Investments, Slower Growth Imminent For Industrial Controls in the US

National Electrical Manufacturers Association’s (NEMA) primary industrial controls index dropped slightly from first-quarter 2006 to the second quarter, suggesting rate of growth is slowing, compared to faster growth over the last two years. The industrial controls index increased 6.5 percent over the same period a year ago and has risen 11 consecutive quarters on a year-over-year basis. The organization suggests that to maintain productivity, businesses may have to invest in new facilities, machinery, and equipment.

The broader market index, the primary industrial controls and adjustable speed drive index was higher in the second quarter and reached the highest level in its five years of existence. Slowdown signs are evident, but overall market conditions remain strong compared to a year ago, as the index rose 9.3 percent on a year-over-year basis.

NEMA issues the industrial control business indices quarterly. The primary industrial control index represents US shipments for motor starters, contactors, terminal blocks, control circuit devices, motor control centers, sensors, programmable controllers, and other industrial control devices, a $2.6 billion market. In 2001, the NEMA data collection program was expanded to include adjustable speed drives, a key energy-saving industrial component.

Demand for industrial controls and adjustable speed drives is expected to remain healthy over the near term, since record corporate profits allow for additional spending on capital equipment, and relatively healthy economic conditions abroad stimulate foreign demand for U.S. manufactured goods. Still, many plants are running at almost full capacity and resources are stretched thin; recent data show the aggregate capacity utilization rate for the manufacturing industry hit a six-year high of 81.1 percent, while 40 percent of producers are running factories in excess of 85% capacity. NEMA says businesses may have to invest in new capital such as facilities, machinery, and equipment and replace worn-out equipment to maintain current levels of productivity.

Source: Control Engineering US