The Frost & Sullivan report into the European Automation and Control Solutions (ACS) Market in Pulp and Paper found that the market in Europe is near saturation, but growth will come from an increasing need for replacement technology.

The analysts estimate that industry revenues will grow to £693m ($1.39bn) in 2013, from £609m in 2006, with growth curbed by intense price competition between the suppliers.

Most of the control solutions in the older mills are about 15 to 20 years old and have to be gradually replaced, as it becomes difficult for the end users to obtain hardware, software or staff to maintain the old technology.

The report suggests that automation suppliers will benefit since they have a very large installed base in Europe and very few replacements have been made to date.

Frost & Sullivan research analyst Ambika Kolangarakath said the biggest growth driver in the paper and pulp sector of the European ACS market is the need to improve efficiency for better productivity.

"The need for the effective use of raw materials, such as fibre and energy, will lead to continued investments by pulp and paper makers in automation architecture and control systems to streamline their operations," Kolangarakath said.

Since there is increased competition in the market, ACS manufacturers need to add value to products in order to compete, the report suggests.