Listen in: Companies continue DCS investments

Companies invested heavily in control systems in 2007. How about 2008 and beyond?

09/03/2008


Despite global economic uncertainty, the market for process manufacturing and automation remains strong, so says a new study released by ARC Advisory Group . This is particularly evident in the global DCS market, which grew by almost 13% between 2006 and 2007. “ARC expects there to be continued growth in the global DCS market through 2012, with an overall CAGR of just under 10%. This may seem like an overzealous growth projection to some, but the process automation market remains poised for long-term growth on several fronts that we believe will be sustainable for the next several years,” according to ARC research director Larry O’Brien, the principal author of ARC’s “ Distributed Control Systems Worldwide Outlook .”. ( Listen in: Hear comments from study author, Larry O'Brien .)

Users demand more MAC capabilities

Both end users and engineering and procurement firms (EPCs) are increasingly looking to automation suppliers to provide them with automation project execution capabilities, combined with ongoing service after commissioning. Many factors are contributing to growth in project and engineering services for automation suppliers. As a result, suppliers are beginning to fill the role of a main automation contractor (MAC), overseeing all aspects of automation projects and providing a single point of responsibility for automation projects from design to startup and beyond. The result is that vendors are seeing a growing proportion of income from services.

The ability of the customer to influence project costs diminishes as the project nears its latter phases, but these latter phases are also where the bulk of project costs start to accrue. The ability to have a single point of responsibility in an automation supplier that acts as a primary automation contractor is essential to controlling project costs, especially when it comes to preparing expert proposals that portray a realistic and honest view of project costs.

Migration solution market heats up

By ARC’s reckoning, even just a couple of years ago only two automation suppliers had a sound competitive migration strategy. Now, the group says that just about everyone has one to varying degrees. Offerings include extensive migration service capabilities and tools for automated graphic conversion, control strategy and database conversion, and so on. This makes it a lot easier for suppliers to infiltrate their competitor’s control system installations.e time, many end users are reformulating their automation strategy for the next decade and are reevaluating their installed base suppliers.

Migration, evolution, modernization — whichever term you use to describe it, making the transition to a modern DCS is fraught with challenges for end users, from the increasingly difficult task of justifying an automation purchase, selecting a supplier, and implementing the solution, to providing a roadmap for the future. Most of the end users ARC deals with list migration as one of the key issues they are facing today. ARC estimates that there are $65 billion worth of installed process automation systems in the world today that are nearing the end of their useful lifecycle, which in many cases can exceed 25 years.

Asia is still the biggest growth driver

ARC concludes that the large amount of grassroots project activity in Asia remains the leading driver for growth in the global DCS market, particularly China. There continues to be significant growth in nearly all industry sectors there, from process to discrete manufacturing.

The Chinese pharmaceutical industry is growing at 30% per year, and the need for more advanced forms of automation to achieve regulatory compliance and enable China’s pharmaceutical companies to become true global players is huge. The basic process and discrete industries also continue to perform well. In the oil and gas industry, there continues to be a lot of focus on off-shore production to meet China’s ever increasing demand.

—Edited by Peter Welander, process industries editor, PWelander@cfemedia.com ,
Process & Advanced Control Monthly
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