ABI Reasearch sent the results of a couple of research studies last month. I’m still catching up on an unusual amount of news. One report is on the value of manufacturing to the world’s economy. The other relates to Cyberattack risks relative to the growth of Internet of Things (IoT) connections.
Cyberattack Risks to IP Rich Data Double as Manufacturing IoT Connections Grow at a CAGR of 53% by 2026
Intellectual Property (IP) theft, including industrial trade secrets, is one of the costliest security breaches costing the U.S. economy, which is between US$225 billion and US$600 billion annually. Most IP forms are stored as IP-rich data via digital mediums, including cloud platforms, servers, and laptops.
ABI Research, a global technology intelligence firm, forecasts that manufacturing Internet of Things (IoT) connections will increase by a CAGR of 53% globally, significantly expanding the vector of attack to obtain IP-rich data. While this is a potential opportunity for cybersecurity vendors, they must explicitly showcase that their usual IT/OT solutions can also help protect IP. Vendors that provide Identity and Access Management (IAM) or those providing encryption services contribute to IP security but need to emphasize that IP security is embedded in their solutions.
Protecting sensitive data is a primary strategy for protecting IP. Protecting data can be achieved by identifying, managing access, and encrypting sensitive data.
These findings are from ABI Research’s Industrial Data Security: Protecting Intellectual Property application analysis report. This report is part of the company’s Industrial Cybersecurity research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Application Analysis reports present an in-depth analysis of key market trends and factors for a specific technology.
Industrial and Manufacturing Contributed US$16 Trillion Worth of Value to the Worldwide Economy in 2021
According to a new global technology intelligence firm ABI Research report, the world manufacturing value add rose by around 20% from 2020 to 2021 to reach more than US$16 trillion.
The largest manufacturing companies globally remain a mix of petroleum refining, mining, electronics, and automotive. However, nine out of the ten biggest factories in the world are automotive manufacturing plants, notably the Volkswagen Wolfsburg Plant, Hyundai’s Ulsan Factory, and Kia’s Hwaseong Plant. In fact, five of the top ten plants are Kia factories.
Despite this, the automotive market is not dominant in digital transformation expenditure. Interestingly, in the United States, out of the six CAPEX spends measured (machinery and equipment, computers and peripheral data processing equipment, software purchases, data processing, and other purchased computer services, communications services, and professional and technical services), the automotive industry was only the top spender for three of these.
The other three were dominated by the chemical manufacturing industry, where Dow, Exxon Mobile Chemical, and Dupont are some of the largest players. However, the largest difference in spend did belong to automotive, with its data processing and other computer services coming in 469% higher than the closest second spend.
These findings are from ABI Research’s 2022 Manufacturing Market Data report. This report is part of the company’s Industrial and Manufacturing Technologies research service, which includes research, data, and ABI Insights. Market Data spreadsheets are composed of deep data, market share analysis, and highly segmented, service-specific forecasts to provide detailed insight into where opportunities lie.
We have two movements on the automation trade show front that are interesting. IMTS, the International Manufacturing Technology Show and formerly the International Machine Tool Show, is a huge event held in September every other year. Some time ago, organizers added an automation segment partnering with the company behind Hannover Messe.
This automation show was given a few aisles in the East Hall. The first year is was only a couple of aisles, but even this year there were not that many exhibitors. They were mostly German automation suppliers.
The Hannover Messe group pulled out of IMTS after the last event. It has announced the formation of a new annual show that will be held in Indianapolis in October. IMTS, meanwhile, has filled the open automation slot with a joint venture of AMT and Mesago Messe Frankfurt.
The new Hannover Messe event.
Industrial Transformation USA in 2023. The organizers of Hannover Messe USA have announced the event will be rebranded as Industrial Transformation USA and held annually, beginning in October, 2023 at the Indiana Convention Center in Indianapolis.
“Our exhibiting companies have been telling us they want to get in front of their customers more frequently (annually) for a number of years,” said Ed Nichols, CEO of Industrial Transformation USA. “Our focus groups at HANNOVER MESSE USA 2022 demonstrate that our attendees, primarily OT, also want to meet more frequently and bring more members of their team.”
Industrial Transformation USA joins the Industrial Transformation brands currently serving Mexico and Asia-Pacific. Industrial Transformation USA will be built from the Operational Technology (OT) user perspective, engaging a Board of industry professionals that will guide the development of the events format and content.
Filling the opening at IMTS are AMT and Mesago, Messe Frankfurt
Two of the global manufacturing industry’s premier organizations, AMT – The Association For Manufacturing Technology and Mesago, a subsidiary of Messe Frankfurt Group, announced a collaboration to create the Automation Sector at IMTS – The International Manufacturing Technology Show in 2024, and SPS – Smart Production Solutions in Atlanta, Georgia, in 2025.
The Automation Sector at IMTS and SPS – Smart Production Solutions in Atlanta will be held in alternate years, and both events will be supported by Gardner Business Media (GBM), the leading publisher for manufacturing in North America.
IMTS 2024 runs Sept. 9-14 at McCormick Place in Chicago, Illinois.
SPS – Smart Production Solutions will be held Sept. 23-25, 2025, at the Georgia World Congress Center in Atlanta, Georgia. The inaugural event will host exhibits from simple sensors to intelligent solutions, from what is feasible today to the vision of a fully digitalized industrial world.
The Atlanta event is an expansion of the SPS – Smart Production Solutions trade show held annually in Nuremberg, Germany. It is Europe’s leading trade fair for digital industrial solutions. SPS 2022 attracted 44,000 visitors and featured about 1.2 million square feet of gross exhibition space and 1,000 exhibitors involved in advanced automation solutions.
Mesago Messe Frankfurt also produces SPS fairs in China, Italy, and the Middle East, as well as events focusing on electronic assemblies, intelligent motion, and additive manufacturing.
My phone exploded yesterday afternoon with news. Emerson initiating a hostile takeover fight for NI (formerly National Instruments). Right now the figure on the table is $7.6 billion. According to my scanning of the news from a number of outlets, NI is developing a “poison pill” to avoid the takeover.
That latter makes sense to me. NI stopped emphasizing automation applications of its technology several years ago. News sources said Emerson was interested in NI’s test technology and “technology stack”. In other words, Emerson would strip NI of what makes the company unique, suck up some technology, probably devalue LabView since it’s not compatible to Emerson’s control technology.
I don’t see the value here, just like I didn’t think the attempted takeover of Rockwell Automation a few years ago made sense. I thought there was no way Emerson could merge the Rockwell culture into its own. Maybe Emerson thinks the industry is still consolidating and that would be a gigantic consolidation?
NI’s market is not Emerson’s market. I’m not even sure it is adjacent, exactly. How much would this assist the drive toward industry consolidation? Where would this help in the global competition toward size among ABB, Schneider Electric, and Siemens?
Is this action just another example of corporate hubris of which we’ve seen plenty in the past decades?
We’ll see how this dance ends. I’d personally hate to see NI go away. I’ve always liked the company’s culture of technology and innovation. And great people. Not that I have anything against Emerson. But I don’t see the $7 billion in benefits resulting from the acquisition. I did tell a CEO whom I was interviewing yesterday, though, “I am not a financial analyst.” I am a student of strategy. Wonder where this strategy will lead.
In the “I’m not surprised” category, the ARC Advisory Group conducts market studies in the industrial and manufacturing market. For the 23rd consecutive year it has calculated ABB as the global DCS market share leader.
In a Distributed Control System market worth more than $15 billion, the official ARC Advisory Group report confirms that ABB has maintained its number one position with a leading share of 19%, as it continues to support the acceleration of digital transformation across industry.
The report highlights energy transition and sustainability as key growth drivers for ABB. Growth also came for ABB thanks to the upturn in DCS segments across the pharmaceuticals and biotechnology which was generated by continued external investment in vaccines and medications.
Siemens announced its intention to separate its three-billion euro motor and drive business into an independent entity last November. This move both impacts the motor and drives market in general and further reveals business strategies now undertaken by large automation and controls suppliers.
Blake Griffen, senior analyst at Interact Analysis, writes, “The new motor & drives business would be an amalgamation of 5 current Siemens businesses/divisions. Large drives, Sykatec, Weiss Spindeltechnologie, and the low voltage motors & geared motor divisions from Siemens Digital Industries.”
He notes that what is included in the spin-off and what is retained are both indicators of strategy. He begins by looking at a little history.
Since their announcement of Mindsphere in 2017, Siemens has taken explicit steps to refocus the company away from being a hardware manufacturer in favor of being software and services provider. The move away from lower margin hardware businesses has yielded results for the company in terms of profit margin. Since 2017, Siemens’ gross profit margin averaged 35.5% compared to 28.8% in the previous 5 years.
For those of us who are close observers, we have noticed similar moves by other companies such as Rockwell Automation, Emerson, Honeywell, and Schneider Electric. Perhaps even ABB. One astute executive told me when I observed how these companies now self-identify as software and automation companies that this is what “Wall Street” expects. Financial analysts clearly believe this is the path toward growth.
Back to the Siemens announcement. Griffen writes, “We were expecting Siemens’ low voltage drive portfolio, SINAMICS, to also be a part of the new business. However, from what we can tell by the information publicly available, the low voltage drive product line will be retained by Siemens.”
I’m not surprised, and I agree with his explanation. Low-voltage drives have so much intelligence and networking power these days, I believe they should be considered part of the control system. Writes Griffen:
The drive represents the closest ‘smart’ device to a motor. As such, the device can be a powerful enabler of many digitalization strategies. VFDs have long had the ability to sense changes in the electrical behavior of the motor it is controlling. Many drive vendors, including Siemens, have begun offering condition monitoring and predictive maintenance services which employ this ‘drive as a sensor’ mentality.
As a customer, should you be concerned about the direction of your supplier, you’d do well to consider these thoughts.
Knud Lasse Lueth, founder and leader of the firm IOT Analytics in Germany, wrote a comprehensive report on trends picked up at the SPS fair in Nuremberg in November. Note: I have an affiliation with the analyst firm as an advisor. I recommend visiting the web site to check out the full report.
Smart Production Solutions (or SPS), one of the leading industrial automation fairs, was back in action earlier this month. The event that took place from 8 November –10 November 2022 in Nürnberg, Germany, showcased once again the latest industrial automation developments. Despite a smaller crowd (44,000 visitors—roughly 30% less than pre-pandemic), the fairgrounds were buzzing and filled with senior executives from many leading industrial automation companies, software providers, and related companies. The conference remains a key show for industrial automation hardware and (increasingly) software. It is perhaps the most important fair for some European (especially German) industrial automation companies, such as Siemens, Beckhoff, or Phoenix Contact.
IoT Analytics had a team of three analysts on the ground. They visited approximately 75 booths and conducted over 50 individual interviews to get a handle on the latest industrial automation trends with a special focus on IT/OT convergence.
The main reason we are seeing interest and movement toward the convergence of IT and OT in the manufacturing space is because of IT technologies’ promise to significantly improve manufacturing. The market dynamics of an increasingly competitive world have “forced” OT, a traditionally less hi-tech sector, to consider these IT technologies. As a first step, IT/OT convergence can happen by creating the necessary (secure) interfaces between IT and OT systems.
10 IT/OT convergence trends visible at SPS 2022
1. IT-based containerization technology at the edge
2. Integration of IT and OT tools
3. Cloud-native (IT) tools for improved manufacturing operations
4. IT programming tools and languages for controllers
5. Virtual PLCs—containerized controllers
6. Digital twins to virtualize physical assets
7. Low-code tools
8. MQTT protocol connecting OT and IT
9. IT cybersecurity models for OT
10. IT approach for industrial software quality control
On another note: The team would like to give a shoutout to Schneider Electric for being one of the few companies at the fair that embraced sustainability by leading with a carbon-neutral booth completely made from recyclable materials (such as walls made of reusable wooden pallets).