Matthew Kimpton-SmithManaging DirectorCygnet Group Ltd

The Role of Automation in the Future of Manufacturing and the

Opportunities it Will Bring

What is Industrial Automation?

INDUSTRIAL AUTOMATION• The use of control systems and software to

independently operate, control and monitor a mechanised system.

INDUSTRIAL AUTOMATION• Increases manufacturing output while reducing

operating costs.

How big is the Market?

Industrial Automation

£100bn GloballyFactory Automation

£45bn Globally

Process Automation

£55bn Globally

Source: Credit Suisse estimates

Reasons to Invest in Automation• Increase in output• Increase in flexibility• Reduction of waste• Save space in high value

manufacturing areas

• Reducing operating costs

• Reduce capital costs• Improving product

quality• Complying with H&S

North America Manufacturing output & manufacturing employees

North America Operational stock of robots & manufacturing output per hr of labour

Source: IFR, Bureau of Labour Statistics Source: IFR, Bureau of Labour Statistics, United Nations Statistics

Automation Examples

Robotics Auto Guided Vehicles

Automated Handling

Role of Automation

• Increases manufacturing output

• Reduces operating costs

• Improves product quality

The Role of Automation in the Future of Manufacturing & the Opportunities it will

Bring

Market Outlook

• The market has grown by approximately 6% per annum since 2003, this is roughly 1.7 times global industrial production.

Automation Markets vs. Global IP

Factory & Process Automation Growth Rates

• Global capex outlook for key automation end-markets such as Automotive and Petrochemicals is stronger today compared to previous years.

Source: Credit Suisse Economic Research Source: Credit Suisse estimates

Emerging Economies

‘Lewis Turning Point’• Rural labour has largely been utilised

• Demographic polices are shrinking the working age population

• Rising education levels are reducing the proportion of the population wanting to enter the manufacturing sector

• Wage inflation – pressure on manufacturing costs

China - CurrentDwindling Supply of Manual Labour (China)

Hourly Manufacturing Labour Costs (China)

Population aged between 15-19 minus population aged between 50-54 and new college students.Source: CEIC, UN, Credit Suisse estimates

Source: Credit Suisse Global Strategy

China - Future

• Government actively encouraging the rise of manufacturing technology

• Increasing levels of automation will help China manage wage inflation

• Companies migrating their manufacturing facilities westRobot Shipments to China

Source: IFR, Bureau of Labour Statistics, Credit Suisse Research

Robotics• Robot density in most geographic regions remains low. This

augers well for rising penetration as a driver of automation investment.IP & Robot Shipment CAGR’s (2000-

2011)Robot Density by Region (2002 vs. 2011)

• Penetration of automation in emerging markets remains low

• Emerging markets account for 50% of global manufacturing output

• Largest future growth opportunity for investment exists in Non-Japan Asia, which currently accounts for 35% of the world’s manufacturing output, but only has robot density of 11

Source: IFR Source: Robotic Industries Association

Opportunities

• China needs to invest in automation to maintain competitiveness

• Opportunities in emerging markets and Non-Japan Asia

• As overheads rise in the east manufacturing could migrate west

Factory of the Future

Henry Ford’s assembly line 1913

• Improved design software will increase product development

• The same software will be used to program machining stations and more dexterous robotics

• New materials such as Carbon Fibre will result in new production processes

• 3D printing promises to demolish economies of scale

• Manufacturing in the future will become even less labour intensive

• Labour costs will become less importantAutomated assembly line 2014

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