Roland Berger Industrial Automation Perspective 2019

Zurich/ Munich April 2019
Industrial
Automation
Short market report for
stakeholders interested
in the segment

2Roland Berger_Industrial Automation perspective 2019_v4.pptx
ShortreportonIndustrialAutomation(DRAFT)
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Contents
Market segmentation
Company landscape
Selected M&A activities
End customer industry examples
Trends & outlook
References & contact
Industrial Automation
1
2
3
4
5
6

Industrial Automation contains 6 segments, each an integral part of
a full-scale solution
PLC, CNC, motion
control, HMI, IPC,
I/O, sensors,
machine vision-
systems
Electric drives,
other drives (gears,
standard, stepper),
hydraulics,
pneumatics
Industrial robots,
cobots, pick & place
systems
Assembly modules
and systems, linear
systems, electro/
hydraulic systems
ERP, PLM, plant
management
applications,
machine control
applications, system
engineering tools
Contains
Role in
automation
Coordinates all
movements of the
mechanical system,
issues commands
to activate motion
control mechanism
Actuates/drives
robot joints/arms to
produce a linear
motion or rotation
Grasps, lifts,
transports,
maneuvers or
performs operations
on a workpiece
within a given area
(work envelope)
Module or sub-
system of an
automation solution
Manages
automation solution
Control
components
Motion
components
Robots Mechatronic
systems
Software
Development
of concept, building
of system and
debug. Run a short
production to verify
and offer service
Develop individual
automated turnkey
solutions
System
integrators
Industrial Automation segments
Source: Roland Berger
1 Market segmentation
Industrial automation market System integration
market

Industrial Automation is a ~EUR 185 bn market – Top companies
accounting for 50% of the market, the rest is rather fragmented
~11
Mechatronic
Systems
Software
Automation
spend
Robots
Global CAPEX
Control
Components
Motion
Components
by segment
System
integration
~2.800 ~185
~3
Rockwell
~5
~6
~10
~15
~15
~19
Industrial Automation - Players
Rest of the market
~6
~3KUKA
Yokogawa
~185
GE
Honeywell ~5
Fanuc
Yaskawa
~3
~96
Schneider
Emerson
ABB
Siemens
Overall market size and split by segment and major players, 2016 [EUR bn]
Source: IHS; Markets & Markets; interviews with market participants; Infinancials; company websites; annual reports; Roland Berger
Note: Capex spend of relevant industrial manufacturing industries; global market approximation based on available segment and regional split
1 Market segmentation
System
integrators
market
potential
partly
included in
segments
and
extended by
mark-up for
integration1)
1) Double counting cannot be fully avoided between system integration and industrial automation

Siemens, ABB and GE are the leading players
Approximate revenue in Industrial Automation of selected companies [USD bn, 2016]
Source: Infinancials; company websites; annual reports; Roland Berger
Emerson SchneiderGESiemens FanucRockwell YokogawaABB
15
Honeywell KUKA Yaskawa
19
15
6
10
6
5 5
3 3 3
2 Company landscape

Only the largest players have a service offering across most
segments
Segment coverage of key players
Source: Company websites; annual reports; Roland Berger
Siemens
Emerson
GE
Schneider
Fanuc
Honeywell
Rockwell
Yaskawa
Yokogawa
KUKA
ABB
Control
components
Motion
components
RobotsMechatronic
systems
Software
Offering available
2 Company landscape
1)
System
integration
1) Through acquisition of Maverick Technologies

Technological trends cluster around digitalization and cloud-
enablement as next step of industrial automation
Siemens
Emerson
GE1)
Schneider
Rockwell
Automation
ABB
Technology trends/focus areas Partnerships & geography
2 Company landscape
> Automation and Digitalization as strategic pillars
> New growth area "IoT Integration Services"
> PaaS and autonomous handling systems incl. robots as
industry drivers
> Focus on digital industries via ABB Ability digital platform
> Focus on industrial B2B customers
> Cloud and software enabled automation and digitalization
as strategic growth areas
> Key inorganic growth areas information software,
connected services, process expertise
> Growth of software and service share of portfolio
> Grow of digital platform EcoStruxure
> Cross-selling with energy management
> Long-term partnership with Hitachi and Dassault Systems
> Focus on existing trends in e.g. 3D printing or healthcare
> Leverage distributors & partners to accelerate growth
> China as remains growth driver
1) Intense focus on internal reorganization, strengthening of businesses and financial position
Industrial automation company specific trends (1/2)
> Regional market share expansion for better regional
diversification
> Strategic partnership with HP owned software and IoT
expert aruba (recently announced)
> Partner alliance network for GE Digital and Research to
push for growth and innovation
> Emerson Alliance Program to supply customers with full
solution

Open innovation, cooperation and co-innovation with customers are
key to develop customer-centric products
Fanuc
KUKA
Yokogawa
Yaskawa
Honeywell
Technology trends/focus areas Partnerships & geography
2 Company landscape
> AI and IoT as indispensable technologies for further
growth
> Life-time maintenance and "service first" initiative
> Digital transformation
> Cross-business technology development
> Establishment of software development and
commercialization of IoT with implementation of
"Connected enterprise"
> Robot-based automation and plant digitalization
> Diversification away from automotive to general industry,
e-commerce, consumer goods and electronics
> Automation of challenging operations via connectable
equipment
> Focus on "Connected enterprise" build up in high growth
regions
> Co-innovation with customers in field of digitalization
> Diversify regionally away from Asia and Middle East
Industrial automation company specific trends (2/2)
> Open innovation to create user-centric products
> Cooperation with companies via FIELD system, a open
IoT platform
> Creation of architecture to make full use of digitalization
> Leverage innovations in IIoT, Blockchain, AI and Big data
> Establish IIoT platform
> Diversification to high growth countries in Asia and
North America
> Focus on China as largest robotics market via China task
force despite slower growth assumed

Industrial Automation is an overall attractive business, however,
variations across business models exist
Selected profitability and valuation examples in Industrial Automation
Siemens ABB
Emer-
sonGE
Schnei-
der Fanuc
Honey-
well
Rock-
well
Yaska-
wa
Yoko-
gawa KUKA
Segmentprofit
margin[%]
Groupvaluation
[EV/EBIT]2)
Sharein
automation1)[%]
45%21% 12% 66% 100% 22% 100% 12% 95% 100% 86%
12%12%
n/a
2%
17%
n/a n/a
15%
9%
3%
9%
14 15
23
15 16 14
23
14 15
27
20
Ø 10%
Ø 18x
Source: Infinancials; company websites; annual reports; Roland Berger
Ø 60%
1) Share of revenue in automation is calculated based on revenues of relevant segments 2) EV/EBIT multiple is calculated as EV at fiscal period end date (market capitalization + net
debt) divided by reported EBIT for the fiscal period
2 Company landscape

Several notable transactions in 2016 - Acquisition of Kuka stands
out in terms of deal value
2016
Manz AG (20% stake)
> Buyer: Shanghai Electric
Group (CN)
> Seller: Family
> Rationale: Enter strategic
collaboration in area of
energy storage, solar and
automation technology
> Deal value: c.USD 100 m
Intelligrated
> Buyer: Honeywell
International (US)
> Seller: Permira Advisers
(UK)
> Rationale: Acquire supply
chain automation solutions
> Deal value: USD 1.5 bn
KUKA (87% stake)
> Buyer: Midea Group
(CN)
> Seller: n/a
> Rationale: Enhance
industrial robotics
business and third party
logistics services
> Deal value: c.USD 4.2
bn
Svensk Industri-utomation
> Buyer: ABB (CH)
> Seller: n/a
> Rationale: Strenghten
automation solutions
> Deal value: n/a
Emerson Process Management
(Sensor production business)
> Buyer: Ts Temperatur Sensorik
(DE, subsidiary of WIKA)
> Seller: Emerson Process
Management (DE, subsidiary of
Emerson Electric)
> Rationale: Strengthen position in
sensor market, expand in Germany
> Deal value: n/a
Shenzhen Axxon
Automation (75% stake)
> Buyer: Mycronic (SE)
> Seller: n/a
> Rationale: Expansion into
general dispensing market,
with China representing
40% of the global business
RMG Messtechnik
> Buyer: Dalian Energas
Investment (CN)
> Seller: Honeywell
International (US)
> Rationale: Expansion into
the manufacturing of
measurement equipment
Permasense
> Buyer: Emerson Electric
(US)
> Seller: Imperial Innovations
Group (UK)
> Rationale: Invest in core
business platforms, i.e.
pervasive sensing
applications
Source: MergerMarket; S&P Capital IQ; Roland Berger
Acquisitions in Industrial Automation and adjacent segments 2016 (selection)
3 Selected M&A activities

Industrial automation sector has seen significant M&A activity with
diverse players from Tesla to Swisslog snapping up targets
2017
Crompton Greaves B2B
automation business
> Buyer: alfanar Group
(SA)
> Seller: Crompton
Greaves (IN)
> Rationale: Expand
B2B automation
> Deal value: c.USD
140 m
Grohmann Engineering
> Buyer: Tesla Motors
(US)
> Seller: Deutsche
Beteiligungs AG;
Private investor (DE)
> Rationale: Improve
speed and quality of
production
> Deal value: c.USD
110 m
Sandvik Process
Systems
> Buyer: Foundation
Asset Mgmt (SE)
> Seller: Sandvik (SE)
> Rationale: Target with
strong global market
position and outlook
> Deal value: c.USD
600 m
W Interconnections
> Buyer: Weidmueller
Interface (DE)
> Seller: Rockwell
Automation (US)
> Rationale:
Strengthen US
position in
Industrial
Automation
> Deal value: n/a
Compac Sorting
Equipment
> Buyer: Tomra Systems
(NO)
> Seller: Private investor
(NZ)
> Rationale: First
provider of solution for
both lane and bulk
sorting of foods
> Deal value: c.USD 50
m
Vanderlande Industries
> Buyer: Toyota
Industries (JP)
> Seller: NPM Capital
(NL)
> Rationale: Strengthen
automated material
handling business
> Deal value: c.USD 1.3
bn
Talyst Systems
> Buyer: Swisslog
Holding (CH,
subsidiary of KUKA)
> Seller: Columbia
Pacific Advisors (US)
> Rationale: Ability to
provide end-to-end
integration for
medication supply
chain
> Deal value: n/a
Bernecker + Rainer
Industrie-Elektronik
> Buyer: ABB (CH)
> Seller: Private
investors (AT)
> Rationale: B + R's
installed base,
application and
solution know-how in
machine & factory
automation
> Deal value: n/a
Rockwell Automation
[CANCELED]
> Buyer: Emerson
Electric (US)
> Seller: T. Rowe Price
Associates; Capital
World Investors
> Rationale: Emerson
made 3 offers which
were all declined
Microscan Systems
> Buyer: Omron
Corporation (JP)
> Seller: Spectris (UK)
> Rationale: Improve
product offering (code
reading technology)
and sales network
> Deal value: c.USD
155 m
ASCO Power
Technologies
> Buyer: Schneider
Electric (FR)
> Seller: Vertiv (US)
> Rationale: Market
leader in Automatic
Transfer Switch
> Deal value: USD
1.3 bn

Several acquisitions in 2018 with Denmark-based Mobile Industrial
Robots (MiR) standing out in terms of deal size
2018
KUMATEC
> Buyer: AVX
Interconnect Europe
(US)
> Seller: Private
> Rationale: Addition to
producing capabilities
and exploring new
business opportunities
m
EXOTEC Solutions SAS
> Buyer: Iris Capital (FR)
> Seller: n/a Series B
funding
> Rationale: Grow the
team and deliver 1,000
new robots by 2019
> Deal value: c.USD
18 m
Ve.Ma.C.
> Buyer: The Middleby
Corporation (US)
> Seller: Private
> Rationale: Expand
expertise related to
automation and
robotics
m
AGVE
> Buyer: Murata
Machinery (JP)
> Seller: Private
> Rationale:
Utilization of
Muratec’s strength
in the Asian and
Japanese market
> Deal value: n/a
Alvey Group
> Buyer: Scott
Technology Limited
(NZ)
> Seller: Private investor
(NZ)
> Rationale: Expand the
business and
capabilities in industrial
automation in
international markets
m
Mobile Industrial Robots
> Buyer: Teradyne (US)
> Seller: Private owner
> Rationale: Provide
financial strength to
MiR to reach its growth
objective and help
Teradyne to expand its
product portfolio and
geographical reach in
the Denmark markets
m
AVT Europe
> Buyer: VINCI Energies
(BE)
> Seller: Private
> Rationale: Extending
knowledge and
expertise in
Automation sector
enable AVT future
(international) growth
> Deal value: n/a
Magazino
> Buyer: Fiege, Koerber,
Zalando (DE)
> Seller: Private
> Rationale: Enable
growth, strengthen
market position and
deploy robots in own
business model
> Deal value: USD 24 m
Asic Robotics
> Buyer: Paragon
Partners (DE)
> Seller: Vinci Capital
SA; Evoco AG
> Rationale: Further
develop and grow
business
> Deal value: n/a
FEBA AUTOMATION
> Buyer: PIAB
Invest/EQT (SE)
> Seller: Private
> Rationale: Enable
growth in the robotic
gripping and end-of-
arm tooling segment
> Deal value: n/a
Whiteley Murphy
> Buyer: HAHN
Group (DE)
> Seller: Private
> Rationale:
Strengthen global
presence as cross-
industry provider of
automation solute.
> Deal value: n/a

Transaction rational was mostly the fulfillment of growth targets –
Almost half of the transactions took place in Europe
> Due to the dominance of strategic investors, most
transactions are made to achieve growth targets
> Chinese investors have made both financial and strategic
investments
Transaction rationale Geography
> Asian buyers mostly come from Japan or China - No general
trend towards China investments apparent so far
> Almost half of the transactions took place in Europe - mostly
strategic investors who expanded their business with
acquisitions
26%
100%
24%
19%
19%
12%
Financial
investment
TotalExtension
of the value
chain
Expand
end-
customer
industries
Expand
geographies
Extension
of process
integration
43%
Europe
Asia
7%
17%
10%
North
America
5%
7%
North
America
2%
2%
7%
Asia
Europe
TargetBuyerGrowth targets
Source: Company information, Press, Capital IQ; Roland Berger
1) Selected transactions between 2013-18
Transaction rationale and geography1), 2013-2018 [%]

Previous transactions dominated by strategic investors –
Chinese strategists with around 10% stake
62%
100%
10% 5%
24%
Strategic investors
(excl. China)
Chinese strategists OEM Financial investors Total
> Financial investors show
high interest in industrial
automation but so far still
with a limited number of
transactions
> Since 2017 an increased
activity can be observed
> Strategic investors
(outside China) make up
the majority of buyers with
62% - Indication of high
consolidation pressure in
the industry
> Growth or increase in
market share serve as
main acquisition target
> Some automotive OEM
with interest in acquiring
system integrations and
automation capabilities
> Best known purchases by
Toyota and Tesla Motors
> Chinese strategists
showed a particularly
strong interest in
industrial Automation
> Chinese with 5-year plan
to maintain
competitiveness
> Participation in many
of the major M&A
transactions
Based on sample of transactions1)
1) Selected transactions between 2013-18
Source: Company information, Press, Capital IQ; Roland Berger
Distribution of buyers, 2013-2018 [%]

Industrial Automation spans across many use cases – Automotive,
CE and Medical example
Selected end customer industries use examples
Automotive Consumer electronics
Areas for automation
Material handling, palletizing, laser
and camera operations, foundry
operations, installing components and
painting
Material removal, part transfer,
handling, assembling and
disassembling, cutting, milling,
dispensing, packaging
Manufacturing disk drives, computer
printers, cell phones, fuel cells,
LCD/LED screens, and other
processes
Medical
Potential customers Potential customers Potential customers
4 End customer industry examples

Main trends and challenges in the respective end customer
industries require a broad range of automation solutions
Actions of potential customers on sector trends (2017)
"Apple and Samsung supplier Foxconn has
reportedly replaced 60,000 factory workers with
robots", Newspaper
"1.2 million jobs to vanish as Foxconn unveils plans
for fully autonomous factories",
Newspaper
"Leoni is planning full automation of assembly of
smaller cable sets by 2020. The production cell is
particularly suitable for so-called HaF or HaD cable
sets - above all for the requirements for
autonomous driving", Leoni
"Trends and opportunities in packaging operations
show that pharma machinery buyers are looking
for improvements that will drive production and
packaging line efficiency, and automation holds
the answer", PMMI
"With its highly automated and intelligent battery
manufacturing facilities, CATL was able to put out
a battery system capacity of 6.8 GWh in 2016. By
the end of 2020, the output capacity will heavily
increase to 100 GWh p.a.", CATL
"With the Innovation Factory, Aesculap plans to
more than double the number of sterile containers it
produces. To achieve this, a fully automated
container production line with ten processing
stations and seven networked robots has been
integrated into the factory",
Aesculap
"Germany is a high wage country. Anyone who
wants to produce here has to rely on automation.
The Procter & Gamble Manufacturing GmbH in
Marktheidenfeld accomplishes this with the electric
toothbrush", Procter & Gamble
Automotive Medical
Consumer
electronics
Source: Interviews with market participants; Roland Berger
4 End customer industry examples

Four global trends drive the automation spend – Technological
advance and increasing labor cost most imminent
Key trends in the automation market
Key
trends in the
automation
market
Description Overall economic growth
and increase in CAPEX as
well as increase in wealth
level in emerging markets
driving higher demand for
manufactured/processed
goods
Technological progress and
higher degree of flexibility
making automation solutions
available and economically
more viable for a broader set
of use cases, e.g., for
production or products with
shorter life cycle and/or
smaller volumes
Increase in labor cost in low
cost production countries
such as China drives the
high demand for automation
solutions particularly in
APAC and China, but also
the interest to "automate at
home" from developed
countries
Changing consumer
behavior of aging and more
quality-conscious population
drives the growth of the
automation market in all
consumer segments with
some such as medical
benefiting over
proportionally
Economic
growth
Changing
consumer behavior
Technological
advance
Increase in
labor cost
Impact on
automation
market
Positive impact Negative impact
5 Trends and outlook

The Industrial Automation market is expected to grow 7%-13% p.a.,
reaching EUR 260-340 bn in 2021
Global Industrial Automation market size [EUR bn]
Source: IHS; Markets & Markets; interviews with market participants; Roland Berger
20202016 2017 2018 2019 2021
185
209
236
267
302
341
CAGR
2016-21
7-13%
Lower range Upper range
> Robots and software expected to grow
above other segments as their importance
in automation solutions increases and the
technological upside potential is significant
> Particularly software will play a more
prominent role as a larger number of
devices will be connected, more data will be
analyzed and significant productivity gains
are possible through self-learning systems
> Technological advances in robots, e.g.
cobots, gripping arms, etc. increase the
number of use cases, supporting higher
growth rates
> Control and motion components will
continue to play an important part in
automation solutions, however, their
potential for differentiation is more limited
and thus their growth is below the other
segments

APAC and China expected to demonstrate strongest growth rates,
Europe and NAFTA are slightly behind
Industrial Automation market growth expectations 2016-2021 [CAGR]
Source: IHS; Markets & Markets; interviews with market participants; Roland Berger
> APAC and China are sizable
markets already today and due to the
higher forecast growth 2016-2021
will strengthen their position vis-à-
vis traditional automation markets
Europe and NAFTA
> Higher labor costs, particularly in
China, will drive the need for
> Europe and NAFTA have already
reached a certain "saturation",
however, still growing as customized
automation plays a more important
role in key industries
> LATAM and MEA are less relevant
markets compared to the other
regions, and growth outlook is limited,
too
6%
Overall
market
4%
7%
Europe ChinaNAFTA
6%
LATAM
13%
3%
8%
APAC excl
China
9%
MEA
13%
11% 11%
7%
14%
8%

Positive outlook is supported by all market participants, some
variation in expected growth rates
Comparison of market growth rates, 2016-2021 [%]
7%
Market-based
consensus range
13%
Source: Goldman Sachs, Bank of America Merrill Lynch; analyst repots; IFR; Markets & Markets; Mordor Intelligence;
VDMA; interviews with market participants; Roland Berger
6%
Expert-based
consensus range
21%
12%
7%
Report-based
consensus range
5%
Analyst-based
consensus range
13%
15%
4%
Company-based
consensus range
Expert
opinions
Market
reports
Roland Berger
market model
Analyst
estimates
Company
estimates

Industrie 4.0
Several trends on the Gartner hype cycle have an impact on
industrial automation
Source: Gartner Hype Cycle for Emerging Markets, 2017; Gartner Hype Cycle for the Internet of Things, 2017; Roland Berger
Gartner Hype Cycle for Emerging Technologies 2017
Innovation trigger Peak of inflated
expectations
Trough of disillusionment Slope of
enlightenment
Plateau of productivity
Time
Expectations
Human augmentation
As of July 2017
Brain-Computer Interface
Connected Home
Augmented Reality
Virtual Reality
Quantum computing
Plateau will be reached in: 2-5 years 5-10 years > 10 years< 2 years
Smart dust
Nanotube Electronics
Software-Defined Security
Commercial UAVs (Drones)
Conversational User Interface
Volumetric Displays
5G
Deep Reinforcement Learning
4D Printing
Artificial General Intelligence
Neuromophic Hardware
Serverless PaaS
Digital Twin
Smart Workspace
Augmented Data Discovery
Edge Computing
Virtual Assistants
Machine Learning
Deep Learning
Artificial Intelligence
Cognitive Computing
Blockchain
Cognitive Expert Advisors
Enterprise Taxonomy and Ontology Management
BOLD = Industrial automation relevant
IoT platforms
x Selected technologies for snapshot
Smart robots
Autonomous Vehicles
Machine vision

Machine vision is a major trend influencing industrial automation –
Isra Vision is a technologically leading player in the field
Machine vision – Isra Motion
Machine vision trend
> Machine vision helps machines identify
and inspect workpiece enabled by
sensors
> Specific application examples include
– Car body position detection
– Component identification
– Quality inspection
– Defect detection
– Surface inspection
> Machine vision technology development
is driven by connectivity, which will
provide a broader platform for image
comparison
Impact on industrial
automation
> Space: Integration of machine
vision technology into e.g. robot
arms will save production space
> Productivity: Machine vision
enabled robots will be more
suitable for mixed-model
processing applications
> Flexibility: Increased flexibility of
robots to manage part variability
without fixturing and facilitate
quick changeovers
> Precision and quality:
Increased precision in quality
inspection and material handling
Isra Vision
> HQ in Darmstadt, Germany
> Develops machine vision and industrial
image processing solutions
> Applications include quality and surface
inspection and robot vision for
automated production
> Active across range of sectors including
automotive, packaging and pharma
> Robot vision systems and surface
inspection are examples of their product
portfolio
Source: Company website; Desktop research; Roland Berger
Deep-learningEmbedded vision
Infrared and hyperspectral imaging

The Digital Twin is enabling industrial automation by creating a
digital replica of a machine, a process or a whole factory
Digital twin – NavVis and B&R Automation
Digital twin trend
> Digital twin refers to modeling assets
with all their geometrical data,
kinematic functionality and logical
behavior using digital tools
> The digital twin might be applied to
machines as well as whole plants
> A digital twin differs from a CAD system
as it also includes dynamic processes
and not only parts and can mirror more
complex situations
> In the context of industrial automation
the digital twin will bridge the physical
world of automation with the
virtual/digital world of process,
machine and product design and
continuous monitoring and maintenance
Impact on industrial
automation
> Speed: Production start-up and
changeover speed improvement
helps fulfill need for quicker time-
to-market as well quicker cycle
times
> Efficiency: Use of digital twin will
lead to a 10% efficiency increase
by 2021 according to Gartner
> Simulation: Improved testing
and simulations for prognostics,
e.g. by exactly predicting
situations in a fast-forward mode
> Reversing logic of production:
Products determine the machine
instead of the vice versa
NavVis
> HQ in Munich, Germany
> Offers Digital Twin solutions for indoors
> Focus on creating a complete digital
copy of the factory, enable factory
planning, safety and maintenance
> With sensor data and VR, NavVis will
further increase use cases of their
technology
Source: Company website; Desktop research; Gartner; Roland Berger
"The digital twin is the key to the
factory of the future",
Bosch Rexroth
B&R Automation
> HQ in Eggelsberg, Austria
> Digital twin for developing and testing
machine software
> Real time display of machine physical
behavior
> Changes on digital twin directly
transferred to real machine

> …
…
> …
…
A broad range of activities by market participants will impact the
industry structure going forward
Potential actions by market participants (selection)
Insourcing of automation
know-how
> With automation becoming a more integral
part of the production process, large
producers establish own automation
capabilities
> Foxconn for example is developing in-house
solutions to safeguard production USPs
> Drive to improve manufacturing standards and
compliance with increasing regulation (e.g. in
Pharma) requires automation
> Chinese companies and investors continue to
look for investment opportunities in automation
Push of Chinese companies
and investors into automation
> Producers who gain more advantages from close
proximity to their customers vs. centralized
production will establish decentral production –
Using technical opportunities such as digital twins
> Adidas and its automated factory in Germany is
one example
Growth of decentral
production
> Software companies push into
Industrial Automation to
provide standardization
solutions and norms
> MS Azure is one example
Platforms and
standardization> Key automation providers such as
Siemens, ABB and Emerson continue
to invest heavily in automation
> Organic as well as M&A activities in
scope of strategy
Existing players
continue to expand

PE funds have been active in Industrial Automation
Please reach out to
us regarding
opportunities you
want to disucss
Transactions examples with participation of PE funds
Example 1: Automated storage and retrieval systems
> Target company with a good competitive situation and positive market
outlook (growth rates in high single digit, low double digit percentage range
feasible)
> Increasing labor costs, new warehouse location focus and e-commerce
drive demand and penetration
Example 2: Process and conveyor solutions
> Target company active in a mid-single digit percentage growth market
driven by increase in CAPEX overall and a higher share being invested in
Automation
> High barriers to entry and good competitive situation of target company in
its segment shield it from low cost competition while entry & market share
gain in several end customer industries and regions (e.g. China) appears
feasible
Transactions (past, ongoing)

High expected growth rate for China is underlined by currently still
low robot density
Global robot density, 2017 [# of robots per 10,000 industrial employees]
Source: IHS; IFR; interviews with market participants; HSBC; Roland Berger
189
US
145
CA
34
MY
309
DE
3
IN
488
SG
68
CN
631
KR
303
JP
31
MX
177
TW
5
ID
10
BR
3
RU
> The level of automation
in China is on a low
level compared to
other markets with a
manufacturing focus –
proven by a low density
of robots in China (68
in China vs. 309 in
Germany)
> Malaysia, Mexico,
Indonesia and India
as future high potential
markets for system
integrators with a
relative low robot
density (34,31,5,3)
respectively
Countries for comparision Focus country
5 Trends and outlook – Deep-dive China

C.21% p.a. growth of the robot market in China from 2016 to 2019
expected
Global robot demand, 2012-'16 ['000 units]
Source: IHS; IFR; interviews with market participants; HSBC; Roland Berger
2012 2013 2014 2015 2016 2017 2018 2019
250
300
200
100
0
50
150
350
400
450
ThailandGlobal KoreaChina Other Asia/Australia
13%
5%
13%
20%
21%
CAGR
2016-'19
CAGR
2012-'16
-7%
20%
16%
13%
41%
> China's robot market is
expected to grow
c.21% p.a. from 2016
to 2019
> China's global system
integration market
share will reach
approximately 26% in
2021 – APAC countries
slightly gaining market
share
> Robotic market relies
heavily on imports
with only approx. 8%
Chinese domestic
players excluding
KUKA
> Japanese robots (e.g.
from FANAC) represent
78% of all imports

Increasing wages force Chinese manufacturers to invest into
automation in order to keep competitive prices
Average wages development, 2011-'21 [USD/h]
> Rise in labor cost in China
due to increasing average
wages
> Average wages are expected
to rise 9% p.a. in China from
2017 to 2021
> Wages in South Korea and
Taiwan are on a higher level
than China with an expected
growth of 5% and 0% p.a.
from 2017 to 2021
> Average labor costs in
Russia, Mexico and India
are lower than in China
since 2014/2015 and are
expected to stay on a low
level until 2021 – however
also strongly growing with 6-
10% p.a. from 2017 to 2021
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Russia
China
India
South Korea
Mexico
United States
Taiwan
Germany
9%
5%
Source: Oxford Economics; Roland Berger
0%
10%
+6%
7%
CAGR
2017-'21
5%
3%
10%
4%
-2%
4%
-4%
-3%
CAGR
2011-'17
-1%
2%

We have worked with multiple clients in the industrial automation
and system integrator industry
Selected clients Selected reference projects
>Numerous due diligence projects in the linear
guides and industrial automation space
>Service strategy across industrial products
including ball / roller bearing manufacturer
>Business Unit Strategy for a leading
manufacturer of rotational and linear bearings
>Relevant market models, historical data and
forecasts for Industrial Automation
>Business expanding strategy for component
supplier within assembly automation industry
>Strategy development and performance
improvement for automation solution providers
>Market analysis, strategy & long term sales
development for a manufacturer of ball bearings
& linear guides
Project track record (examples)
6 References & contact

Contacts
Sven
Siepen
Managing Partner
Zurich
Head of Capital
Goods Cluster
sven.siepen@rolandberger.com
+41 79 792 7374
Ralph
Mair
Principal
Zurich
Industrial Products
and Services
ralph.mair@rolandberger.com
+41 79 808 8693
6 References & contact
Dr. Philipp
Schmitt
Principal
Zurich
Industrial Products
and Services
Philipp.schmitt@rolandberger.com
+41 79 808 8634

Roland Berger Industrial Automation Perspective 2019

Roland Berger Industrial Automation Perspective 2019

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