Continued growth for distributed control

Edited by the Engineeringtalk editorial team Aug 18, 2008

ARC estimates that there are US $65 billion worth of installed process automation systems in the world today that are nearing the end of their useful lifecycle.

Despite global economic uncertainty, the market for process manufacturing and automation remains strong.

Nowhere is this more evident than 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 the 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".

Both end users and engineering and procurement firms (EPCs) are increasingly looking to automation suppliers to provide them with automation project execution capabilities.

There is more to this equation, however, than simply project backlogs.

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 contractors (MAC), overseeing all aspects of automation projects and providing a single point of responsibility for automation projects from design to startup.

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 so they can be managed effectively.

A couple of years ago, only two automation suppliers had a sound competitive migration strategy.

Now, 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.

Suppliers are targeting not just existing DCS installations, but many PLC installations as well.

In ARC's view, 2008 will be a pivotal year for competitive system migration, and suppliers will become more and more aggressive about targeting their competitors' installations.

At the same time, many end users are reformulating their automation strategy for the next decade and are reevaluating their installed base suppliers.

Migration, evolution, modernisation, 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 the automation purchase, selecting a supplier, 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 US $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.

Many - as much as $12 billion worth - are some of the original DCSs first installed in the late 1970s.

Some date back to the pneumatic or analogue age.

The large amount of grassroots project activity in Asia remains the leading driver for growth in the global DCS market.

China in particular continues to be the primary global growth driver for automation.

GDP growth in China reached 11.4% in 2007 compared with 2006.

Value added for primary industries increased by 3.7% while value added by secondary industry increased by 13.4% and tertiary industry by 11.4%.

Total value added of the industrial sector increased by 13.5% over 2006.

There continues to be significant growth in nearly all industry sectors, from process to discrete manufacturing.

ARC sees particular promise in the long-term growth prospects for the pharmaceutical and batch process related industries.

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 offshore production to meet China's ever increasing demand.