DCS market dip much worse than ARC predicted
27 Sep 2010
Dedham, Massachusetts – ARC has got its DCS market projections in a bit of a twist, the market analysis firm admitting that global demand for distributed control systems had fallen much further in 2009 than it had anticipated.
ARC initially predicted that the market would be flat, with a strong services business compensating for a sharp decrease in hardware business. Instead, the overall market declined by just over 7% between 2008 and 2009, said ARC’s “Distributed Control Systems Worldwide Outlook” report.
So far, 2010, has not shown significant growth over 2009, but it looks like conditions are gradually improving, said ARC research director Larry O’Brien. Most process automation systems companies, he said, are close to or a bit above what they did in 2009.
“The DCS market is at a point where suppliers serving the installed base are probably more stable than those that must rely more heavily on project business,” said ARC. “Suppliers ate through a huge chunk of their project backlog while new projects were postponed or cancelled.”
Growth will accelerate after 2011, but ARC said it is unlikely to match the pre-recession levels. Historically, it noted, “the process automation market has been characterised by slow yet steady growth, and we expect the market will return to this pattern with an overall CAGR of 4% over the five-year period of 2009-2014.”
The DCS business has primarily been a services business for the past few years, with combined project and after-sales or operational services accounting for over half of total revenues.
ARC had expected this market to remain quite buoyant throughout 2009, but both it, in fact, declined, with many large projects were put on hold in 2009 and many continue to be on hold.
However, the firm now sees services recovering, particularly in sectors such as power generation, upstream oil and gas, water and wastewater, bioprocessing, renewable energy, and others.
