Process manufacturing faces early challenges in 2016

As one of the leading consultancies around the Industrial Internet of Thing (IIoT) ARC Advisory Group has been helping its clients understand how and why to explore IIoT and its value to process manufacturing. Andy Chatha, president of ARC Advisory Group, discussed some of those issues with CFE Media in advance of the ARC’s annual conference in Orlando.
By CFE Media & Andy Chatha February 11, 2016

Andy Chatha, president of ARC Advisory Group. Courtesy: ARC Advisory GroupAs one of the leading consultancies around the Industrial Internet of Thing (IIoT) ARC Advisory Group has been helping its clients understand how and why to explore IIoT and its value to process manufacturing. Andy Chatha, president of ARC Advisory Group, discussed some of those issues with CFE Media in advance of the ARC’s annual conference in Orlando:

CFE Media: What’s your overall outlook for 2016? What will be the key issues affecting manufacturing as we begin the new year?

Chatha: ARC is predicting another gloomy year for manufacturing due to both the modest global growth expected in light of the slowdown in China, Brazil, and Russia and the continued depressed oil prices, which will continue to reduce capital expenditures across a number of key industrial sectors.

CFE Media: Manufacturing was in a slump at the end of 2015. What are the driving factors for manufacturing going forward that will pull out of that slump?

Chatha: We expect the slowdown in manufacturing to continue a least through the first half of 2016, especially in upstream oil and gas and those manufacturing and service sectors that depend on upstream oil and gas for a significant portion of their business. On the other hand, the lower oil and gas prices are driving some large capital projects in downstream industries, such as petroleum refineries and petrochemical plants, where the reduced energy and feedstock prices help improve profit margins. This is particularly the case in North America, where several years ago chemical plants and refineries were being closed down by the score.

The global automotive industry also saw good growth in 2015 due in part to increased consumer confidence and lower gas prices, which stimulates sales of less energy-efficient, but typically much more profitable larger and luxury vehicles. Automotive manufacturing is also going through a transformation through digitization and robotics, which are increasing value for consumers and reducing design and manufacturing costs and increasing production flexibility.

We’re also seeing a big focus on general manufacturing innovation driven by new technologies such as IIoT, additive manufacturing, robotics, and so on. Most manufacturers now realize that they must transform their operations through new information-driven technologies and approaches to survive.

CFE Media: Everyone is hearing about IIoT. Why should IIoT be important to manufacturers?

Chatha: ARC believes that the Industrial IoT, Industry 4.0, Smart Manufacturing and other initiatives will drive a transformation in manufacturing. IIoT connects previously stranded data from smart sensors, equipment, and other industrial assets with predictive analytics and other advanced applications running both in-plant on edge computing devices and remotely "in the cloud."

Despite initial concerns, many companies now realize that, when properly implemented, Internet-based technologies can provide appropriate security and availability. This further increases collaboration on the plant floor, throughout an industrial enterprise, and across a global value chain.

CFE Media: We talk a lot about IIoT, globalization, safety and productivity. What’s the one big issue that you think manufacturers should talk about that doesn’t get a lot of attention?

Chatha: Due to the short-term, bottom-line mentality of many manufacturing enterprises, I don’t believe that the need to invest in and exploit innovation gets nearly as much attention as it deserves.

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