drives industry growth.
In the long run, the development of automated networks will further improve the resilience of supply chains.Essential insights about materials, logistics, machines, inventory, and production can directly be taken, analyzed, and shared, helping companies with efficient supply chain management. Moreover, the COVID-19 pandemic has compelled businesses to reduce dependency on the workforce and undertake automation upgrades and digitalize processes. Below mentioned are some of the opportunities for the automation and control process industry in several components of the industrial operational chain.
Manufacturers of industrial controls, drives, and motors must stay agile to keep pace with the rapid transformation with automation technologies. Straits Research provides deep insights into the highly categorized value chain. Our team has helped companies operating in the industry by analyzing trends, such as the increased use of autonomous mobile robots in manufacturing and logistics and expanded use of machine vision.
We have worked with clients every quarter to provide insights regarding the industry ecosystem’s growth strategy. We have also provided clients with ideas regarding market estimates and forecasts to help them strategize around the fragmented value chain. Straits Research has delivered the most comprehensive insights into the impact of ‘Industry 4.0’ on the industry and different technological advancements such as artificial intelligence (AI), machine learning, data analytics, and cloud computing.
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.
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.
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.
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.
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.
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.
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.