Staggering declines in Asia drive motion control market into downturn: study

The market decline for General Motion Control (GMC) systems was affected by the sharp decline in capital equipment purchases during the second half of 2012, according to a new report from ARC Advisory Group.

The study found the rate of global growth slowed down, putting a damper on economic activity in the latter half of 2012. The sovereign-debt situation in Europe compounded with anticipation of another financial crisis slowed down investments in capital equipment.

The global economy grew by 3.8 per cent, which was not as strong as predicted. In Asia, the economic situation was not as robust as prior years. The motion control market in China sustained a decline along with Japan. Japan’s economy continued to experience aftershocks of the natural disaster. The North America and Latin America markets were the only regions to achieve a modest positive growth.

In 2012, the general relative market leadership positions have experienced considerable compression in market share separation. Notably, the largest declines in revenues were experienced by several of the leading Japanese suppliers with revenue declines on the average of 12 to 20 per cent. The supply chain issues faced during the period after the tsunami resulted in indigenous Chinese suppliers capturing market share. The second tier suppliers are being reshaped by acquisitions, according to the study

The market witnessed an increased number of acquisitions to allow motion control suppliers to place a stake in regions where they have little presence. In prior years the general trend in acquisitions was to extend product lines in an effort to support more comprehensive solutions. Now the market is witnessing very specific niche plays that are strategic in nature. Conversely, larger diversified businesses are acquiring niche motion control suppliers, viewing these simply as good investments providing a predictable, but steady ROI.

“These dynamics on the supply side are creating a new competitive climate in the foreseeable future as motion control suppliers realign portfolios and centers of competency to capture growth in emerging markets and applications,” said research director Sal Spada, the principal author of ARC’s “General Motion Control Global Market Research Study”.

China has become an important market for the Japanese suppliers; however, they have been burdened with a high valued Yen that prices many of the Japanese products outside of their domestic market. China is also one of the largest global producers and consumers of machinery that makes this a very important market for Japan. However, indigenous suppliers in China are also growing rapidly as they are now becoming part of the fabric of the overall motion control market. Japan’s motion control suppliers confronting the high valued Yen are establishing manufacturing operations outside of their domestic market to regain control of their manufacturing costs.

Manufacturers are seeking to reconfigure the production lines automatically and more rapidly. This is driving the demand for low cost auxiliary axes on each machine. Low cost axes in conjunction with high performance servo solutions are driving up the axis count per machine. This is enabling the market to withstand declines in the price points in motion control platforms.