Automation services: More outsourcing, double-digit growth
Dedham, MA —The fastest growing segment of the automation market is services, according to a recent report from
ARC Advisory Group
. “Automation Supplier Provided Services Worldwide Outlook,” a five-year market analysis and technology forecast through 2011, finds that many automation services that are required throughout the lifecycle of a plant or factory no longer can be performed in-house by manufacturers.
Users increasingly depend on suppliers that offer more value-added services. Among the findings: labor has become a global issue driving outsourcing and services growth, and suppliers need to bring vertical industry expertise to their service offerings. Additionally, the influx of less experienced workers into the world of automation and manufacturing is spurring extremely high growth in training segments, with suppliers and users stepping in to fill the need.
The study reports that the worldwide market for services approached $14 billion (year-end 2006). It is predicted to increase by more than $10 billion over the next five years, reaching $24.9 billion in 2011, representing a compound annual growth rate of 12.3%.
“The impetus for the study,” says ARC’s Larry O’Brien, research director for process industries, “was that we saw services rapidly growing business in the automation marketplace.” He adds, “There’s a resource crunch as a lot of people retire; approximately 60% of oil and gas engineers will retire by 2010; there’s dwindling staff. So who do users look to now?”
Another factor is the growth of the marketplace. ABB tops the automation service market share worldwide. Siemens and Honeywell come in next. Other key players are active as well, including Rockwell Automation, which told Control Engineering that its services business is “rapidly growing,” at number six worldwide and number two in North America.
While project services and other traditional services were in strong demand, services provided during the operational phase of the plant, such as asset management, condition monitoring, loop tuning, performance management, and overall maintenance outsourcing, contributed to overall market growth. Market shares of leading suppliers, notes the study, are driven by suppliers’ strength in process automation.
Mature markets such as North America and Europe, the Middle East, and Africa constitute the bulk of the market for automation services, but revenue growth will be concentrated in the developing economies of China, the rest of Asia, and Latin America.
The study recommends that users consider automation suppliers to fill the list of skills gaps and as training and education providers. They should also consider suppliers as main automation contractors or main instrumentation vendors (MAC / MIV) for new projects.
—Edited by Barb Axelson, contributing editor
Control Engineering Weekly News
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