November 05, 2014
In the automation industry, there are thousands of factors that determine how a fiscal year will go. Because automation is so heavily related to other important sectors of industry and job growth, it can be extremely interesting to note the ways in which seemingly disparate factors can aggregate to determine the success of individual automation projects.
For example, something as fickle as global oil cost has an impact on the automation industry for a number of reasons. In recent months, we have seen noticeable fluctuations in oil prices, though it had been a steady market for a long time. This has taken some by surprise, and now markets must catch up and account for the ways in which the future of the oil market will continue to affect the output of many industries.
Impacts on Other Industries
In automation, our health in any given year is largely determined by the health of our customer companies. As our customers need to factor an increased amount of their revenue to buying oil, their financial plans will change in other parts of their companies, which may mean changes for any outstanding projects like the development of new automated systems.
Impact on Buyer Markets
Even if a customer company is not directly impacted by changing oil prices, their customer companies, materials suppliers, or end consumers may still be impacted. For example, in today’s oil market, American oil dependence is switching to American and Canadian sources and away from sources in Russia and Iran. However, if an American company relies on Russian suppliers for a different resource, the availability and price of that separate resources may change as the Russian economy changes due to decreased foreign demand for their oil.
The Temporary Domestic Results of Changing Oil Prices
As oil prices change in America, we can see evidence of a consumer base that responds quickly. For example, as American oil prices have dropped due to decreased demand and an influx of domestic supply, the market for cars has picked up (though this defies expectation as in past times, consumers were usually disinclined to decide on a certain type of car during times of volatile oil availability). Manufacturers need to be able to adjust very quickly for these kinds of rapidly changing markets, and in turn their technology companies, like those who build their automated machinery, need to be available to provide support and repairs for machines for which optimal support is necessary for increased capacity. Changing oil prices also affect shipping companies, agricultural businesses, retail, and many other industries.
The Affects of Oil Prices on Jobs
According to oilprice.com, though we might expect increasing oil prices to lead to more jobs with oil companies, this is not what happens in practice. In fact, oil companies tend to be very small-scale employers and do not represent a particularly large portion of the American job supply.
In addition, employers across industries tend to not raise salaries in accordance with rising oil prices. This is often related to recession-like conditions in which people are forced to cut leisure spending in order to have enough for necessities.
The Switch to Alternate Energy Sources
Because many industries have witnessed drastic market changes as a result of volatile oil prices in the past, many companies have now switched to natural gas and other energy supplies. This fortunately means that in today’s market, the impact of volatile oil prices will not be so extreme or direct on many industries, which will slightly lessen the overall burden on companies that do still rely on oil.
In automation, this motivates our desire to embrace alternative energy sources, and to ensure that machines are energy efficient. This will help our customer companies in their efforts to decrease their dependence on oil and will ensure that if there are market fluctuations, that their production will not become wildly more expensive.