Automation services market set to expand

The services business remains one of the best growth opportunities for automation suppliers today, and one of the best ways for end users to take advantage of the growing expertise of suppliers to reduce plant maintenance costs, operating costs, and project costs, says ARC Advisory Group.

Indeed, the worldwide market for supplier provided automation services is set to grow at a compounded annual growth rate (CAGR) of close to seven percent over the next five years, according to a new ARC study, Supplier Provided Automation Services Worldwide Outlook.

“Today, we stand on the verge of an era of transformation for the services business. Tight operating environments and reduced demand are forcing companies to cut costs wherever possible. The result is that users rely on suppliers to provide them with a continuously expanding scope and depth of automation-related services,” says ARC research director Larry O’Brien, principal author of the report.

Both end-users and EPCs find it increasingly difficult to hire qualified personnel. This is not only an issue in developed regions, such as North America and Western Europe. Even in China, which turns out a large number of engineering graduates every year, too few highly trained and qualified personnel are available to fill the needs of the process industries.

The MAC phenomenon

One of the biggest overall trends in the past decade, says ARC, is for automation suppliers to fill the role of main automation contractor (MAC). Demand for MACs, which can provide a single point of responsibility for all automation-related aspects of a project, has never been higher. End users are under increased pressure to lower the cost of capital projects, find experienced and qualified personnel to execute projects and operate their plants, and reduce operating costs.

Accurately forecasting project costs for the process industries is becoming increasingly difficult. Even in the wake of the current economic crisis, capital costs continue to soar, particularly in the process industries. Booming capital expenditure in developing economies, such as China and India, has given way to an environment of uncertainty and unpredictability due to the global economic meltdown. Companies must work harder than ever to reduce risk and provide some level of predictability for the capital projects that are still underway.

Even in a down economy, large infrastructure projects march ahead, and factors such as the US economic stimulus package will actually increase the level of infrastructure projects taking place in the US. According to the ARC study, the MAC must serve an even larger consulting role to the owner/operator as well as be an integrated partner to one or more EPCs in order to help each EPC manage their own schedules and cost risks. As with EPCs, MACs must be able to provide global clients with a standardized solution anywhere in the world.