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Demand for Industrial Control Equipment Continues to Rise

03/1/2011 11:00AMSign-up to receive press releases.

NEMA’s Primary Industrial Controls Index increased 3.3 percent on a quarter-to-quarter basis during the fourth quarter of 2010. The index has registered sequential gains in five of the last six quarters and with this latest increase is nearly 24 percent above its level of one year earlier. Nonetheless, inflation- and seasonally-adjusted shipments of industrial control equipment still have an appreciable amount of ground to make up before surpassing the previous cyclical peak. The Primary Industrial Controls and Adjustable Speed Drives Index, which serves as a broader measure of industrial controls demand, advanced 2.5 percent between the third and fourth quarter of 2010 and registered a 21.6 percent gain versus 4Q 2009.

Manufacturing sector output growth slowed appreciably during the second half of 2010 and given the recent end to the inventory rebalancing cycle, is unlikely to revert back to the pace of gains seen at the outset of the recovery. Nonetheless, the emergence of sounder demand fundamentals should support solid rates of growth in factory production and operating rates going forward, and during 2011 in particular. Notwithstanding the labor market’s lagging response, the economic recovery has shown signs of strengthening in recent months and the tax cut extension should bolster final demand for manufactured goods by engendering ramped up spending activity in businesses and households.

NEMA’s industrial controls indices will likely enjoy solid growth going forward as companies continue to ramp up spending on capital goods. While demand will likely not surge to the same extent as what was observed in early 2010, strong corporate profitability, measurably improved balance sheets and low financing costs will buoy investment in industrial controls and other related types of equipment. Also, the bonus depreciation allowance included within the administration’s tax cut package is expected to buoy business investment over the near term, including demand for controls, speed drives and other industrial equipment.

industrial Index 4qtr 2010 chart 1

industrial Index 4qtr 2010 chart 2

NEMA is the association of electrical and medical imaging equipment manufacturers. Founded in 1926 and headquartered near Washington, D.C., its approximately 450 member companies manufacture products used in the generation, transmission and distribution, control, and end use of electricity. These products are used in utility, industrial, commercial, institutional, and residential applications. The association’s Medical Imaging & Technology Alliance (MITA) Division represents manufacturers of cutting-edge medical diagnostic imaging equipment including MRI, CT, x-ray, and ultrasound products. Worldwide sales of NEMA-scope products exceed $120 billion. In addition to its headquarters in Rosslyn, Virginia, NEMA also has offices in Beijing and Mexico City.


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