European chemical sector on verge of new investment cycle
Demand for automation and control solutions in the European chemical sector is being hampered by chemical production moving overseas and the absence of new chemical plants in the western countries of the European Union, according to a recent assessment by Frost & Sullivan . Solution suppliers without an installed base of existing products, says F&S, risk being marginalized by the lack of “open” opportunities.
On the other hand, the global consulting firm sees chemical manufacturers investing in retrofits and upgraded systems to improve production efficiency and counter competition from low-cost suppliers. Clear findings among end-users, says the report, show chemical firms favoring existing suppliers for upgrades, particularly in key DCS product sectors where relationships are well entrenched.
Chemical firms are particularly reticent about investing in supervisory control and data acquisition (SCADA) technologies, the research indicates, and suppliers are faced with convincing them of increased functionality and reliability of SCADA, particularly in batch-oriented chemical manufacturing. The importance of branding and reputation are paramount, explains Danny Solomon, F&S research manager. “New firms seeking to penetrate these well-established supply structures will have to provide reliable migration from long-established systems,” he notes, a condition that favors larger suppliers.
“After two years of low and stable interest rates, there are definite signs of an upturn in investment from 2005 in the chemical sector, in spite of uncertainty surrounding the EU constitution and the Euro,” says Solomon. F&S puts revenue from sales of automation and control solutions to the chemical sector at $1.3 billion in 2004 and expects it to touch $1.7 billion by 2011 as the continued threat of low-price competition stifles attempts to drive like-for-like revenue gains.
—Jeanine Katzel, senior editor, Control Engineering, firstname.lastname@example.org