Design of a Decade

The Asian financial crisis, global recessions, significant volatility in energy cost, the search for alternative energy sources, and the emergence of BRICs economies have impacted nearly all businesses in the past decade. And while the speed and scale of the recent economic slowdown surprised everyone, the longterm trends that drive ABB’s business in power and automation remain intact as we continue to help the industry and our customers reduce costs, by improving their operations, maintaining products, managing electrical and automation systems, and increasing energy efficiency.

In terms of technology, the past decade saw significant advances made in integration capabilities, remote access, the intelligence in the devices, plus the unification of previously-competing communication protocols, all of which has contributed to users’ ability to optimize their assets.

For example, advances in remote access technologies to reach and then use information from devices in hard-to-reach or hazardous locations help the customer to assess and access the needed data points accurately and rapidly of a plant operational status, or to take preventive actions. Wireless communication further enhances this opportunity.

While the business environment remains challenging, it also offers tremendous opportunities over the next 10 years as businesses will be under pressure to strive for even higher productivity and reliability and, hence, competitiveness. Capabilities for innovation, in its broadest perspective, from technology to supply chain and to how we serve the markets and improve internal processes will be a key differentiating factor.

– James Foo, President & Country Manager, ABB Singapore

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Cost improvement, reduced machine size, and implementation flexibility have been the main factors driving changes in the automation market over the past 10 years. The vast improvement in CPU technology has brought about many new developments to the PC based automation market.

Embedded Windows operating system now provides for ease of programming, flexibility, high drivercompatibility, and security enhancement to enable system designers to fully integrate adds-on to the PC based control system. Embedded box computers with fanless designs and no internal cabling have also improved the reliability and ruggedness of PC based automation.

The automation industry will continue to see good growth in the coming years. There will be new applications that will demand the use of even more CPU-intensive PC based automation systems and even smaller machines. Increased support for green energy and implementation of sustainability initiatives will force more companies to re-examine and re-evaluate their automation plans to comply with the new regulations.

The next 10 years will indeed be challenging and exciting, and Advantech is well positioned to support the needed solutions.

– David Soon, Managing Director, Advantech South Asia Pacific

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Despite tumultuous, decade-ending economic conditions, Moore Industries has remained aggressive in all aspects of our business. We see no reason to abandon the philosophies that served us well throughout the last decade. As the world recovers, we expect less-committed competitors to find they have left themselves unable to meet customer expectations. We will demonstrate to clients we are ready to serve their needs with the highest level of customer service combined with new, intelligent instruments that give more.

The second generation of intelligent process instrumentation we developed throughout the decade provides enhanced flexibility and functionality. This includes completely programmable operating parameters, informative process and instrument diagnostics, and digital communications, such as Foundation fieldbus and Profibus, which significantly save installation and maintenance costs.

It is also worth mentioning that customers don’t care how marvelous your technology is if it takes too much time to get the device up and running. The key is to provide these attributes with a simple and intuitive user interface. We have.

– Leonard Moore, President & CEO, Moore Industries-International

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Mitsubishi Electric, Factory Automation Division has come a long way over the past 10 years. Our sales turnover increased many fold during this time and we have emerged as one of the leading automation equipment suppliers in the region.

Mitsubishi Electric is known for supplying reliable products with advanced features and we are persisting with the endeavour of expanding our product line-up and functionalities. This is to make sure we always stay one step ahead of our competitors.

Looking forward to the near future, Mitsubishi Electric Asia is very confident to become the dominant supplier of automation products and solutions in Southeast Asia and India. With the resources in place and established strong localization, we are poised to be more aggressive and successful in this next decade.

– Francis Cheng, General Manager, Mitsubishi Electric Asia

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The last 10 years have seen the Harting Technology Group focused on internationalization and extending its product portfolio. We expanded our product range with various network components like industrial Ethernet and with complete solutions that generate clear benefits in customers’ applications and in the evolving field of industrial network solutions.

A significant step was taken with the first Asian subsidiary of Harting founded in Hong Kong in 1988. Since then, the region has become a very important market. Our Asian manufacturing facility in Zhuhai, China, inaugurated in 2007, was a further step in our Asia-Pacific expansion strategy. With this expanded plant and our Asian wide local subsidiaries we are close to our customers.

In the next 10 years, it will be very important to keep pace with developing technology and further enhance international sales and distributions channels. In industry like ours these are essential success factors in order to enhance the capability of developing sustainable solutions which provide superior customer value and to be always one step ahead of trends – in order to provide tomorrow’s technology today.

– Soeren Montag, Managing Director, Harting Singapore & Harting Australia

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The last 10 years have been the decade of multi-domain functionality and convergence in automation. This includes programmable automation controllers (PACs) performing logic, motion, and process control on single platforms. PACs incorporate common tagging and a single database, unified development and visualization tools, and de facto standards for network interfaces and programming languages to enable open interoperability between the plant floor and the enterprise.

This convergence also includes human machine interface (HMI) software performing both visualization and intelligence solutions on single platforms ranging from control room PCs to smartphones. HMI software incorporates production management and manufacturing intelligence information as well as plant floor data.

The next decade will see further acceleration in multi-domain functionality and convergence trends. Look for building automation and power control to become integral control disciplines in future PACs. Also, look for HMI software and MES software to completely converge into manufacturing visualization and intelligence suites.

– Craig Resnick, Research Director ARC Advisory Group

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Looking back at the past decade, whilst businesses faced many challenges from the external environment, there was also a great spike in enterprise technology adoption, especially how companies started leveraging enterprise resource planning (ERP) to help small and medium businesses (SMBs) to reduce operational costs, assist in making more informed decisions, improve efficiency, and ensure accurate and timely delivery for products and services. All this empowers information workers and improves customer satisfaction.

Moving forward into the new decade, businesses are facing a growing need for real-time collaboration inside and outside the organization, and improved interaction across globally multiple locations. Mobility will also be a key technology focus in the ERP space in the coming decade. With the rise of smartphones in the consumer market, businesses will expect ERP solutions to be mobile and provide real-time data to make informed decisions.

Epicor also sees a paradigm change in the way content is produced and consumed, with the rise of Web 2.0, which leverages the benefits of web resources beyond information services and uses the internet as an integrated system that brings multiple sites and services to a single platform. We also believe ERP solutions will continue to evolve to lighter weight software that is less expensive, less complicated and much more flexible.

– Bryan Tan, Vice President (Sales), Asia Epicor

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The last 10 years, we’ve seen a staggering amount of change in both automation technology and the business dynamics of our customers. Technology has changed continuously to help process companies improve safety, profitability, and environmental compliance. For customers, while there are many factors at work, many of their struggles can be attributed to the challenges arising from workforce demographics and complexity of technology.

Emerson has changed in many ways in anticipation of these trends. In the late 1990s, we introduced PlantWeb and invented the concept of an integrated, digital plant. In the mid 2000s, we led the industry with the introduction of our Smart Wireless field instrumentation and plant network products. We believe the next inflection point is the reduction of complexity.

Fewer and less experienced personnel will be running bigger plants and more complex process equipment. Competitive pressures will force manufacturers and their EPC contractors to complete ever more complex projects faster than ever and begin manufacturing and generating profits. Time to execute projects will become ever more dynamic pushing a lot of the project work to the site.

Hence, all of our recent and future products will feature “human-centered design”. Our HCD-based products help to improve bottom-line of our customers by eliminating unnecessary work processes, removing the complexity of using technology, and embedding specialized knowledge.

The pace of change continues to accelerate. What has not changed is our belief in quality and customer satisfaction. We can be counted on to solve problems quickly – and in ways that have never been done before.

– Hakan Erdamar, Vice President, Marketing & Services,Emerson Process Management Asia Pacific

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Machine vision systems first gained popularity in the semiconductor industry for the purpose of tracking wafers. In the last decade, there has been an increased adoption of these systems across different industries such as automotive, electronics, pharmaceutical and food & beverage. This is a result of companies recognizing how operational efficiency is obtained by eliminating human inspection and in turn, reducing production errors, costs and contamination.

In the last 10 years, Cognex had operated through two major economic recessions, one being the 2009 global financial crisis that brought businesses across the world to their knees. Through the two crises, we learnt to optimize both organizational and operational efficiencies to make the most of lesser resources. And, we’ve also learnt to be adaptive and flexible in order to cater to our customers’ changing needs arising from the economic situation.

Moving forward, we see 3D and color as emerging areas of growth for machine vision. As production lines move at higher speeds and grow in sophistication, there is greater demand for cleverer image processing analysis using 3D and color imagery for quality inspection.

– Didier Lacroix, Senior Vice President, Cognex

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All the technologies we are currently using were already developed 10 years ago: Foundation Fieldbus and Profibus; EDD and FDT/DTM technology; Ethernet and Wireless for transmitters; Web-technologies and Software as a Service. So it is valid to ask: what really has changed?

Well, there is a big difference between development and broad practical use. And I think that is also the main difference when I compare Automation 2000 with Automation 2010. Now, automation professionals in almost all user- and vendor companies are involved in these technologies, whereas 10 years ago it was only limited to some specialists. So one may ask what the next 10 years will bring? I can summarize my view with three statements:

Customers will go for value not for technology as such. Every technology, every system and product will be evaluated under this point of view. Process industries are in tough global competition. To improve costs is a question of survival for customers. Service oriented architecture will allow the integration of business processes with process control. The Endress+Hauser W@M concept shows the way. Customers save time and money through easy access of information and by linking applications.

Global warming, CO2 reduction and energy efficiency will be very important subjects for customers in process industries. To improve here means to understand processes in a better way and to automate further. A main stream of investment will go into these kinds of applications.

– Michael Ziesemer, Chief Operating Officer, Endress+Hauser Group

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The year 2009 brought the curtain down on a decade of contrast. We saw the robust growth of five years till mid-2008 followed by a very harsh recession. Although most of the automation companies capitalized on the growth years, their ability to survive the downturn varied. The industry saw rightsizing and restructuring – as a reactive measure by some and as a preparation for the impending recovery by others.

While growth in industrial automation in the last decade was mainly driven by greater global demand, the coming decade will demand greater focus on innovative products and solutions. Some of the key trends in the industry which will dominate the automation requirements in the coming decade:
Smart technologies in the way plants operate – predict not react will be the mantra
Rapid developments in IT driving interoperability, miniaturization and intelligence of systems
Advancement and proliferation of industrial wireless
Green manufacturing and drive for improvement in energy efficiency
Development of strategic services to drive revenues and customer loyalty

– Satish Lele, Vice President, Industrial Technologies, Frost & Sullivan

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The past decade has been filled with extreme events – both good and bad. Events spark change in the markets, which provide opportunities. The biggest changes affecting automation technology over the last 10 years have been the need for security, the increase in energy costs that have driven the need to monitor usage/efficiency in manufacturing, and increased public awareness of industry’s impact on the environment. The explosion of social media has also driven expectations of real-time information to be available anytime and anywhere.

As for OPC technology, we chose to invest heavily in the adoption of OPC UA, including the crossplatform version of our Universal Connectivity Server (UCS). OPC UA products like UCS, that provide secure, reliable data connectivity throughout the enterprise, will be the building blocks of the major initiatives of the next decade. Customer demands for secure industrial software also mandated that intrinsic OPC security is provided in all MatrikonOPC products.

Going forward, interoperable connectivity will be a must for engineering projects such as the Smart Grid, smart buildings, wireless systems, and alternative energy infrastructure.

– Sean Leonard, Vice President, OPC, Matrikon

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During the past decade, globalization advanced significantly. Fewer new plants and factories were built in the US and Europe, and the focus of automation business growth shifted to the international arena.

Beyond just low-cost labor, China increased its dominance as a world manufacturing power, and is now investing highly in automation. With an abundance of low-cost telecom connections, India gained significantly in the software arena, beyond just outsourced back-office work. These countries, as well as other emerging global centers, will increase their growth and success in the accelerating technology markets of the next decade.

On the technology front, programmable controllers have become commodities, and distributed control systems (DCS) are primarily PC-based, with HMI software adding increased functionality. The fieldbus wars ended with a multi-standard compromise, and several different networks now proliferate in industrial environments. Wireless is an enabling technology for new applications beyond just wirereplacement, and will spark a new phase of growth that will re-energize industrial automation. Standards are just an incidental nicety.

Through mergers and acquisitions, over this new decade, the international automation majors will combine into just four or five companies that can operate effectively in the global environment. Some new technology, growth companies will emerge, and from areas outside of America and Europe.

For end users, the age of large factories is over; today’s markets are consumption limited, not production limited. Winners will focus not on manufacturing commodities, but rather on becoming innovators and specialists in new types of high-value manufacturing.

– Jim Pinto, Automation Analyst & Author

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In the last 10 years, the world has become smaller, logistically and economically. Innovation cycles have become increasingly short, putting industry under additional competitive pressure in the global arena. Businesses, more than ever before, have to produce goods inexpensively and affordably, quickly and with high quality standards.

The result is an automation industry having to provide integrated solutions with reduced technological complexity and that offer greater efficiency in product development, interoperability, manufacturing and distribution. There will definitely be continuous demand for progress in those areas.

As we enter a new decade, increasing energy costs, growing pressure to improve profitability, and awareness of increased climate protection all mean that industry will focus more and more on concepts for energy-optimized machines and drives.

Siemens, with our expansive environmental portfolio, is certainly in the position to help our customers reduce energy costs and carbon footprint, create sustainable value, save cost through efficiency gains, and achieve fast amortization of investments.

– Lothar Herrmann, CEO, ASEAN, Siemens

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Looking back at the last 10 years, it is truly heartening to see the product lifecycle management (PLM) industry growing at a rapid rate; in fact, faster than any other enterprise software category. The relevance of PLM is now embraced by the boardroom and has become mission critical to enhance organizations’ productivity, competitiveness and profitability.

At Siemens PLM Software, we live up to our commitment to innovation by devoting 20 percent of our annual revenues to R&D, which is a high percentage for the industry.

Two areas that are going to be highly emphasized by many organizations are green manufacturing and the implementation of integrated solutions. Our solutions are designed to increase production efficiency initiatives and from an environmentally point of view, we enable organizations to optimize their processes, which eliminates unnecessary waste of energy. Many of our solutions like the recent NX 7.0 emphasize the design process, which plays an integral role (up to 80 percent) in a product’s environmental impact.

The recent release of a software solution that integrates our Teamcenter software with Motion Control Information System (MCIS) from Siemens Motion Control Systems is a response to many organizations’ need for an integrated and cohesive platform to increase productivity. At the same time, we are also seeing PLM moving from a CAD-centric approach to a data management/solution oriented approach.

– Rajiv Ghatikar, Vice President, Asia Pacific,Siemens PLM Software

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In the past decade (2000-2009), the turbomachinery controls (TMC) retrofit market in the Asia Pacific region was dominated by OEM manufacturers, with only a small percentage of users keen and bold enough to engage using “TMC solutions providers” for their turbines and compressors controls retrofit.

But with increasingly stringent safety standards, such as the ISO 21789 standard on gas turbine safety, which was finally published last year, users now have more standards and good engineering practice to depend on when they make their retrofit decision. More end-users are also beginning to specify and demand more reliable and more efficient solutions to mitigate risks due to control system failures.

So going forward in this decade, users will be looking for engineering firms that specialize in TMC controls and are hardware-independent. As such, alternative solutions from non-OEMs will be considered more widely in the retrofit market, driven by strong expectations in cost reduction, and higher controls reliability and efficiency. This will bring benefits to end users and the entire retrofit market.

– Reuben Chuah, Managing Director, Tri-Sen Asia Control

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In our industry, the trend has been moving from human-managed process to full automation of those processes. Socio-political issues such as 9/11 led to heightened security awareness, while the Asian financial crisis issues in the late ‘90s and the recent global recession had businesses looking at increasing productivity through technology and improving and optimizing their processes.

In the past, industrial automation reduced the worker to a button-pusher, performing machine maintenance and monitoring production line outputs. Today, however, the individual worker no longer operates in a silo-ed environment but part of a performance team that looks at the entire process of automation, from information retrieval to performance tuning of the business itself.

As such, Invensys Operations Management has expanded and integrated portfolios of solution in process automation to the operations management space, to empower our customers with real-time operations management for business optimization.

Today, the transition continues from replacing people to empowering people; from process management to product management; from transactional business to real-time business; from island perspective/ isolated business components to a holistic view of the entire business; and from rigid/fixed processes to agile operations.

Looking ahead, the industry will become even more efficient and advanced with business intelligence, and we will continue to give our customers that edge in an increasing competitive global market.

– Sherie Ng, Vice President, Strategy & Marketing, Invensys Operations Management, Asia Pacific

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Looking back over the last decade conjures up a wealth of changes within the industrial networks’ market space and for MTL in particular. Whilst maintaining an extensive point-to-point product portfolio, we have also matched the market demands for faster, more data intensive applications by being at the forefront of new technologies such as wireless, Ethernet, and fieldbus.

The next 10 years will see a continued quest for more open, integrated, high-bandwidth “data highways”. This desire for data will drive technological advancements within the process automation space; in particular, look out for new implementations of fieldbus, Ethernet, and wireless.

Multi-tiered interconnectivity of plants also creates a need for clear and concise network design segregation. Hence products specifically designed to interact with the process control systems of the future will become the norm. On the whole, the outlook for the next decade looks incredibly exciting and MTL is well positioned to drive its technology and application knowledge through the process control space.

– Philip Nunn, Product Manager, Industrial Networks, MTL Instruments

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The intersection of internet and Ethernet technologies with globalization of the marketplace have been the key changes for the automation industry in the last 10 years. The result has been the convergence of applications and technologies in a 24/7 world. ODVA has been significantly impacted by these changes in all aspects of its operation, from our value proposition to industry to the technology portfolio.

Today, ODVA must serve its membership on a global basis and meet the needs of the automation industry to leverage both cost and technology evolution from products and systems using commercial off-the-shelf (COTS) technology combined with standard Ethernet and internet technologies. Looking to the future, ODVA anticipates that the rate of convergence will accelerate.

Users will seek future return on investment for automation technologies in newer areas of productivity enhancements such as energy management and this will create emerging market opportunities for automation vendors in areas outside their traditional expertise.

Successful standards development organizations, such as ODVA, will need to focus on the integration of technology standards based on a broad view of their application within the enterprise. ODVA will play a key role in distilling technical know-how and standards to realize the promise of these new emerging market opportunities.

– Katherine Voss, Executive Director, ODVA

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Devices have certainly become smarter over the last 10 years, and communication has gone from proprietary to industry-standard, utilizing Ethernet and wireless technologies and attractive low cost to implement a complete connection between the factory, the supply chain, and the enterprise.

Enterprise information systems have consolidated and, in the future, we are very likely to see a single software system service many processes, and even many plants at one time enabling a significant flow of data to drive analytics and improve productivity. As business process management (BPM) tools become robust enough to handle the real-time demands of manufacturing, they will become the preferred tool for building capability.

Companies also need to think about building capabilities rather than static, rigid processes. Dynamic capabilities can be repurposed and optimized quickly based on the realities of the market to support industrialized BPM so companies can reconfigure manufacturing capabilities quickly.

– Erik Udstuen, Vice President, Software and Services, GE Intelligent Platforms

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The automation market experienced significant movements in the last decade. The emergence of several mega-scale projects, amounting to multi-billion dollars, reflected a massive market need for automation. Fussfree “single-point responsibility” approach to total plant automation needs and “MAC” (main automation contractor) became the buzzwords. New selection criteria also emerged favoring automation partners with the capability to provide high level solutions beyond field and control room.

As for technology, open platforms focusing on manufacturers’ interests were preferred over proprietary protocols, and were rapidly adopted by growing oil & gas and general industries. At Yokogawa, we introduced new digital field sensors, new generation DCS, advanced solutions and services, and support for Foundation Fieldbus and FDT/DTM open platforms. We also established localized engineering and services in this region to provide high levels of customer operation support.

In the next decade, we foresee wireless technology with open platform will grow at an exponential rate. New trends in automation technology may emerge leveraging on internet technologies. The scope of solution will grow from plant automation to business integration. Green automation solutions that support CO2 reduction and energy efficiency will gain prominence, including water/ wastewater management and sustainable energy. To Yokogawa, customers’ interest is paramount, and we will continually invest to meet the growing needs and expectations of our users.

– Kersi Aspar, Executive Vice President, Regional BU & Marketing Operation, Yokogawa Engineering Asia

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We have witnessed in the past 10 years intense competition that requires extensive corporate transformation in order to compete effectively. Automation technology, once predominantly geared to increase productivity and reduce manufacturing costs, has evolved to emphasize changing trends.

For instance, it is now applied to increase quality in the manufacturing process and to increase human safety. Automation technology is now providing more flexibility and agility to manufacturers that have to swiftly respond to changing trends and consumer demands in the market.

Omron has so far contributed to society with a steady stream of innovative products to meet emerging needs of the society. Some of the key areas that we are looking into are sustainable manufacturing and clean energy. We are also constantly refining our manufacturing processes to lead industry by providing environmentally safe products to the world.

At Omron, our focus has always been on the art of making things (monozukuri in Japanese), and our determination to support safety and ensure the manufacturing of high-quality products. Indeed, we use our expertise in sensing and control technologies and monozukuri to meet the needs of many of the world’s top manufacturers.

– Koji Kagiyama, Managing Director, Omron Asia Pacific

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We have seen a fast growing acceptance of digital communication technology over the last decade. For instance, Profibus saw a sharp increase of the number of installed nodes from approximately five million in 2000 to almost 30 million by the end of 2009. A significant percentage was for Profinet, underlining the acceptance of industrial Ethernet for automation.

It is forecasted that the total number of Profibus and Profinet nodes will further increase to over 50 million nodes by the end of 2012. Still, the local technical support that is required for successful implementation and maintenance of Profibus and Profinet solutions remains a key concern, especially for the new emerging areas.

Over the last 12 years, Procentec has created a world leading position by being a truly independent Profibus and Profinet company. And with recently formed (2009) Procentec Singapore accredited as a Profibus International (PI) Competence Center, there now exists a Profibus technology hub and knowledge base to support the needs of the regional industry.

– Henk Schaake, Managing Director, Procentec Singapore

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Technology and manufacturing drivers are hand in hand with each other. In the last 10 years, we have seen manufacturing change from mass production to mass customization, discrete supply chain to supply chain synchronization, loosely coupled design and system to integrated system, physical assets to functional assets, lowest procurement cost to total system cost, and local to global.

These manufacturing changes are realized with developments in microelectronics, information, networking and communication technologies that help automation equipment and solution providers provide more integrated and cost effective products and solutions to customers. For Rockwell Automation, examples of these technologies include the Integrated Architecture, FactoryTalk software suites, and Intelligent Motor Control.

Moving forward, manufacturers are moving toward a sustainability-driven business model, which isn’t just socially responsible – it is financially essential for staying competitive. As a result, enabling technologies, such as wireless, software integration, web services, device intelligence, and safety will be more widely adopted to help plants be more sustainable, flexible and integrated.

More important is that manufacturers know how to utilize these technologies to transform information into knowledge. Because knowledge is the unique know-how of one plant that differentiates it from others. Plants with proper use of technologies and knowledge will definitely be more competitive and successful in the next decade.

— Keiran Coulton, President Asia Pacific, Rockwell Automation

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The first decade of the 21st century was very interesting to say the very least. The early part saw the internet bubble and the terrorist related issues of 9/11, while towards the end, we saw a tremendous and increasing focus on climate change. All these events also helped secure the place of technology to help us lead better lives, and will shape the events of this decade.

From a technology perspective, in our industry, we expect the proliferation of multi processor systems architected such that algorithms can be developed quickly, products can be designed, prototyped, and deployed much more quickly. The computational models will be able to be run in parallel much more effectively. And increased bandwidth will result in seamless streaming solutions.

In addition, over the next 10 years, control and measurement solutions will be pervasive, in order to evaluate and then fix issues with global warming, security, transport and energy.

– Chandran Nair, Managing Director, National Instruments – SE Asia

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Over the last 10 years, the world has changed and awakened to the challenges in rising energy demand and CO2 emissions, as well as the grave consequences should global temperature continue to rise.

Meanwhile, Schneider Electric, in the last decade, undertook a number of targeted acquisitions to go from power & control to energy management. These included MGE in secured power, APC in critical power and cooling, TAC in building management, Pelco in security, and Xantrex in renewable energies connectivity and reliability systems.

The repositioning of our business portfolio has enabled us to double our accessible market, diversify exposure to end markets, and transform our growth profile. So we can now unite our expertise in power, data centers, process and machines, building control, and physical security to deliver intelligent energy management solutions that will optimize energy efficiencies across multiple domains. In the foreseeable future, the direction is set for us to be the leader in the field of energy management.

– Stuart Thorogood, Senior Vice President (South East Asia), Schneider Electric

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Automation and manufacturing have seen many changes in the past decade. One of the leading movements is “lean”, the assembly-line methodology originally developed for Toyota. From a lean perspective, not only have the operations of a factory changed but so have the products and equipment servicing those factories.

In the past, the number of suppliers and components required to perform a function was unimportant. But now, with lean, we are beginning to realize it is important to minimize the footprint of a control panel and decrease the number of terminations and components in that panel. These drivers lead Watlow to develop a family of integrated controllers.

Component and supplier consolidation is a way to eliminate waste, an objective of lean. We helped our customers accomplish this by integrating functionality into one component that, in the past, was provided through multiple components and suppliers. These integrated controllers can provide advantages of less space consumed in a panel, easier installation, and faster repair, and best of all, lower cost of ownership.

– Don Commare, Director, Product Marketing, Controllers, Watlow

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With nearly 15 years experience in China and other Asian countries, Turck has witnessed the changes in the Asian automation business from the beginning. As an early bird, we had to face a lot of challenges but today, Turck has become one of the most successful Western automation suppliers in Asia.

Compared to 10 years ago, it is easier now for Western companies to do business: Asian customers require the latest technologies, and more MNCs have established companies in Asia and brought their key people here to help meet customer requirements.

More and more qualified Asian customers, system integrators and contractors have developed their own way to use Western and Asian technology. What happened was much more than a simple one-by-one takeover: an extract out of available technology was created.

In this pretty smart way, the Asian automation industry generated an efficient usage. My prediction for this decade is that a lot of product innovations and new technologies will still come from Europe and the US but their requirements will be increasingly defined in Asia.

– Frank Rohn, Managing Director, Turck China

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Global Automation Industry Outlook

Control Engineering recently partnered with Morgan Stanley to conduct in-depth, global research on the automation, control, and instrumentation markets. David Greenfield reveals the findings.

With all the turmoil raging across markets and industries this past year, the one thing we could all use right now is a compass to help us know which way is up – or at least out. The goal of the research, carried out by Control Engineering in partnership with Morgan Stanley, was to gather specific evidence that would indicate whether our markets were beginning to ascend from the depths of this latest downturn or were destined to remain mired in the muck at the bottom of the pit for awhile longer.

The survey was sent out in September 2009 to print and online subscribers of the worldwide family of Control Engineering publications in North America, Europe, Latin America, Asia, and the Middle East. Responses were received from 1,049 automation professionals, including 416 working at companies that purchase automation equipment and 633 at companies that manufacture or install automation equipment.

Key findings
I am happy to report that the survey does, indeed, offer more than few rays of hope. Overall, the findings appear to indicate that a bottom in the market has been reached, pricing is holding firm, and that customers remain loyal –all positive signs for global automation players.

Four general points about the automation market are apparent from responses to the survey:
1. The automation market has already bottomed; modest growth will return in 2010.
• 49 percent of respondents see automation spending up over the next 12 months, compared with 31 percent that see it down.
• Preservation of cash is cited as the key reason for spending cuts, and service activities are the key area being cut. As credit becomes more available, there appears to be pent-up demand.

2. There is no evidence of a price war in automation equipment.
• Only 12 percent of buyers and 14 percent of sellers said they expected pricing to fall over the next three to six months, which compares with 12 percent and 24 percent that experienced a fall over the past 12 months. Most respondents expect pricing to be flat – the key risk is that if pricing doesn’t move as input costs rise, this can pressure margins.
• Only 23 percent of buyers and 32 percent of sellers see increased pricing competition in competitive bids.

3. There is limited differentiation between the spending outlooks for process versus discrete industries.
• Both discrete and process industries have their areas of strength and weakness in terms of endmarket exposure, which appear to be cancelling each other out.

4. While highly cyclical, automation is a good business to invest in over the long term
• Buyers are reluctant to switch suppliers, cite pricing as eighth in importance out of 13 factors that go into purchase decisions, and don’t appear overly interested in working with new entrants.

Demand trends
Though the outlook is still far from rosy, or even certain, the near-term trend for the automation industry does appear brighter than it did in early in 2009. Supporting this observation is the percentage of respondents expecting demand to increase, more budgets going up or staying level versus retreating, and increasing demand to replace aging equipment. Findings from the survey related to automation industry demand trends include:

• Majority of respondents expect automation demand to be up (49 percent) versus down (31 percent) over the next 12 months. But, there is a wide dispersion of outlooks – 26 percent of buyers expect spending up 10 percent or more, 20 percent expect it down 10 percent or more.

• Budgets appear to be bottoming. Sixtynine percent of respondents have seen budgets remain flat (45 percent) or increasing (24 percent) over the past three months, compared with 31 percent that see budgets still falling.

• Increasing demand and need to replace aging equipment were cited as the top two reasons for budgets rising. Delayed servicing activities to preserve cash and too much capacity were cited as the top two reasons for budgets falling.

• Financing still appears to be an issue (74 percent cite as constraint), but is improving for more (27 percent) than say it is getting worse (18 percent).

• Buyers are most positive in Asia Pacific (59 percent of buyers see spending up versus 33 percent down), and least positive, but more balanced in Europe (35 percent see spending up versus 35 percent down).

Pricing trends
If there is one good thing that has come out of all the market turmoil – at least for buyers – is that pricing appears to be stabilizing in the near term. Few are expecting to see prices fall, but neither are they expecting out-of-the-ordinary price moves by suppliers to help offset losses in the past year. Survey data supporting this observation include:

• No sign of a price war. Only 12 percent of buyers see pricing falling in the immediate future, compared with 30 percent that see it rising.

• Buyers are more bullish on pricing than sellers. Twenty-three percent cite a more competitive bidding environment (bigger spread between high and low bidders) compared with 32 percent of sellers.

• Seventy-seven percent of buyers indicate that pricing is rational, driven by inflation, or supported by brand/ product differentiation.

Increased input costs and price increases due to inflation are seen as key reasons why pricing could rise. On the other hand, price competition among existing suppliers was cited as key reason why it should fall. New entrants to the market are not seen as a material factor in pricing.

Competitive dynamics
Given that the automation market is beginning to look up in terms of potential activity, what other factors are likely to influence how and what manufacturers are looking for when it comes to automation purchases? Responses to the survey point to:

• Loyalty to suppliers. Only 17 percent of buyers are very or somewhat likely to switch from their current supplier; 56 percent are somewhat or very unlikely to switch.

• Least likely reasons for spending in the near term: greenfield capacity additions and energy efficiency.

• Buyers rank reliability, safety, and technology as being of highest importance in selecting a supplier.