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ARC says services is the fastest growing automation market segment

June 8, 2009 - The newest version of ARC Advisory Group’s “Supplier Provided Automation Services Worldwide Outlook,” reports that the total worldwide market for these services had expanded to close to $17.3 billion at the end of 2008, despite adverse conditions in the automation marketplace, and will increase by a compound annual growth rate of 7% over the next five years. ARC identified Services as the fastest growing automation market segment in 2008.

The report cites several results of the current economic crisis as contributing factors to the growth of the automation services sector, such as postponed capital projects, massive job reductions across all industries, and slowdowns in developing economies such as China and Latin America. Services provided by automation suppliers help end users take advantage of resident supplier expertise to reduce plant maintenance costs, operating costs and project costs, as well as fill the engineering and knowledge gap left by dramatic reductions in the end user workforce. The report noted that that ability to provide outsourced maintenance services was as a key factor in market leadership.

“As the largest automation services supplier, ABB offers its customers one of the broadest ranges of traditional and expanded service across the plant lifecycle, from field services, system evolution planning, engineering, and consulting to complete outsourced maintenance services, as well MAC and project management capabilities,” said Larry O’Brien, Research Director for Process Industries, ARC. “ABB’s ability to reach into the entire scope of plant automation, combined with extensive resident industry knowledge and resources, put ABB in a good position to help their customers improve all aspects of operations.”

The report states that the scope of automation supplier provided services expanded to fill the gaps created by the increasing labor shortage in the process industries, intensified by the impending wave of baby-boomer generation retirements and widespread organizational restructuring. Many end user companies, as well as EPC’s, no longer maintain in-house automation and control engineering departments; they now look to automation suppliers to provide this knowledge and support.

“As the world’s leading process automation supplier, ABB has the global resources, technology and industry expertise, and project execution services to help our customers accomplish their growth objectives, while providing significant cost savings,” said Veli-Matti Reinikkala, head of ABB’s Process Automation division. “Our unmatched ability to manage and improve all areas of the plant and operations with our service offerings, including the plant automation and electrification systems, provide our customers with the support they need to be successful in today’s unprecedented economic environment.”

According the ARC, one of the biggest trends over the past decade is for automation suppliers to fill the role of the MAC (Main Automation Contractors) on a project; this provides a single point of contact and responsibility for complex capital projects. Similar trends exist for plant electrification, through the MEC (Main Electrical Contractor) approach.

Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. ARC analysts have the expert industry knowledge and first-hand experience to help clients find the best answer to complex business issues. ARC focuses on simple yet critical goals: improving clients’ return on assets, operational performance, total cost of ownership, project time-to-benefit, and shareholder value.

ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 120,000 people.

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