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Boomtime for linear motion products leads to backlogs

26 October, 2018

A boom era of double-digit growth in sales of linear motion products is coming to an end, with the market about to enter a period of stable growth as demand starts to slow, according to a new analysis by IHS Markit. Global revenues for these products reached a record high of $7.9bn in 2017, and are expected to grow by a further 10.2% during 2018, due primarily to substantial backlogs in orders. Growth is then forecast to slow to 4.5% in 2019.

As a result of improved global economic conditions and an increase in manufacturing activity, IHS predicts that total revenues from linear motion products will grow at a compound annual growth rate (CAGR) of 5.6% between 2017 and 2022.

A substantial surge in demand for linear motion products, that started in the last quarter of 2016, continued into 2017, leading to record revenue growth that year. However, linear motion manufacturers were not expecting this and were not adequately prepared to deal with it, leading to considerable increases in delivery times – from a couple of weeks for some products, to as long as six months for items such as linear guides and ballscrews.

IHS Markit industrial automation analyst Syed Mohsin Ali reports that the linear motion manufacturers are now struggling to buy raw materials including mild steel, medium-carbon steel, aluminium and stainless steel. High demand for these materials from the automotive sector and other metal-intensive industries means that metals producers have full order books and have been unable to accommodate the increased demand from the linear motion industry. This dearth of raw materials is likely to ease towards the end of this year, as demand slows down. Ali expects the linear motion market to enter a phase of stable growth from 2019 onwards, as demand for products returns to more sustainable levels.

There is a growing likelihood that the linear motion market could experience a price war between its larger players during 2019, and this has already started in some European markets. In Italy, for example, THK and Hiwin are vying to dominate the market and are pushing out other competitors, IHS reports. In the long term, it is likely that profit margins and revenue growth will fall, limiting the growth potential of the market.

Assembled actuator products – mainly commercial-grade rod-style and rodless actuators ­– are experiencing comparatively low growth rates due to their dependence on capital-intensive machinery investments in the automotive, food and beverage, packaging, materials handling, machine tool and electronics assembly industries.

The machine tools sector dominates global demand for linear motion products, with sales in 2022 expected to be approaching $2bn
Source: IHS Markit

Revenues from these products are projected to expand with a CAGR of 5.7% between 2017 and 2022. This is the highest growth rate of all complete product types, and is slightly higher than the 5.5% CAGR predicted for ballscrews and the 5.6% CAGR for linear guides.

The largest buyers of linear motion products during 2017 were the machine tool, and medical and scientific industries. Machine tools accounted for 18.4% of global revenues, followed by medical on 11.2%.

IHS predicts that robotics will be the fastest-growing market for linear motion products from 2017 to 2022, with an 18.1% CAGR in revenues. It says that an increase in demand for gantry machinery will drive demand for linear motion products in the robotics sector, especially for pick-and-place applications. Most of this demand stems from China’s increased adoption of advanced automation technologies, including robotics.

Between 2016 and 2017, the fastest-growing regional market for linear motion products was Asia-Pacific, which expanded by 24.3%. This was followed by Europe, the Middle East and Africa (EMEA) on 13.4%, America on 12.6%, and Japan on 9.4%.

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