Manufacturing Investments Drive Asian DCS Market

March 20, 2007
Electric power and batch control needs will help drive rapid growth of Asian distributed control system market, study says.
Strong economic activity in Asia is spurring the growth of manufacturing, which in turn is propelling the growth of the automation market in the region. The Asian market for Distributed Control Systems (DCS) is expected to grow at a compounded annual growth rate (CAGR) of 9% over the next five years, according to a new study from ARC Advisory Group Inc., Dedham, Mass.  In Asia, large greenfield projects are translating to large investments spread across many verticals such as chemical, electric power, oil and gas, and refinery industries. Many of these plants are engineered and built not only to meet the domestic demand but to cater to the global demand.  “Robust demand, massive investments, and increasing affluence result in a cycle of wealth creation, and Asia is experiencing this transformation. Large greenfield projects are the flavor in Asia and the scale of plants in chemical, electric power, oil and gas, and refinery industries are leaning toward catering to global demand, in addition to local consumption. Growth in the manufacturing industry is leading to a thriving DCS market in the Asian region. To compete globally, manufacturers realize that high productivity and quality are necessary. They are embracing current technologies to a greater extent and the trends are very positive,” ARC says. The report, “DCS Outlook for Asia,” is co-authored by ARC Research Director Larry O’Brien and Senior Analyst S.R. Venkatapathy. Electric power needs The growing demand for electric power is prompting massive investment in the electric power industry, with coal-fired predominantly emerging as the biggest user of DCSs in China, India, and the growing economies of Southeast Asia, the ARC study points out. Rapid urbanization in most countries in the region and massive expansion in manufacturing activities spread across many verticals provide the impetus for electric power industry growth. In the next five years, while China will account for the addition of around 25,000 megawatts (MW) of generating capacity, India will be adding over 50,000 MW. The other emerging economies in Asia are also expected to add large capacities.  Even though most of electric power in many countries in Asia, including China and India, depends on fossil fuel, Japan, China, India, and South Korea, besides other countries in the region, have drawn up ambitious plans to increase nuclear power generation capacity. Accelerating investments in the construction of nuclear power stations, which typically involve higher automation spending, will further spur the growth of the DCS business. The growing electric power industry will remain the largest business for DCS over the next five years, ARC maintains.  Batch control grows Changing lifestyles and demography and increasing affluence, which are contributing to the growth of the food and beverage, and pharmaceutical industries in Asia, are resulting in the expansion of the batch control system market, says the ARC report. The demand for packaged food, life-quality enhancing, and pharmaceutical products are on the increase. Global suppliers, such as Procter & Gamble, Unilever, Kraft, and Budweiser, along with homegrown companies, are establishing large-scale manufacturing facilities requiring the use of sophisticated control systems. Food and beverage, and pharmaceutical industries that typically involve highly regulated production processes need to comply with Food and Drug Administration (FDA) regulations and international standards. The growth of life science industries results in the widespread use of batch control systems. These control systems, apart from helping manufacturers address compliance issues, also help to achieve agility, flexibility, operational safety, traceability, and reliability in production, while concurrently managing extensive documentation. These factors provide the necessary impetus for growth of the DCS-based batch control system market, the ARC study says. ARC Advisory Group

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