By Rita Liu, Analyst, IHS Markit
The global market for programmable logic controllers (PLCs) suffered strong headwinds and contracted by 11.5 percent in 2015, with revenue falling to $8.3 billion, according to the IHS Markit PLCs Annual Intelligence Service. The market will continue to contract through 2016 for several reasons, including an unfavorable economic climate in emerging economies. Other concerns include China’s ongoing economic slowdown and overcapacity in most heavy industries, as well as the end of the commodity super-cycle. However, there is light on the horizon: global revenue from PLCs, with their associated software and services, are forecast to grow at a compound annual growth rate (CAGR) of 3.8 percent from 2017 to 2020, reaching $9.3 billion.
Europe, the Middle East and Africa (EMEA) will continue to be the largest regional market for PLCs, accounting for over one third of the 2020 global revenues. The Asia-Pacific market will grow the fastest over the next five years -- especially from 2018 to 2020 – driven by the fast-growing Indian and Southeast Asian markets and a recovering Chinese market tied to South Korean and Taiwanese markets. The American region is expected to be the second-fastest growing market, with a strong recovery starting in 2017.
Of course, the performance of the PLC market depends largely on the underlying growth in the discrete and process-manufacturing sectors where PLCs are mainly applied. Machine tools, packaging machinery and automotive sectors were the three largest markets for PLCs. However, these markets, -- especially the machine tool sector -- are forecast to grow more slowly from 2015 to 2020 than the market average. The machine-tool sector suffered a big decline in 2015 in China and the United States, which are the leading national markets for machine tools.
In discrete-manufacturing sectors, robotics is still the fastest growing for PLCs. Currently robots are widely used in automotive manufacturing, the electrical and electronics industries, and other fast-growing industrial production industries. As core components of robots, PLCs are expected to benefit greatly from the global robot boom. Food, beverage and tobacco machinery will be the second-fastest growing sector from 2015 to 2020. In process manufacturing sectors, water and wastewater, pharmaceutical and power-generation sectors are forecast to grow most quickly.