September 2009
Automation investment tumbles
Capital expenditures are cash outlays for creating future benefits. A capital expenditure (CapEx) is when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life that extends beyond the taxable year.
Automation equipment is a typical CapEx. The economic crisis is having a devastating effect on capital spending as manufacturers cut spending and postpone investments in anticipation of an extended period of low demand.
According to ARC Advisory Forum’s most recent data, capital spending as a percentage of revenue across 10 target industries declined between 1997 and 2008 at a compounded annual rate of 1.5%. These numbers reflect 52 companies and their global markets.
InTech estimates a 2008-to-2009 decline in North American automation expenditures of 15-20%.
 Capital expenditures as a percentage of revenue, by industry, from 1997 to 2008. Source: ARC |
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