Instrumentation and Control was recently afforded an exclusive interview with senior Yokogawa management who were in the country for Yokogawa South Africa’s November 2012 User Conference.
Participating in the interview were Harry Hauptmeijer, president, Yokogawa Europe; Takeo Kobayashi, senior vice president, Sales Division, Yokogawa Electric International; and Charles van Haght, IA manager Marketing and Sales, Yokogawa South Africa.
Business plan
In November 2011 Yokogawa announced its Evolution 2015 mid-term business plan (MTBP) with the goal of becoming the world’s top industrial automation and control company. Since then the company has faced unforeseen economic challenges starting with a great earthquake in Japan and followed by a struggling global economy. Based on published results up to March 2012 it looks like a big ask to achieve the four hundred billion yen sales target for your 2015 financial year. Is this still in your sights?
Kobayashi: Last financial year was the first year of the MTBP. We did pretty well in spite of a very difficult economic situation. The earthquake did affect our supply chain, but we managed the situation. Of course, we consolidate our financials in Japanese yen and that is a very strong currency, but in spite of that, we are half way through the current financial year and so far we are managing okay. We will review progress again at the end of the third quarter.
Over the last few years, your research and development (R&D) expenditure has declined from a peak of about 9,8% five years ago to 8,2% budgeted for financial year 2012. Is this sufficient R&D investment to maintain and support the MTBP?
Kobayashi: We think so because 8 and 9% is still very high compared to the other similar manufacturers in this industry. We try to keep within this range and in fact the ratio that is going to industrial automation is actually increasing year by year.
Is the bulk of that R&D investment in industrial automation going into software, or is that going into wireless and instrument transmitter technology?
Kobayashi: A lot of R&D is going into development of new types of sensor. Wireless is already becoming today’s technology, so there it is evolutionary improvements.
Worldwide, how are sales going for the new enhanced Centum VP systems?
Kobayashi: I think they are very good, and in North America, which is our competitors’ home market, we are growing very quickly, and particularly we are catching up the gas business opportunities. In Australia, with its big energy plants, we have a majority of market share and are continuing to win new projects. In the Middle East we have large projects, 60, 70, 80 million US dollars, with Saudi Aramco and other clients.
Hauptmeijer: Yokogawa has a policy of evolutionary development, so step-by-step, we develop the systems. Of course, now and then we have a breakthrough if a new technology comes forward. That means that over time, Centum VP will be the system. One breakthrough was the safety system that Yokogawa developed and within a very short time we grew considerably in safety systems.
South Africa and Africa
How is the Evolution 2015 plan impacting operations in South Africa and southern Africa?
Van Haght: In response to the MTBP Yokogawa has established an African Business Centre, which has improved our focus on what is happening outside the borders of South Africa, and looks at maximising the opportunities in the rest of Africa. From Johannesburg we look after Anglophone Africa and the two Portuguese speaking countries. We already have a well-established and profitable branch in Luanda, Angola. The African Business Centre is coordinating opportunities in Zambia, Kenya and Mozambique.
Hauptmeijer: There are many, many consequences. From Yokogawa we have a strong focus on the African continent. The African Business Centre provides a unique leadership coordinating all the activities for the African continent and maintaining focus on investments in key African countries where we have already some installed base: Morocco, Algeria, Nigeria, Angola, South Africa and Kenya. We also see future growth into Ghana and Congo.
Everywhere the major customers are, the major oil companies, Yokogawa is also there and the structure is really changing. In Nigeria and Angola we have established our own offices and legal entities. In South Africa we see the BEE component as a key element to change and adapt our structure. We have to really adapt to local requirements, governmental and direct customer requirements. That is a big change for us, because in the past we discussed directly with the major oil companies like the Shells and the BPs, but now government organisations play a major part in the decision role, so we have to adapt our structure from the top down to reach all these partners and to convince them about benefits of Yokogawa.
You mentioned BEE. What are your current and future plans in terms of BEE in the South African business?
Hauptmeijer: We are fundamentally a technology company and so a suitable partner must be a good match with Yokogawa not only as a financial partner, but also the partner must have an interest in the technology. We think that we have found such a partner with whom we can conclude an agreement and are continuing down that path.
With your renewed focus on energy and electrical power generation and with the plans that have been set forth for Botswana, will we see you winning projects relating to Botswana coal fields and related power developments?
Van Haght: We are certainly active in that area and busy establishing an infrastructure there that we hope will present us with some future opportunities. But not only in Botswana. There are lots of coal initiatives happening in Mozambique and many mining opportunities opening up in Zambia. We already have a really good footprint in the Copper Belt and in the sugar industry in Zambia. Our expertise in oil and gas and power also provides an entry into opportunities in Kenya and Ghana.
In 2011 Yokogawa won a project using a Centum VP system for outside plant control at Eskom’s Tutuka power station. Will that be the first of the new Centum systems commissioned in South Africa and will you be able to build on that to gain a footing in Eskom turbine hall control systems?
Van Haght: No, it will not be the first. We have a number of Centum VP systems in South Africa, but this will be the first Centum VP in Eskom and that is why it is ground breaking for us. We have made a fantastic stride into Eskom with this project and believe we can leverage off that to look at future revamp projects.
As part of our restructuring we have established a business development team here to look specifically at the power industry and how we can be more successful in that environment. Globally Yokogawa has had very great success in providing IA systems for power generation, so it is nothing new to Yokogawa.
Hauptmeijer: From the Centum perspective we have an organisation in Tokyo that is driving and setting the directions for the power industry. The next step globally was the development of the power base and business in Australia, including simulation. And from there we expanded further. We have a Power Centre of Excellence in Europe which we are expanding step-by-step. Here in South Africa the support for the power industry is coming from Europe.
Technologies
You have had to play catch-up in terms of competing with wireless technology offerings from some of the other DCS vendors. How is that progressing?
Kobayashi: With our products based on the ISA100 standard, which will be adopted as a global standard, we are really a leading wireless supplier in industrial automation. Other competitors are offering WirelessHART, and, of course, we have HART technology, but our focus is now fully on ISA100.
Does Yokogawa have good reference sites for ISA100 wireless technology in South Africa?
Van Haght: Yes, we have two sites, both in the oil and gas industry. It is a very sensitive environment and there have been a number of challenges, including that of overcoming WirelessHART. Currently these sites have relatively small numbers of transmitters because they are testing the environment, they are testing the product and they are testing ISA100.
Yokogawa has recently introduced a new version of Fast Tools. How does Fast Tools fit in with or complement Centum? Are you targeting specific industries?
Kobayashi: Fast Tools is a scada system so it is suited to largely distributed applications like gas and oil pipelines. And the growth in shale gas, with its geographically large distributed production areas, offers great potential for the Fast Tools type of scada system.
The shale gas industry is largely North American. Can you succeed in the North American scada market against very strong US-based scada players?
Kobayashi: Our Stardom RTU is extremely intelligent so for our scada that is our key differentiator. This is still the early phase of this industry and we are confident we can get on this market growth in North America for Shell gas.
Fast Tools is Java based and avoids many of the problems associated with using Windows operating systems in instrumentation and automation; and yet penetration in the South African market is slow. Is there enough appreciation of the benefits of the underlying technology?
Van Haght: There is not enough appreciation, and we are faced with a rather mature market in terms of scada in South Africa. Everybody who is anybody has committed to one or another scada system and they are pretty much sticking with their choice. Going forward we need to adopt a strategy of offering Fast Tools combined with Stardom RTUs.
Having said that, Fast Tools is used by Natref on the pipeline. So we do have an installed base.
Over the last 12 months or so we have seen the introduction of quite a lot of new technology from Yokogawa: New versions of Centum and Fast Tools; and new wireless technology. What can we look forward to in the next 12 months that you can share with our readers?
Van Haght: In the next few days we are launching the new EJA-E Series transmitter. To date in South Africa, we have only focused on the EJX Series transmitter, which is aimed at our flagship market. The new series is a competitively priced, high specification unit with a very fast response time and all the good things that one expects to get from a new generation transmitter. The measurement section of the transmitter stays fundamentally unchanged from the EJX Series, but the packaging of the transmitter has been cost engineered so that we can offer a fit-for-purpose transmitter, in a multitier strategy.
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