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Mega Trends and the Nondestructive Testing Industry Presented at NDT in Canada 2013

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  • 1. Mega Trends and the Nondestructive Testing Industry Macro to Micro Opportunities on Future Business, Cultures and Personal Lives By Nikhil Jain 1
  • 2. Agenda • Introduction and Definition of Mega Trends • Presentation of Top Mega Trends • Conclusion and Macro to Micro : How To Apply Mega Trends Within Your Organization to Develop Growth Strategies 2
  • 3. Top Mega Trends What is a Mega Trend? Mega trends are transformative, global forces that define the future world with their far reaching impact on business, societies, economies, cultures and personal lives. Urbanization – City as a Customer Bricks and Clicks Innovating to Zero Smart is the New Green Future Infrastructure Development Health, Wellness and Well Being Social Trends New Business Models: Value for Many Future of Mobility Connectivity and Convergence Beyond BRIC: The Next Game Changers 3
  • 4. Mega Trend 1: Urbanisation - “City as a Customer”
  • 5. Mega Cities Mega Regions Mega Corridor Mega Slums 5
  • 6. Mega Cities in 2025 By 2025, 35 Mega Cities will exist globally, and about 77% of these will be from the developing world. Tokyo will be the largest Mega City in 2025, with a population of 38.7 million. Moscow Chicago New York City London Paris Harbin Istanbul Madrid Los Angeles Tehran Cairo Delhi Mumbai Mexico City Bogotá Shanghai Beijing Tokyo Seoul Tianjin Wuhan Chengdu Osaka-Kobe Hangzhou Chongqing Chongqin g Kolkata Guangzhou Foshan Shenzhen Shenzhen Jakarta Population in 2025 More than 27 million 18–27 million 8–18 million Nanjing Hong Kong Rio de Janeiro São Paulo Buenos Aires Note: A Mega City has a population greater than 8.0 million and a GDP of $250.00 billion or more. Source: United Nations, Department of Economic and Social Affairs, Population Division (2012); World Urbanization Prospects: The 2011 Revision; and Frost & Sullivan analysis. 6
  • 7. Top Mega Regions of the World in 2025 By 2025, 21 Mega Regions will exist globally. Shanghai and Guangdong Mega Regions will contain 9% of the total population of China. New Delhi, Greater Noida, Ghaziabad, Beijing-Tianjin Gurgaon, Marmara Mega Region 51.0 million Faridabad ChongqingIstanbul, Kocaeli 28.5 million Chengdu 20.6 million 28.9 million Shanghai Mumbai, Washington, D.C.Cairo-Giza 67.9 million Bhiwandi, Baltimore Area 17.6 million Guangdong Region Kalyan, Thane, 15.6 million 58.7 million Kolkata, Ulhasnagar Lagos and Eko Howrah 34.4 million Atlantic City National Capital Region 21.6 million Chennai, Kanchipuram, 25.0 million in the Philippines Pondicherry Greater Bangkok 27.7 million 15.0 million 19.2 million Tri-state Area 36.9 million Greater Los Angeles 20.9 million Central Mexico 31.4 million Population greater than 40 million Population from 20 million to 40 million Population from 15 million to 20 million Emerging Mega Region Greater Rio de Janeiro 17.2 million Greater Jakarta 29.8 million Johannesburg and Greater Sao Pretoria Paulo 7.6 million 28.8 million Greater Buenos Aires Source: United Nations, Department of Economic and Social Affairs, Population Division (2012); 36.5 million World Urbanization Prospects: The 2011 Revision; and Frost & Sullivan analysis. 7
  • 8. Mega Corridors in 2025 By 2025, there will be 21 Mega Corridors globally. United States (3) • Southern California • Great Lakes Corridor • Bos-Wash (D.C.) Corridor Latin America (2) • Rio de Janeiro-Sao PauloCampinas Corridor • Toluca-Mexico City-Puebla Corridor Transportation Corridors (16) Mega Corridors (21) Regions with Mega Corridors Europe (2) • Trans-European Network Transport (TEN-T) • Blue-Banana Corridor China (7) • Beijing-Harbin and Dalian • Beijing-Shanghai • Shanghai-Chengdu • Ningbo-Shenzhen • Beijing-Guangzhou • Shanghai-Kunming • Guangzhou-Shenzhen-Hong Kong Japan (1) Tokyo-Osaka Corridor Jakarta (2) • Sumatra-Java • Jakarta-East Java Turkey (1) Istanbul-Izmir Mega Corridor Africa (3) • AbidjanOuagadougou Corridor • North-South Corridor • Kampala-NairobiMombasa Urban Corridor Cross-country (1) Beijing-Tokyo-PyongyangSeoul Corridor India (8) • Delhi Mumbai Industrial Corridor • Mehsana-Valsa • Mumbai-Ahmedabad • Mumbai-Nagpur • Bangalore-Belgaum • Hyderabad-Hindupur • Srikakulum-Nellore • Chennai-Hosur Malaysia (5) • Sarawak Corridor of Renewable Energy (SCORE) • Sabah Development Corridor (SDC) • East Coast Economic Region (ECER) Corridor • Northern Corridor Economic Region (NCER) • Iskandar Development Region (IDR) Corridor Australia (2) • Brisbane Urban Corridor • Perth Urban Corridor Note: Mega Corridors are corridors that connect two major cities or Mega Regions (60 km or more apart, and with a combined population of 25 million or more). The corridors can be planned transportation or economic corridors (with planned investment going into transport infrastructure, industrial zones, energy, or real estate) or naturally evolving urban corridors. Source: UN-Habitat and Frost & Sullivan analysis. 8
  • 9. Mega Slums Globally, 22% of the total population will live in slums by 2025. Slum Population, Global, 2025 Europe Eastern Asia 41.8 Western Asia SouthCentral Asia 362.0 Forecast of Asian Slum Population as a Percent of Total Slum Population, Global, 2025 89.4 Northern Africa Latin America and the Caribbean 196.8 25.1 476.0 88.7 1.1 475.7 Sub-Saharan Africa Note: The numbers in the circle are in millions Southeastern Asia Rest of the World 43.1% Oceania Asia 56.9% Source: UN-Habitat and Frost & Sullivan analysis. 9
  • 10. Cities, and Not Countries, Will Drive Wealth Creation In the Future Cities like Seoul account for 50% of the country’s GDP; Budapest (Hungary) and Brussels (Belgium) each for roughly 45%. What are the Micro Implications? High Economic Power Hub and Spoke Business Model Transit oriented development New Mobility Solutions City as a Customer 10
  • 11. Mega Trend 2: Smart is the New Green
  • 12. Smart Factory Case Study: Toyota Practices “Kakushin” in its New Takaoka Plant Able to Build 8 High-Volume Models as Against 3 on the Original Assembly Line Current Plant - Cost-cutting to generate more than $2.5 billion Press Shop Body Shop - Lead time to add new model halved Paint Shop # 1 Welding Parts Shops - Sensors that monitor quality during each process Assembly Shop # 1 Paint Shop # 2 Body Shop Assembly Shop # 2/3 Stamping presses that use servo-motors rather than hydraulics, combined with high-speed delivery robots. Paint Shop # 3 • 2006 – 660,000 Capacity Future Plant Press Shop Welding Parts Shops A welding system that slashes the cost of jigs and other tooling. A paint process that eliminates the need to let the base coat dry. Body Shop A "set parts system" that delivers a basket of parts to each vehicle. Paint Shop # 1 Assembly Shop # 1/2 Ditch huge expensive machinery Paint Shop # 2 • 2010– Capacity 500,000 13
  • 13. Mega Trend 3: Social Trends
  • 14. Surge in Asian Work Pool Geo Gen Y Socialization Middle Bulge Generational Political Shift “Sheconomy” Ageing Population Reverse Brain Drain 15
  • 15. Surge in Asian Work Pool Geo Gen Y Socialization Middle Bulge Generational Political Shift “Sheconomy” Ageing Population Reverse Brain Drain 16
  • 16. Global Population in 2025: Out of 2.4 Billion Gen Y Population , Around 52% from Asia Alone World Population: Breakdown by Region (Global), 2025 2025 8.01 Billion Around 37% of Gen Y Population Will Live in India and China Alone 2011 6.99 Billion 0-14 years 15-34 years 35-64 years 65 years and above Source: Department of Economic and Social Affairs of the United Nations 2011; Frost & Sullivan, 2012 17
  • 17. Mega Trend 4: Connectivity & Convergence
  • 18. 80 Billion Connected Devices By 2020 10 Connected Devices for Every Household by 2020 5 connected devices for every user by 2020 5 billion internet users by 2020 500 devices with unique digital IDs (Internet of things) per square kilometre by 2020 Source: Frost & Sullivan, 2012 19
  • 19. Connectivity will Lead to Convergence of Products, Technologies and Industries Technology Convergence Industry Convergence Product Convergence UAV Unmanned Aerial Vehicle V2V Vehicle to vehicle V2H Vehicle to Home V2I Vehicle to Infrastructure 20
  • 20. Convergence in the NDT Industry Industry Convergence Product Convergence Competition Convergence Metrology Tablet Computers “Expert” Alliance NDT Phased Array Ultrasonic Instruments NDT Training and Equipment Vendors 21
  • 21. Mega Trend 5: Bricks and Clicks
  • 22. Macro To Micro Implications of Bricks and Clicks Before Clicks Big-box Format (Hypermarket) After Clicks Macro to Micro Implications Small-box Format (Virtual Stores) Store Sizes to Decrease by 15%-20% by 2020 (from 2011 levels) Single-Channel Omnichannel In-store, online and mobile to integrate creating a ‘Omnichannel’ shopping experience Money Wallets Mobile Wallets M-Payment Users to increase by 16% exceeding the 1 billion mark by 2025 TV Campaigns Social Media Campaigns New Marketing Solutions through new ‘social’ platforms 23
  • 23. Mega Trend 7: New Business Models: Value for Many
  • 24. Personalization & Customization Nike Personalization and Customization Co-Creation Quirky .com New Business Models Service as a Business Model Location Based Services One-off Experience (red letter Days) 25 Source: Frost & Sullivan, 2012
  • 25. + Free Premium “Value for Many” = Freemium Will Replace “Value for Money” Source: Frost & Sullivan, 2012 26
  • 26. Mega Trend 8: Economic Trends
  • 27. The Next Game Changers in 2025 Russia $6,189 Billion Turkey Poland $2,827 Billion $1,167 Billion $653 Billion Brazil $38,526 Billion $2,441 Billion Egypt $6,235 Billion Thailand $772 Billion Mexico BRIC Nations Next Game Changers $1,098 Billion Note : The figure denotes GDP at market prices. Forecasts to 2025 have been extrapolated based on Nominal GDP growth rate projections . India $5,437 Billion $4,816 Billion $811 Billion Argentina China $323 Billion Vietnam $483 Billion Philippines Indonesia South Africa Source: International Monetary Fund. Oxford Economics, Frost & Sullivan, 2012
  • 28. The Next Game Changers in 2025—Increasing Oil and Gas Activity in Africa Driving Economic Growth Ivory Coast Recent oil discoveries are expected to enhance oil production by 200,000 bpd in 5 years from approximately 32,500 bpd being produced currently Ghana The country planning $20 billion investment in the oil and gas sector over the next 5 years. Oil production expected to double by 2021. Cameroon Oil production has been declining steadily since 1985 but large natural gas reserves remain largely untapped. The country expected to invest in developing the natural gas reserves over the next 5-7 years. Equatorial Guinea Oil production rebounded in 2012 after declining year on year since reaching a peak in 2005. Natural gas production rising and expected to witness considerable investment. Gabon The country has been producing oil for decades but production has been dwindling over the past 15 years due to depletion of reserves. However, offshore oil discovery is expected to usher in the next oil boom in the country. Ethiopia and Somalia Exploration activity has found reserves of oil and gas, however, production is still a few years apart. Kenya Recent oil and natural gas discoveries have increased investment. 46 oil blocks auctioned off in the past year. Tanzania Large natural gas reserves discovered recently. The country looking to develop the reserves and start exporting power by 2015. Mozambique Large recent natural gas discoveries add to the existing reserves. Production to ramp up with potential export of natural gas to South Africa being planned. - Potential oil and gas Producers Namibia Oil discovered recently in partnership with a Brazilian firm after years of exploration. Production expected to start in the next 5 years. - Emerging oil and gas Producers - Current Major Oil and Gas Producers Source: Frost & Sullivan Analysis
  • 29. South Africa—NDT Inspection Services Market Key Takeaway: The market is expected to witness high revenue growth rates with significant investment being made in developing new infrastructure. 250.0 21.0 200.0 20.0 19.5 150.0 19.0 18.5 100.0 18.0 17.5 50.0 17.0 Revenue Growth Rate (%) Revenue ($ Million) 20.5 16.5 0.0 16.0 2012 2013 2014 2015 2016 2017 Year Revenue Revenue Growth Rate Source: Frost & Sullivan, 2012
  • 30. Mega Trend 9: Future Infrastructure Development
  • 31. Investments in Infrastructure Development is expected to cross $27 trillion by 2025 Worldwide Infrastructure Investment, US$ Trillion, 2010-2025 (Cumulative) Europe Middle East 6.6 Americas 1.5 8.3 Asia Pacific Africa 10.5 Sector Total (US$ trillion) Road 9.7 Railway 1.5 Air/Seaport 1.0 Power 9.7 Water 5.9 1.0 Source: Frost & Sullivan analysis. 32
  • 32. CAPEX in Developing Canadian Upstream Infrastructure Increasing Steadily E&P Capital Expenditure in Oil and Gas, Canada, 2005-2013 50.0 120.00 44.7 45.0 30.0 12.2 21.6 20.7 9.9 17.2 16.8 25.0 24.8 80.00 60.00 20.0 10.0 40.00 10.6 15.0 23.0 25.4 20.9 19.4 18.5 19.8 19.6 20.00 11.0 5.0 0.0 0.00 2005 2006 2007 2008 2009 Conventional Oil and Gas 2010 Oil Sands 2011 2012 2013 Oil Prices Source: Statistics Canada, Public and Private Investment in Canada, BP Statistical Review of World Energy 2013, Frost & Sullivan Analysis 33 WTI Spot Crude Price ($/bbl) E&P CAPEX ($B) 35.0 Forecast 100.00 40.0
  • 33. CAPEX in Developing Pipeline Infrastructure Increasing at a High Pace 6 4 3 5.7 Planned Pipelines CAPEX ($B) 5 2 2.6 1 1.3 0 2011 2012 2013 Source: Oil and Gas Journal, Frost & Sullivan Analysis 34
  • 34. From Macro to Micro: Taking Mega Trends from Information to Strategy Implementation Macro To Micro Mega Trend Analysis of Opportunities and Unmet Needs Selected trends that impact your business and markets Sub Trend Impact on Future Product/ Technology A sub-layer of trends that has a wide ranging impact Impact to Your Industry Visualising the roadmap of these critical forces through scenariobuilding and macro economic forecasts 35
  • 35. Thank You Questions? 36
  • 36. Contact Information Jeannette Garcia Corporate Communications, Measurement and Instrumentation (+1) 210.477.8427 jeannette.garcia@frost.com Nikhil Jain Vijay Mathew Senior Research Analyst, Measurement and Instrumentation Program Manager, Measurement and Instrumentation nikhilj@frost.com vijay.mathew@frost.com 37

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