2020 was expected to be the year of recovery but the coronavirus outbreak, which threatens on a global level, has hindered the recovery in China's motion controls market.
In 2019, affected by the trade war between China and the United States, as well as the downturn in the electronics and the automotive industries, the motion controls market contracted in China. 2020 was expected to be the year of recover, but the coronavirus outbreak, which threatens on a global level, has hindered the recovery in China's motion controls market.
The outbreak has had a major impact on China's manufacturing sector. Wuhan, Hubei province, has long been one of China's manufacturing hubs, strong in the automotive, electronics, and semiconductor sectors. Even if the outbreak is brought under control soon, a combination of factors such as the isolation of personnel, extended holidays, and traffic control will make it difficult for the manufacturing industry in Hubei and Wuhan to recover in the short term.
On the other hand, this outbreak is likely to have a beneficial impact on a few industries, especially those related to medical supplies, surgical masks, and protective equipment.
From a national perspective, for those industries or enterprises with a higher degree of automation, such as semiconductor and panel manufacturing, production activities are relatively normal and will not be too badly affected by the outbreak. However, industries with large workforces and low levels of automation, such as electronics assembling, will face significant challenges. After the resumption of work, the labor-intensive manufacturing industry will face a higher epidemic uncertainty than the less labor-intensive industries. This will lead to disruption across the supply chain.
The impact on supply chains is twofold:
- First, on the supply side, resulting in shortages of raw materials and components. Due to transportation restrictions, the supply of raw materials is not smooth. This not only affects the transportation of domestic raw materials, but also significantly slows down the clearance speed and import volume of imported goods from abroad. This creates a supply squeeze, which in turn causes raw material prices to rise.
- Second, at the demand level. The downstream demand is weakened, so that the production enterprises in the middle and upper streams are facing high inventory risks, which could lead to further production cuts or cost increases.
However, there are still opportunities in the manufacturing sector, despite these challenges. The underproductivity of protective products has been highlighted during this epidemic, encouraging medical equipment manufacturers to pay more attention to promote the application of flexible and automated production lines and factory intelligence. This will help to improve logistics within the supply chain and provide more protection towards future risks.
From the perspective of automation sector, 2020 is the best time to promote digitalization to these enterprises. When unexpected events such as virus epidemics, earthquakes, and typhoons occur, regions and industries that have been heavily effected look for solutions to mitigate risks in the future. This demand for technologies utilizing intelligent services based on IIoT, such as remote guidance through augmented reality and fault warning based on the monitoring of devices, will gradually turn these smart services from concept into reality.
In production, the integration of device data and device management systems can be realized by docking with the IIoT platform, supporting remote monitoring and debugging of equipment by device experts, and providing diagnostic services based on data. The accumulation of data lays a foundation for realizing equipment optimization, quality analysis, and supply chain scheduling optimization. After the outbreak, manufacturing companies will pay more attention to the practical application of BI, big data analysis, and AI technologies. If these technologies can show that they mitigate future risks, it could lead to a surge in demand for manufacturing software and demand for robots and co-bots.
Omdia estimates that the future growth of the Chinese motion controls market will be strongly driven by the application of IIoT. Networked motion control products and the development of 5G are essential to provide remote diagnosis, real-time reaction, and predictive maintenance, adding more value to end-users of industrial equipment and machinery.
The coronavirus outbreak has added to the woes of China's automotive and 3C electronics industries, further undermining the recovery of the machine tool and semiconductor industries. However, the outbreak has also accelerated investment in the pharmaceutical protection machinery and logistics industries. The above graph demonstrates the year 2020 growth rates comparison of Asian motion controls which resulted from the biggest impacts of the coronavirus. Omdia predicts that the GMC servo markets will have lower single-digits growth for 2020, with the rate of growth increasing in Q3 2020.