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Is the manufacturing recovery sustainable?: ARC report

Automation supplier revenues continued to fall throughout 2009 compared with 2008, year-on-year comparisons between 2008 and 2009 are expected to experience a decline, with modest growth in 2010, according to a study from ARC Advisory Group.

ARC sees signs that the manufacturing recovery has begun but its continued success depends on the ability of the financial markets to return to normal functioning.

Small, medium, and large businesses have all been strained by the inability to access short-term capital, the ARC study, Automation Expenditures for Process Industries Worldwide Outlook, records.

Moreover, many businesses have simply delayed capital equipment expansions, particularly if they manufactured components in the automotive supply chain, the study reports.

Although the short-term forecast for the global automation expenditures for the process industries looks bleak, ARC expects moderate market growth to resume during the latter part of the five-year forecast period.

Once the economic turmoil settles, the globalisation environment will resume, which will once again cause manufacturing companies to invest in capital expenditures.

“Manufacturers will continually face challenges to raise productivity, lower product costs, reduce plant operating expenses, and increase return on investment (ROI) to compete in the global market. Consequently, capital investments for automation should resume across many industries,” said senior ARC analyst and author of the report, David Clayton.

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