What is the state of the industrial market for electronic components, particularly for connectors?
The industrial market is the one segment that is most closely tied to the overall economy. Over the past few years this market has been relatively stable, with annual growth of roughly 3-6%, depending on the region of the world. Generally speaking, the growth rates are very similar to the overall GDP growth in the applicable geographic region. In addition to the economic growth rates, this segment is closely tied to the business confidence levels that dictate whether companies are willing to invest in capacity expansion, new plants, increased automation, new technology, etc. Over the past few years, in spite of increased revenues, profitability, and record stock prices, many companies have chosen to hang onto their cash and carefully weigh new investments beyond what is necessary for their current business levels.
While this trend has somewhat limited growth in the industrial segment, it bodes well for the coming years when either confidence increases or businesses realize that they can no longer delay expansion. Another key factor that points to future growth is that global demographics, especially in China and other developing regions, predict as many as one billion additional people will enter the middle class by 2020, and this will drive up the demand for vehicles, energy, food, water, and other consumables, requiring similar increases in production and manufacturing. Investments in both capacity and productivity will be required to meet this growing demand. With that said, there are many different sub-segments within industrial, including industrial automation, energy (smart metering included), machine builders/robotics, HVAC, motors, and controls, and the growth rates of each can vary somewhat.
With respect to connectors specifically for the industrial market, I would say that we are seeing similar growth rates of 3-5% annually. While the technology trend associated with this segment is leading to fewer but more sophisticated connectors, the revenue growth rates are being maintained due to the higher ASPs (average selling prices) associated with higher performing but more efficient connectors and/or higher technology solutions. While some of the large OEMs in the automation space will continue to develop platforms based on their own proprietary interconnects, there is a definite trend toward adoption of industry-standards-based I/Os, such as Ethernet, Camera Link, CC-Link, and others. External communication buses/standards, such as DeviceNet and Profibus, will also continue to allow control over a wide range of peripheral equipment connected to third-party networks.
What are industrial customers looking for in electronic components, particularly connectors?
Generally speaking, customers in this space are looking for similar technology trends as in other segments, such as higher speeds and data rates, increased power capabilities, smaller package sizes and footprints, combination of power and data in the same package, and the reduction of applied costs. While these trends are similar, it is clear that the component requirements in these areas for industrial applications are far from leading-edge or state-of-the-art. In this segment, proven standard technology and reliable solutions are much more essential. Critical performance criteria for components (including connectors) include the ability to operate reliably in harsh environments (vibration, moisture, and temperature extremes), scalability that will allow expansion as needed, and ease of use (on-site terminations, plug-and-play without the need for exotic or special tools).
What are the major technology trends in connectors for the industrial market/applications?
One needs to look no further than the communications industry to get a preview of what lies ahead for many industrial applications. Data rates such as 10Gb (Cat 6A), which has been around since the early 2000s, are just now taking root in industrial applications such as vision systems and Ethernet networking. Ethernet will continue to see increased adoption rates replacing legacy Fieldbus. Higher amperage requirements will continue to grow and solutions include hybrid packaging of power, data, and even fiber optics. I believe we will see a continued increase in the integration of sensors everywhere, which will need to be connected. And certainly we will continue to see a lot more RF and wireless applications, all requiring power via electrical connections or battery connections. In addition, antennas and RF/EMI shielding and noise reduction will become more critical. Finally, with more connections on the factory floor, one of the major trends will be ease of installation and the ability to handle installations/connections in an easy, fast, safe, and reliable manner. Examples include tool-less connectors, half-turn solutions versus full-threaded, hybrid connectors, and push-in contact technology.
Will the "Internet of Things" have an impact on the factory floor?
The "Internet of Things" (IOT) will eventually have a significant impact on the factory floor. It will change everything from the way manufacturing employees interact with their equipment and working environments to the way products are scheduled, built, and delivered. There is no doubt that great efficiencies can be gained by continued adoption of increased automation and intelligent platforms. The implementation and utilization of the IOT will accelerate the concept of "the totally connected enterprise" in which a business’s various functions, such as headquarters, supply chain, manufacturing/production, quality control, distribution, and its customers are fully linked and integrated in an optimized, collaborative, and secure manner. In this connected enterprise, everything will have a URL and there will be real-time continuous communication. Equipment can be monitored and controlled remotely, and the equipment will be providing feedback with respect to production rates, energy usage, raw material consumption, and even alert when maintenance is required. Sensors and cameras will provide continuous remote monitoring for safety and security. Production equipment can be configured or re-configured remotely and provide instant feedback to the operators. RFID tags will be utilized to track product right through manufacturing, inspection, and shipping and even through its eventual life cycle.
However, this will be an evolution and not a revolution. Implementation will require significant investments in areas not typically associated with the factory floor, such as "big data" (networking and data storage will increase significantly, much of it moving to the cloud), mobility (mobile devices deployed and connected), and security (billions will need to be spent on physical and cyber security). The vision of a fully connected factory floor is well on its way but it will take some time to reach the goal of a fully connected enterprise. How much time? That will vary depending on the specific businesses and products being made, and the companies who make them.
How have your customers been approaching the Internet of Things so far?
Systems and MRP are becoming smarter; process control is fully integrated into manufacturing equipment; and the use of tracking mechanisms, sensors, and RFID are expanding management and information access and exchange. In EMEA this concept is being driven under the theme "industry 4.0," where progress is being made, especially around the utilization of sensors in the machines, more complex PLCs to dynamically respond, and more intelligent manufacturing processes, like stamping dies, which are able to learn and adapt to changing processes without human interaction.
How important will robotics (in its widest definition) become on the factory floor? For example, Foxconn is determined to replace humans with machines in the near future. How are robotics currently being used by your customers on the factory floor? How do you think that will change (or stay the same)?
Robotics and automation will continue to play increasingly more important roles in manufacturing for the foreseeable future. There will continue to be investments in this area for functions such as production, assembly, and parts machining as in the automotive business, or in the high-speed assembly of precision components. However, I do not believe we will see the move to replace all human labor broadly implemented in the near future. Certainly some businesses will see this sooner than others, but for certain types of production, this may never happen.
The latest trends in robotics include the integration of vision into the robotics themselves so they can adapt and self-adjust to their own surroundings. This is especially important in a manufacturing environment where the reduction of costly and time-consuming front-end programming can drive improved return on investments, making the technology more affordable to more end users. Technology advancements and interconnectivity will further add to the implementation of robotics and automation and there will be other technologies like 3D printing that will enable increasing automation. Today, robotics is still best suited to high-volume, repetitive, and dangerous operations, and they represent a major capital expenditure and require significant programming and maintenance.
What will the role of wireless networks be in the factory of the future? Will it become robust and failure-proof enough to replace most of the hardwiring?
As discussed earlier, the primary concern in industrial applications is safety and reliability. While wireless networks are currently in use, industrial customers have been conservative with regard to the implementation of wireless, since it brings other risks to the factory floor (like EMI and security). As a result, hardwiring is still the preferred solution, especially for critical processes today. But the trend toward increasing implementation of wireless will continue with the expansion of industrial standards for Ethernet, Profibus, and others.
Wireless networks clearly save on the cost of installing structured cabling and, provided the bandwidth is available, can scale to meet growing demand and expansion. Also, they are becoming more robust and failure-proof for the industrial applications, just as they have outside of the factory floor. As further proof that this trend is the way of the future, you can look at strategic partnerships like the one being formed by Rockwell Automation and Cisco and intended to address the many challenges and issues surrounding data management, security, and totally integrated processes. With respect to interconnects and the reduction in hardwired connections on the factory floor, the opportunity will be offset by increases in the need for connectors in the RF space, networking, base stations, power, and batteries.
Will the Internet of Things, robotics, and wireless technology eventually lead to "lights-out" factories where no humans work, or just a few people who monitor the process from a distance?
In some respects we are there today. There are factories that are fully automated and processes that are integrated and monitored remotely and where operators/process engineers focus their time on improving these processes even further by being involved in new product development from the very early stages. In these cases manufacturability is a design requirement. In industries like food processing and oil and gas, human crews have been relatively small for a long time and in these cases the people monitor the processes remotely from a command center or control room. There are dark warehouses today that operate without human interface except that people are needed to program and maintain the equipment, receive product to be stocked, and to physically ship the products coming out of the warehouse. While this trend for increased automation, connectivity, intelligent machines, and eventually the fully connected enterprise will continue, with very few exceptions there will always be the need for people in the process. The skill set and job functions may eventually be different but people will still be a critical part of successful industrial companies. The Amazon vision of drones delivering your packages may indeed come true in the near future but history tells us that no matter how significant the technological advances, machines will not totally replace people.
Lew LaFornara, Vice President Supplier Marketing and Product Management, has responsibility for connector and electromechanical products at TTI. Lew is an industry veteran with more than 35 years in the connector industry.