Process manufacturing, automation, DCS market remain strong
The market for process manufacturing and automation remains strong despite global economic concerns.
A leading indication of this strength is the global distributed control system (DCS) market, which grew by almost 13% between 2006 and 2007 and is expected to grow through 2012 with the overall CAGR of just under 10%, according to a new ARC Advisory Group study.
“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,” said ARC research director Larry O’Brien, the principal author of ARC’s “Distributed Control Systems Worldwide Outlook.”
Increasingly, automation suppliers are expected to provide end users and engineering and procurement firms with automation project execution capabilities. These suppliers are becoming main automation contractors, which oversee all aspects of automation projects and provide a single point of responsibility for automation projects from design to startup.
According to the study, 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.
As recently as two years ago, only two automation suppliers had a sound competitive migration strategy. Now, just about everyone has one to varying degrees, according to ARC. Offerings include extensive migration service capabilities and tools for automated graphic conversion, control strategy and database conversion. 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 increasingly 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.
Most of the end users ARC deals with list migration as one of the key issues they are facing today. Efforts to make the transition to a modern DCS are impeded by the increasingly difficult tasks of justifying the automation purchase, selecting a supplier and implementing the solution.
ARC estimates that there is $65 billion worth of installed process automation systems in the world that are nearing the end of their useful lifecycle. Many %%MDASSML%% as much as $12 billion worth %%MDASSML%% are some of the original DCSs first installed in the late 1970s. Some date back to the pneumatic or analog age.
The large amount of grassroots project activity in Asia remains the leading driver for growth in the global DCS market. China continues to be the primary global growth driver for automation. GDP growth in China reached 11.4% in 2007 compared to 2006. There continues to be significant growth in most industry sectors, from process to discrete manufacturing.