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ARC says DCS market in Latin America continues to grow

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January 20, 2009: The global economy is in rough shape, but for the process industries, developing economies such as Latin America continue to offer some good growth prospects for suppliers that are well positioned to take advantage of them. The Distributed Control Systems (DCS) marketplace in Latin America is one such example. “The DCS market in Latin America will grow at the average annual rate of close to 10% through 2012, reaching a total size of almost $1.5 billion,” according to ARC Research Director Larry O’Brien, the principal author of ARC’s “Distributed Control Systems Outlook for Latin America.” Most of this growth is driven by infrastructural industries, such as power generation, and traditional heavy process industries like oil & gas, refining, and petrochemical. The mining industry is also a key contributor.

Suppliers Must Have Feet on the Ground in Latin America to Be Successful

Automation suppliers with the largest direct presence in Latin America are the most successful. While relationships with representatives can help penetrate markets where suppliers don’t have a presence and systems integrators can help provide project services, there is no substitute for having local people that can fill critical roles, not only in sales and project support but also in ongoing maintenance and operational services. It can be a challenge for suppliers to build their own local presence in Latin America; the local talent can be hard to find. Many suppliers have begun acquiring companies, including rep firms, in Latin America to boost their presence there. ABB, for example, recently acquired CMS Tecnologia in Chile.

Some suppliers have developed large training centers, so aspiring engineers and technicians will have ready access to knowledge of their systems and solutions. In order for one major automation supplier to get a contract with a mining company in a remote location, for example, they had to help build a local training and education center.

Offer More MAC Capabilities the Latin American Users Demand

Both end users and engineering and procurement firms (EPCs) are increasingly looking to automation suppliers to provide them with automation project execution capabilities, and Latin America is no exception. There is more to this equation, however, than simply project backlogs. Many factors are contributing to growth in project and engineering services for automation suppliers. As a result, suppliers are beginning to fill the role of a main automation contractor (MAC), overseeing all aspects of automation project and providing a single point of responsibility for an automation project from design to startup.

The ability of the customer to influence project costs diminishes as the project nears its latter phases, but these latter phases are also where the bulk of project costs start to accrue. 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.

The increasing pressure faced by end users and EPCs also means that projects need to be finished as quickly as possible. Quicker time to startup means quicker time to profitability. In industries such as fine chemicals and life sciences, faster time to startup is a matter of competitive survival. Automation suppliers with the right capabilities can provide a single point of responsibility for project management; i.e., coordinating activities among multiple automation suppliers and subcontractors and freeing up the end user and EPC to focus on what they do best.

About ARC: Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. No matter how complex your business issues, our analysts have the expert industry knowledge and first-hand experience to help you find the best answer. We focus on simple yet critical goals: improving your return on assets, operational performance, and total cost of ownership, project time-to-benefit, and shareholder value.

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Automation.com Real-time Information for the Automation Professional May. 22, 2012

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