Commentary: Automation for changing industries

Can improved automation shore up sagging profits?

08/06/2008


Dow Chemical reported decreased profits for the second quarter of 2008. Why is that? What does it tell us about process companies in general? Does it point a direction for the future of process automation?

I don’t bring this up because I want to start monitoring financial data or offering investment advice, but Dow’s situation is well publicized, detailed, and probably common to many process industries. The Chicago Tribune reported:

“The company's costs for energy and raw materials surged 42%, or $2.4 billion, when compared with the second quarter of 2007, the largest year-over-year increase in its history, said Geoffery E. Merszei, executive vice president and chief financial officer.

“Dow spent $1 billion more on oil-related costs in the second quarter than in the first three months of the year, the company said. Dow announced last month that it was raising the prices of its products by as much as 25% in July after implementing across-the-board price increases of up to 20% on June 1. Increasing prices helped to offset its higher costs but did not cover them, the Midland-based company said.”

So what does this tell us? When a company as optimized as Dow watches its profits erode even when prices are going up by 20% and 25%, you know things are very serious. It’s also probably a safe bet that less sophisticated companies are suffering even more. If ever there was a situation where the time is right for upgrading control strategy to gain efficiency and reduce costs, this is it. Any process unit that is running at anything less than peak efficiency will cause the company to get hammered in the marketplace. Today’s cost structures leave no room for anything sloppy.

At the same time, there are more products and services available today to improve process performance than ever before: Control platforms that optimize production, asset management to maximize uptime and equipment life, data collection of any conceivable process variable, smart field devices that can communicate with or without wires, and the list goes on. With today’s financial climate, a company that does not make investments in new technology will most certainly see itself slip into the red, eaten alive by rising feedstock and energy costs.

—Peter Welander, process industries editor, PWelander@cfemedia.com ,
Process & Advanced Control Monthly
Register here and scroll down to select your choice of free eNewsletters .





No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Save energy with automation; Process control system upgrades; Dispelling controll myths; Time-sensitive networking; Control system integration; Road to IANA
Additive manufacturing advancements; Machine vision enhances robotics; Fieldbus evolution; Process safety; Advice from System Integrators of the Year; Road to IANA
Salary and career survey: Benchmarks and advice; Designing controls; Remote data collection, historians; Control valve advances; Hannover Messe; Control Engineering International
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Getting to the bottom of subsea repairs: Older pipelines need more attention, and operators need a repair strategy; OTC preview; Offshore production difficult - and crucial
Digital oilfields: Integrated HMI/SCADA systems enable smarter data acquisition; Real-world impact of simulation; Electric actuator technology prospers in production fields
click me