China's materials handling production is tipped for rapid growth. A study by industry analyst IMS Research looks at the growth of programmable logic controllers (PLCs), the computer components used for automation of industrial processes.

The report forecasts that revenues from PLCs sold to machine builders in China will steadily increase to over USD1,026 million by 2011, at a cumulative annual growth rate of 16.2%. The materials handling equipment sector is projected to register even stronger growth, registering 21.9% growth.

According to the report's author, Jackey Wang, shipments of PLCs to the materials handling sector are much smaller than shipments to the textile machinery, packaging and printing machinery sectors. They were worth USD19.8 million in China in 2006, or 4.1% of the total PLC market for machine builders.

"However, strong growth is predicted for the materials handling sector over the next five years of between 17% and 28% per year," Wang says.

Wang says production of materials handling equipment such as cranes, electronic hoists, conveyors, elevators and escalators has grown very fast in the past three years and this is forecast to continue.

"Currently, China is a global production base for many consumer and electronic products, which is driving the development of the logistics industry and thus domestic demand for this equipment," the analyst adds.

"As automation levels are enhanced, more and more PLCs will be installed on or integrated within this equipment. The adoption of PLCs will help to improve the accuracy and efficiency of the materials handling equipment and reduce the labour costs of the equipment users."

Wang notes that besides the efficiency improvement, the average cost of PLCs is forecast to keep falling, which helps machine builders make their equipment more competitive at relatively low additional cost by adopting small, compact automation systems.