Industrial Automation December 2021

How Has The Market For Physical And Structural Testing Evolved Since COVID-19?

Preston Reine

A graduate in finance and economics, Preston joins IA as a principal analyst for our custom consulting projects. His expertise lies in the field of manufacturing technology, motor driven systems and related industrial automation equipment, and his 9+ years of experience in this area adds significant depth to our industrial research initiatives.

What is the testing market and why is it important?

The way that automobiles, airplanes, white goods, industrial machinery, and so many other manufactured products are designed and brought to market is evolving at an increasingly rapid pace. It is for this reason that Interact Analysis is analyzing the market for physical and structural testing.

The manufacturing sector evolves by finding the safest, most efficient way to bring products to market, and this process has become more time-sensitive than ever before across a wide range of sectors. To bring products to market faster, industrial testing providers have had to adapt at an accelerated rate to meet growing market expectations. For example, manufacturers continue to expedite their engineering and design process, but the amount of data gathered in these activities is also growing exponentially. This means that more testing channels are utilized today than ever before, and despite that, the expectation remains that the research and development (R&D) timeline is also simultaneously shortened.

Given that, the market’s dynamics are especially important to understand from an industrial perspective because the pandemic has shown how supply chains, and the overall economy, can be affected when products are not readily available. Without the supply of key economic staples, the growth of the manufacturing sector overall can struggle.

Preliminary feedback from the market

Interact Analysis is actively engaging with leading test technology vendors to understand the diverse regional perspectives of the market. Thus far it has become clear that the pandemic and ensuing supply chain issues have been at the forefront of everyone’s mind affecting all vendors in terms of lead time increases and sales declines from 2019 to 2020. In the North America, there is a large push for utilizing simulation technology, whilst in other regions there is still an important emphasis on running multiple physical tests on equipment and end products whatever they may be. Tesla is a big influencer of this trend in the automotive sector due to increased reliability and accuracy in its testing procedures. In China, brand loyalty is on the rise and more local players are entering this market now that trade concerns have led the Chinese government to strongly encourage local investments and partnerships. The demand for Western technology is very much entrenched, though replicator technology is a risk to supplant the market share that these Western companies have enjoyed once manufacturers look to renovate existing testing protocols that are already in place.

Other general feedback of note thus far from the research includes:

-Overall the market for physical and structural testing appears to have declined by about 25-30% in 2020 and on average companies have reported sales growth of 15-20% in 2021. Sales growth is expected to be similar in 2022.

-When polled, research participants collectively identified wireless data acquisition (DAQ), telemetry-based acquisition, and digital sensor technology as the key trends shaping the future of the physical and structural testing market. Software makes up a relatively small percentage of most supplier revenues whereas DAQ hardware is the largest source.

-Many suppliers are unaware of the market landscape in Asia because of murky distribution partnerships, so this report is focused on identifying the leading local suppliers in countries like China and India.

-End-users (that is, the companies that utilize testing hardware and software) have the free cash available to make investments, but increases to lead times have noticeably halted orders in the second half of 2021. In the automotive sector specifically, total capacity is only at about 50% due to an average 93-week lead time for semiconductor chips. This likely means that testing suppliers can expect dampened, but sustained growth as the global supply chain issues ease gradually through 2022 and potentially into 2023. The other factor leading to a slowdown in market activity is a lack of personnel for conducting tests in person, which can either shift the focus to more digital solutions, or can stymie investment altogether.

-Related to supply chain issues, testing vendors have focused less on customizability so that they can order the raw materials needed in bulk. If every sale was a customized solution, the vendors would not be able to accurately forecast how much to buy, and possible delays could be too long therefore preventing a sale. This means that “semi-custom” solutions could be the norm for the short-term at least.

-With the aggressive targets in all major economies to phase out the internal combustion engine (ICE) in future automobile sales, tests on secondary noise are now a major focus because the loud ICE would normally drown out the secondary noises that have now surfaced and become a primary concern.

-As experienced engineers age out and leave the industry, newcomers have less technical know-how with regards to the proper testing and measurement protocols for large industrial equipment. This means that data interpretation and analytics is growing exponentially in importance, consequently, testing solution providers that can add value with data are best poised for success in the future. Most testing procedures have increased the number of channels required by a factor of at least 10, so the transition to a more data-intensive industry is only going to increase in the future.

-A major focus of this shift towards more data proficiency will be Multiphysics DAQ, because as data collection and interpretation becomes more complex, every leading vendor is identifying ways to offer complete DAQ solutions with regards to durability and fatigue. Durability and fatigue testing is a major application considered in the scope of this research, and it appears to account for over 30% of market revenues globally.

Background to Interact Analysis’ research on the testing market

Interact Analysis is building upon its Automotive Testing & Simulation research with a new study that will analyze the market for Physical & Structural Testing. With manufacturing demand becoming more heavily concentrated on customizability, the testing process for products in R&D and product design are experiencing accelerated changes to which suppliers must respond. These disruptive drivers of change, coupled with a debilitating market performance in 2020 resulting from the COVID-19 pandemic, have led to several uncertainties for which Interact Analysis aims to provide clarity. With the 2022 edition of its Physical & Structural Testing market report, customers and participants of this research will be able to answer the following questions:

  1. What changes to the market for testing equipment have come about as a result of the COVID-19 pandemic?
  2. Who are the market leaders by region for physical and structural testing?
  3. What changes in end user demand are shaping the solutions offered for testing equipment in key verticals?
  4. How prepared is the market to offer end users the increasingly specific solutions that they require?
  5. What impact have recent demand changes had on the competitive environment and supplier market shares?

This insight draws on data from our Physical & Structural Testing market report, which is currently in production. To learn more, contact Preston today: Preston.Reine@InteractAnalysis.com

 

 

 

 

Posted in: Industrial Automation.