Hot Industries Expected to Support Machine Vision Growth Into 2015

After stellar growth in 2013 and 2014, the machine vision industry expected double-digit growth to flatten in the second half of 2014. The good news: the market beat expectations, and that strength could continue into 2015 thanks to a number of hot industries and global trends, especially for machine vision companies selling in North America and supporting companies with strong imports into North America.

First, let’s recap the machine vision market’s stellar 2014 performance. Alex Shikany, AIA’s director of market analysis, reported on Q3 2014 in December, saying that machine vision system and component sales strengthened above and beyond the strong results of the first half of the year. During the first nine months of 2014, total machine vision components were up 18% to $230 million through October, while total machine vision systems rose 12% to $1.42 billion. The third quarter of 2014 was especially strong for machine vision systems, which posted growth of 19%. Machine vision components also increased in the third quarter by 2% over last year. Every component and system category increased in the third quarter of 2014 except for lighting and imaging boards. Smart cameras (44%), optics (16%), software (14%), and ASMV systems (14%) were the standout individual categories in terms of year-over-year growth for the third quarter of 2014.

Shikany adds that AIA members are expecting machine vision component growth to stay in positive territory while systems may flatten through the first quarter of 2015.

Currency Wars Affect Global Trade
As 2015 begins, economists around the world are pointing to the U.S. as the world’s strongest economy, with an equally strong currency. A strong U.S. dollar means U.S. consumers and companies can buy more – as long as the goods are manufactured overseas where the strong dollar offers more purchasing power. A strong dollar also means U.S. goods cost more overseas, which is why the U.S. trade deficit ballooned from $540 billion in 2013 to $606 billion during the first 10 months of 2014.

Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation (MAPI), reports that the U.S.’s economic strength is expected to continue into 2015, supported in part by strengthening demand from Europe, Japan, and Latin America. And despite some softening of the Chinese economy as costs increase and global demand comes off the highs of recent decades, along with a traditional preference for manual labor over automation, machine vision insiders point to this particular Asian economy as a region ripe for machine vision success.

“China has always been an important market for technology companies, and we’re seeing an interesting shift in the region from manufacturing towards technology development,” says George Chamberlain, CEO of Pleora Technologies Inc. (Kanata, Ontario, Canada) and AIA board member. “Our Chinese customers are increasing focus on adding value for their end users, so it’s not simply a ‘made in China’ product but a ‘developed in China’ solution.”

“There’s also a growing domestic market in China for machine vision products, not only for industrial applications but also medical and transportation imaging,” Chamberlain continues. “Considering medical imaging, we’re increasingly working with Chinese manufacturers to design solutions for a fast-growing local market. Often these products have been made in China; increasingly they’re serving the local market. To put it simply, China is transforming from a product manufacturer to a technology developer as well as an end-solution consumer. This will have a significant impact on the machine vision market, as we help Chinese manufacturers leverage our products and expertise to deliver locally developed technology solutions. The plug-and-play capability of USB3 Vision makes it a natural technology fit for medical imaging, and we’re seeing strong design opportunities in microscopy applications for our external frame grabbers that convert HD-SDI and Camera Link cameras into USB3 Vision cameras.”

If the old saw is true that machine vision technology tracks with manufacturing demand, in part supported by manufacturing infrastructure growth, then the strong call for machine vision products in the second half of 2014 may not be a surprise as U.S. manufacturing began construction on 65.1 million square feet of production space in 2014, up from 52.9 million in 2013, according to recent reports from the Wall Street Journal.

“In our case, sales gained momentum over the year,” says Pleora’s Chamberlain. “In general, through the first half of the year there was some uncertainty around project start dates for a few customers. That uncertainty tapered as we moved through the year, and we finished FY2014 with a record month, which drove a record quarter and a record yearly financial result. One key for our growth has been increasing customer design activity based on new products. This design activity gives us a great deal of optimism when looking ahead to 2015.”

Industries to Watch
Machine vision companies involved in process industries, in particular petroleum refining, should gain the most from this build-up of U.S. manufacturing capacity as the majority of the new manufacturing construction has come from this sector. Analysts also expect strong growth from the U.S. aerospace, industrial machinery, semiconductor, and pharmaceutical industries, as well as energy sectors, while the electrical lighting and steel industries are expected to trail.

“The one big thing in my sights this year and next is the serialization effort underway in the pharmaceutical industry,” says Steve Wardell, director, imaging, at ATS Automation Tooling Systems Inc. (Cambridge, Ontario, Canada) and AIA board member. “Since ATS provides automation and packaging solutions to the pharmaceutical industry, we see firsthand the effect of FDA regulations regarding serialization and how it will be a large growth point for the machine vision industry as companies work to meet the regulations. We also see the same track-and-trace-type process reaching into all areas of product assembly, especially automotive related. It is an area we are expecting growth for the next couple years and will lead to an expansion of vision technologies in the industry.”

Serialization is one way companies are embedding data into their products, but embedding intelligence into machine vision products is one way the industry expects to promote machine vision adoption even as the technology relies on more complex algorithms powered by increasing computational options.

With the increasing performance of embedded systems, Pleora’s Chamberlain expects machine vision to be further integrated into a widening range of applications. “We are seeing a shift from traditional computing architectures where processing happens at a desktop PC to embedded systems that offer high processing capabilities in an extremely small form factor,” he notes. “With these advantages, processing intelligence for the vision system can be more easily located at different points in the network – for example in a roadside cabinet, up a gantry, or mounted with a camera. Robotics applications – where most tasks or processes are automated and repeated, including image and video processing within the vision system – are good candidates for embedded processing.”

Even the most commoditized machine vision products are gaining intelligence in the quest to offer more functionality with greater ease of use, says John Merva, vice president, North America, for Gardasoft (Cambridge, United Kingdom) and AIA board member. “One trend I expect to see in 2015 is that lighting gets more intelligent and easy to use, for instance a controller that identifies the type of light and its drive characteristics, eliminating costly set-up errors that can damage the light and/or lead to extended debug time.”

According to Pleora’s Chamberlain, the machine vision market needs to educate the customer base on how this new intelligence brings value and operational cost savings. “Undeniably, price is one of the primary factors driving a customer’s decision-making process, but we must emphasize it should not be the most important consideration,” Chamberlain says. “By focusing on innovation and developing differentiated products, successful players in the machine vision industry can be uniquely positioned to deliver solutions that help end users maintain existing investments, streamline processes to lower costs, or enhance quality and performance.”