Latin America Factory Automation Market to propel at a CAGR of 7.29% during the forecast period 2019 to 2025

Latin America Factory Automation Market Largely Driven by the Growing Demand from the F&B Processing and Manufacturing Industries While the Booming Automotive, Packaging, and Oil & Gas Industries Increasing the Sales of Electrical Components Required in Automation Facilities

The contemporary era of the industrial revolution is bringing a radical shift in the way factories operate, and with the advent of artificial intelligence (AI) and robotics, machine replacement and factory automation have become a ubiquitous phenomenon in multifarious industries. The penetration of factory automation in various end-user industries is predominantly attributable to the dearth of skilled workers, which is making the factory management resort to technology. This lack of skilled workforce has a perceptible effect on the factories in Latin American countries that are inculcating technology, which in turn, is creating a myriad of opportunities in the Latin America factory automation market wherein the electrical component segment of the market is at the most advantage. The growth of the Latin America factory automation market is also attributable to the increasing prospects in the end-user industries such as food & beverages (F&B), oil & gas, chemical manufacturing, and others. While the lack of skilled workforce is setting a profitable pricing environment for the Latin America factory automation market companies, the fact that a significant proportion of working personnel has barely routine work to do that can be replaced by automation is further creating revenue sources. World Economic Forum evinces this fact with research, according to which 40% of Latin Americans are in jobs that have a minimal amount of routine work. Furthermore, according to the World Bank Enterprise Survey, 31.6% of the companies in Latin America struggle to find skilled workers – a figure that is way above 21.2% global average. Henceforth, Latin America factory automation market by electrical components is thriving.

The Latin America factory automation market size was evaluated at $14.76 billion in 2018, and with the growing demand for electrical components from the end-user industries, it is poised to increase at a CAGR of 7.29% during the forecast period 2019-2025.

Brazil Dominating the Latin America Factory Automation Market:

As of 2018, Brazil had the maximum Latin America factory automation market share with 36.57%. This is major because of the growth of the Brazilian oil & gas industry. According to the Energy Information Administration (EIA), Brazil produced 3.36 million barrels per day (b/d) of petroleum and other liquids in 2017, and the country was identified as the third-largest producer in the Americas. This growing production in refineries is coupled with the fact that companies rely on automation for offshore operations which the Latin America factory automation market players are leveraging. For instance, a Brazilian company that produces 90,000 barrels of oil per day is in a joint industry project with ABB for developing power and automation for offshore activities. This is creating revenue sources for ABB in the Latin America factory automation market.

Another revenue source for Brazil factory automation market comes from the F&B industry, which witnessed substantial growth in 2018. According to the Global Agriculture Information Network (GAIN), Brazil’s food processing industry witnessed a lucrative valuation of $198 billion in 2018. The current economic boom in Brazil is leading to the F&B industry growth, which is creating opportunities in the factory automation market of the country. Furthermore, the Brazilian poultry processing industry has been relying on automation for a few years now. The new regulations regarding labor safety and ergonomics in factories is also spurring the processing industries to leverage technology for a better and safety-driven working environment, which is supporting the factory automation market players. Furthermore, the booming agricultural sector is also driving production in the fertilizer industry, which is flourishing the factory automation market in Brazil.

In addition to the aforementioned industries, the Brazilian automotive industry witnessed growth at 5.2% in 2018 when the total number of vehicles produced translated to 2.88 million. The gradual growth of the Brazilian automotive industry is creating a demand influx for electrical components such as inverters, switches, meters, and others that are an integral part of factory automation.

According to the International Trade Centre (ITC), in 2018, the import value of integrated circuits to Brazil from various countries of the world was valued to be $4.6 billion. The import value had increased by 12% year on year. Now, integrated circuits are an indispensable part of factory automation, and the growth in their import value evinces the growing demand influx in Brazil factory automation by electrical component market.

Latin America Factory Automation Market Key Application: F&B Industry –

The incorporation of factory automation in the Latin America F&B industry is poised to grow at a profitable CAGR of 9.61% through to 2025. This is attributable to the fact that a lot of food processing companies in the region are opting for automation to execute daily operations. For instance, the Mexican company Sucroliq's Guanajuato factory produces 150,000 liters of liquid sugar, and the plant became the first 100% automated sugar plant in the world in September 2018. The food processing industry in Latin America is poised to take a progressive leap as the Food and Agricultural Organization (FAO) of the United Nations (UN) projects that the agricultural and fisheries production in Latin America will increase by 17% through to 2027. Hence, the forecast period will observe a subsequent rise in the food processing industry, which will create a demand influx in the Latin America factory automation market.

Latin America Factory Automation Market Growth Drivers:

The growth of the Latin America factory automation market can be further fathomed by the increasing import of circuit breakers and related components to the countries of the region. Here’s the table depicting the import values of circuit-protecting components to major Latin American markets –

Table 1 – Import Value of Circuit Protecting Components 

Import Value Data Source – ITC[8]

Similarly, electrical components such as meters, buzzers, data converters, LAN cables, and others that play a major role in factory automation witnessed an increased import in most of these countries which evinces the Latin America factory automation market growth, and this growth is attributable to the following factors –

· The Growth of the Mexico Automotive Industry in the Region Leading to an Increase in Latin America Factory Automation Market Revenues –

Mexico, the seventh-largest passenger vehicle manufacturing country, has been a profitable automotive industry for many years now. According to the International Trade Administration (ITA), the auto parts producing a segment of the Mexican automotive industry experiences an average of $92 billion worth revenues on a yearly basis.[9] This is the evidence of the large amount of production that the automotive industry witnesses every year, which creates substantial opportunities for the factory automation market players because these auto parts manufacturing industries are equipped with automation facilities. The upcoming years foresee growth in the production of electric vehicles, semi-autonomous and autonomous vehicles, and self-driving trucks in Mexico, which will further augment the demand for electrical components that are required for factory automation.

· Paraguay: An Emerging Industry with Future Prospects for Factory Automation Market Players –

The low corporate taxes, energy expenditure, and labor costs have made Paraguay an attractive manufacturing market, especially for the neighbors in Brazil and Argentina. The initiative called Maquilas by the Paraguay government is supporting the manufacturing industry. This law has been offering a competitive advantage to international companies, and this has a direct impact on the economy of the country because a lot of companies are investing in Paraguay. Due to the advantageous competitive conditions, a lot of Brazilian companies have moved to Paraguay. This is quite evident when 60% of the companies operating in Paraguay are Brazilian. Now, these companies include auto-parts manufacturing, textile, and other factories that have been creating a demand influx in the Latin America factory automation market. The trend of companies investing in Paraguay is going to further increase the prospects for the factory automation market in Latin America.

· The Latin America Packaging Industry Supporting the Factory Automation Market –

According to the latest report by the Flexible Packaging Association (FPA), Latin America had a lucrative, flexible packaging market with revenues worth $392 billion.[10] The demand influx for packaging solutions from the F&B industry has a significant role to play in the profitability of the Latin America factory automation market. In the technological perspective, Industry 4.0 has a substantial impact on the way the packaging industry operates. There is a growing trend of fewer personnel and more control units in the packaging industries in Latin America, which is creating a demand for electrical components such as mainboards, rectifiers, earth leakage breakers, and others that are part of integrated control panels in automation facility. The consistently growing packaging industry in the region will be creating a sustainable Latin America factory automation marketplace for the players, and there will be more requirement of electrical components for the inculcation of automation.

Latin America Factory Automation Market by Electrical Component – Competitive Landscape:

Some of the most prominent Latin America factory automation market players that are striving to expand their territories in the region in order to leverage the growing demand influx from the end-user industries are ABB Group, Honeywell International Inc., Siemens AG, Schneider Electric SE, General Electric Company, The Emerson Electric Co., Rockwell Automation, Inc., Mitsubishi Motors Corporation, Johnson Controls International plc, Danaher Corporation, Omron Corporation, and Yokogawa Electric Corporation.

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Related Reports:

a) Industrial and Factory Automation Market

https://www.industryarc.com/Report/60/Global-Industrial-Factory-Automation-Market.html

b) Factory Automation Market

https://www.industryarc.com/Report/194/Factory-Automation-Electrical-Products-Market-Report.html

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