CAD/CAM/CAE : electronic design automation, 1992 - Archive Server

North American Forecast Drivers
The North American market was flat in 1991
at $5.0 bilhon and is forecast to grow at a
6 percent CAGR through 1996 (see Figure 2).
The main factors driving the North American
forecast are the following:
• According to The Dun & Bradstreet Corporation's
latest monthly survey of 1,000
manufacturers' nationwide, manufacturers
modest expectations for improvements in
operating conditions were essentially
unchanged, despite reports of improved
conditions in the past few months.
However, the one bright spot in the recent
survey is that manufacturers' expectations to
increase capacity in the next three months
rose sharply. This bodes well for increases
in capital spending. With the cost of capital
so low, many companies are seeking to
invest in systems and equipment that boost
productivity. Market growth will increase as
manufacturers invest in CAD/CAM/CAE/GIS
systems.
• Market growth will be limited for the
second half of 1992 and most of 1993 as
businesses wait for the outcome of the
November election and the implementation
of new fiscal policies. Fiscal policy
proposals include restoring investment tax
credits, accelerating depreciation for many
investments, and reducing capital gains. The
budget deficit issue will also have to be
addressed. Most likely, after the elections,
some form of tax increases and/or spending
cuts will occur. A Republican win would
favor defense spending, which would help
EDA and mechanical sales; a Democratic
win would favor infrastructure spending
(such as roads and bridges), wWch is more
likely to benefit sales to AEC and GIS applications.
Businesses will postpone purchases
until they have a better indication of what
the new policies will be and how they will
affect their investment decisions.
• Market growth will be reduced because of
decreasing average selling prices (ASPs). The
United States is a large market with more
developed distribution channels and larger
order sizes than in other regions. Streamlined
distribution channels leave fewer
places for profit to hide; therefore, ASPs
have declined more sharply. In contrast,
Europe is the sum of many smaller country
markets, each with its own customs and
CAD/CAM/CAE^-ElectronJc Design Automation Applications
requirements. Because of these special
requirements, ASPs have not been as pressured
to decline in European markets; therefore,
North American unit shipments will
continue to grow significandy, while
revenue will grow at a slower rate because
of strong price competition.
• Market growth will be limited because of
lower defense spending. Spending cuts for
the defense budget of 25 to 30 percent during
the next five years are being proposed
by the U.S. administration. In the United
States, both Republicans and Democrats are
seeking to balance defense spending cuts
against the large forecast loss of jobs that
will occur when such reductions are
incurred. Most likely, the U.S. Department of
Defense will encourage continued growth in
R&D spending, w^hile severely limiting the
number of programs that would ultimately
make the transition to production. CAD
companies heavily dependent on direct or
indirect government defense spending contracts
increasingly will have limited growth
opportunities.
European Forecast Drivers
©1992 Dataquest Incorporated October—Reproduction Proliibited
The European market grew 4 percent in 1991
to $5.5 billion and will reach $7.9 billion by
1996. This market is forecast to have an
8 percent CAGR for revenue through 1996.
The main issues driving the European forecast
include the following:
• Growth will steadily increase in Eastern
Europe. The collapse of the Soviet Union
as an export market has complicated the
difficult situation already facing other Central
and Eastern European countries as they
make the transition to market economies
and establish new international trading
arrangements. Poland, Hungary, and more
recendy Czechoslovakia have made impressive
progress in shifting exports to other
markets. In all these countries, prices have
been set fi"ee and inflation seems to be
coming under control. The initial groundwork
toward adopting market economies
has been laid. GDP/GNP growth is forecast
to turn positive during the 1992 to 1993
period and reach strength toward 1994. As
these countries' economies become market
economies, CAD/CAM/CAE/GIS opportunities
will increase, also.