With the holding of Honeywell’s second annual Customer Forum in Pretoria during April, Technews was provided with the opportunity to find out from an industry leader what their vision was regarding the future of automation in the Instrumentation and Control industry. This article is based on discussions with high level management from Honeywell Europe. Amongst those present during the discussion were Jerry Walker (vice president – Europe, Middle East and Africa [EMEA]), Jean-Marie Alliet (director Technology Consultants) and Christopher Dartnell (business development director – EMEA).
It is clear that the automation industry as a whole is going through challenging times and many of the players are struggling financially. After years of dispute, customer pressure has finally closed one debate and open systems technology is the way forward. While open technology would at first sight appear to be less demanding in fact it increases the complexity for the manufacturer as many things now fall out of the product suppliers full control. As an example of the intricacy of the problem Honeywell itself has spent a small fortune in the development of its own open platform.
Some 400 engineers situated in Honeywell locations around the world took three years to produce the optimum solution and to ensure that it would operate in the industrial rugged environment with the appropriate levels of security. In terms of its investment Walker used the analogy of the large aircraft manufacturers where virtually the entire business is bet on the development of a new plane such as the A380. At the same time the technology in aircraft is increasing every year and manufacturers have to invest and keep pace with this trend. Honeywell, in order to reach where it is now (with its open platform technology), had to bet its own huge resources to stay in the automation business. Most problematic with openness is the issue of security and here the suppliers have to introduce their own security solution. Honeywell also maintain a close relationship with Microsoft, being the bellwether for the automation industry.
With this scenario Honeywell believes that many traditional automation suppliers will go out of business over the next few years. The view of Walker is that eventually we will be left with only three or four major suppliers. Apart from investment,a key to survival will be the installed base of the supplier. Honeywell estimates that of an installed base valued at between $65 and $100 billion it held a share of $15 to $20 billion and its investment made sense. Acquisitions of smaller players may take place where they have a significant installed base already but otherwise smaller players may not be able to keep pace with technology and will eventually lose their market share to full open platform vendors.
With much more sophisticated integrated platforms now being installed most major companies are questioning whether automation is their core competency. More and more are in fact requiring the automation supplier to configure, install, maintain and support (if necessary through upgrades) the solution. The system is still open of course so where required suppliers will integrate in other manufacturer's devices such as control valves, etc. However, the long-term partnership between the company and the automation supplier is often based on mutually agreed performance targets so there is no place for poor quality third party devices. The mutually agreed performance and productivity targets ensure that once a Volkswagen has been accepted the company can not expect to have the performance of a Porsche.
While automation is often viewed as a human job reduction exercise, Honeywell with its vast experience in this field view the facts differently. They describe it as a workforce transformation exercise, with new, higher skilled, and better-paid jobs. The plant itself is of course safer to work in, is more productive and in most cases now is geared for competition at global levels.
As regards South Africa and all developing economies we are no different from any 1st world country. There is a need to invest in automation if process companies are going to remain competitive and indeed stay in business. As the introduction of total automation in a plant is very capital intensive suppliers like Honeywell work together with the customer to develop a five or 10 year plan for implementation. This allows areas to be identified for earlier implementation of automation so as to get the most immediate return on the investment. The buyer of the automation solution offered should however ensure that the new generation open platforms on offer are backwards compatible with his legacy system otherwise such staggered implementation may be impossible.
The war in Iraq has resulted to some delays to contracts in the Middle East region, but the latest news of the collapse of the Iraqi regime suggests that this will be only temporary. The opportunities are of course immense, as there has been no investment in the huge Iraqi petroleum industry for years. In terms of Honeywell results for the first quarter of 2003, these indicate that there has been an overall growth in its key oil and petroleum market share.
What of the future beyond the new technology open platforms? Here Honeywell believes that wireless technologies will have a huge impact. In the same way that mobile telephony has revolutionised the telecommunications industry it will allow industrial plants to break away from wire and make information available anywhere at any time. While today the plant processes are accessed from a PC over the Intranet or Internet tomorrow we will see handheld wireless devices being used even by technicians at the plant itself with downloads of instructions on how, for example, to deal with a specific fault.
In conclusion Honeywell itself believes that it will be one of the major consolidated suppliers of automation solutions. While attempts to grow further through acquisitions have been stymied by competition authorities the company does not see this as a major obstacle to growth. In fact the reality is that in economic down cycles if mergers of companies does not go through then some of these 'good buys' for a consolidated entity will merely go out of business with a major impact on the country's economy.
As indicated at the start of this article the interview with Honeywell's top European management took place at what is now an annual event in South Africa and other major markets, namely their Customer Forum. Although not defined as such by Honeywell this is another trend in the automation industry. It is not a sales pitch as in fact only existing customers are invited and in fact most of the presentations over the three-day event were by customers themselves. What is in fact interesting is the interaction and presentations by people whose companies could often be viewed as competitors. Presentations at this year's Honeywell event included those from people working for Sasol, Engen Refinery and SAPREF for example. The objective is of course to learn about the latest solutions but also to bring to the attention of Honeywell what customers see as limitations. This allows the automation supplier the opportunity to find ways around these limitations and to improve the platform so that all customers can benefit from improved efficiencies and productivity.
Dr Maurice McDowell has many years' experience as a technical journalist, editor, business manager and research scientist. His third party analyses of world-class companies and processes, as well as his insight into industry and technology trends are well respected.
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