Industrial equipment shows healthy growth potential worldwide

7/25/2012 4:26 PM EDT

What do Mitsubishi Electric, Avago, Apple, Datalogic and Rockwell Automation have in common? While globally, massive revenue drops across several technology segments is in the headlines, there’s evidence that factory automation equipment will show extremely healthy growth. These companies are anticipating the industrial equipment uptick, and investing heavily.

Mitsubishi Electric, for example, just announced an expenditure of 6.5 billion yen to build a new production facility for factory automation products at their Nagoya Works in Aichi Prefecture, Japan. Opening in January 2014, the facility will play a key role in providing factory automation equipment especially in the China and Asia corridor. Programmable controllers and key components in drive-control equipment will be produced at the new operation. Mitsubishi isn’t stopping its investment there; it’s also adding China, India and other countries for new production structures.

An effective way to see who else is involved in major factory automation investment is to look at several trends. Considering the rising cost of unskilled labor in China, the World Bank recently concluded that China’s labor force would shrink within the next few years. As a result, China will increase automation to offset higher costs and fewer workers. Apple’s presence in China is watched with careful scrutiny. Apple is beginning to put a greater emphasis on production automation. The company expects to double its capex budget this year to $8 billion driven primarily by product tooling and manufacturing process equipment.

Another example is Avago, known primarily for its communications presence; the company also has an industrial and automotive segment. Avago is the #1 supplier of optocouplers globally, maintaining a dominant 65% share of high-end optocouplers. While Avago has not completely compensated for its exposure in the declining automotive segment, factory automation is expected to more than offset any automotive decline.

Another example of industrial automation optimism is Rockwell International and its continued investment in Turkey. The company is building an industrial automation, motion control and safety laboratory at Istanbul Technical University. The effort in Turkey places emphasis on software development in the automation sector. Rockwell’s donation to ITU’s laboratory is $600,000.

Finally, Datalogic Group, Accu-Sort Systems and PPT Vision are forming a new organization to become a world-class provider of products and solutions for material handling, traceability, inspection and detection in industrial automation. They plan on efforts in North America, Europe and Asia. Named Datalogic Automation, there will be four business units:

• Transportation & Logistics
• Factory Automation
• Machine Vision
• Laser Marking

Evidence is mounting that the industrial equipment segment globally is comparatively in a good position to outperform many technology segments in the next several years. While what China does to invest and offset declining benefits from offshoring is important, global growth in the industrial equipment sector will not just depend on what China might do.