Chemical Investments Affect Automation Market | Automation.com

Chemical Investments Affect Automation Market

November 6, 2014 - The US chemicals market is expected to witness investments of nearly $80 billion by 2020, creating strong opportunities for automation solution providers. These vendors must adopt diversified go-to-market strategies and new business models as automation technology requirements will vary depending on the product type i.e. basic chemicals, specialty chemicals, life sciences and consumer products. For instance, a cost-focus strategy is important to penetrate the basic chemicals segment, while a customer-focus strategy is key to tap specialty and consumer chemicals segments.
 
New analysis from Frost & Sullivan, Growth Trends and Dynamics for Automation in the US Chemicals Market, finds that the automation and control systems (ACS) market earned revenues between $2.00 and $2.50 billion in 2013 and expects this to expand at a compound annual growth rate of five to six percent over the next seven years.
 
“Demand for ACS in the US chemicals market is fuelled primarily by large greenfield projects that involve lump sum turnkey contracts (LSTK), holistic automation packages, instrumentation and services,” said Frost & Sullivan Industrial Automation & Process Control Senior Research Analyst Rahul Vijayaraghavan. “Both greenfield and brownfield investments are expected to peak between 2015-2018 with a 60:40 split in favor of the former. This will significantly brighten the prospects of automation vendors in the chemical industry.”
 
However, automation vendors need to employ a targeted approach when catering to different project types. Large complex greenfield projects call for a main automation contractor (MAC) or main instrumentation contractor (MIC) approach, robust delivery model as well as project management and execution capabilities. On the other hand, brownfield projects demand strong industry and application expertise, integration capabilities, and competitive pricing as the scale of the opportunity is significantly smaller than that of greenfield projects.
 
“Since MACs and MICs address critical challenges surrounding scheduling, cost, time-to-market and engineering capabilities faced in large greenfield projects, end users prefer these approaches,” noted Rahul. “In fact, the MAC approach and robust project execution capabilities enabled Emerson to win the contract for the Sasol project.”
 
Industry investments are skewed towards bulk petrochemicals and the downstream sector will be lucrative for automation system vendors. Partnerships with engineering, procurement and construction (EPC) firms and systems integrators are a dominant trend. Automation vendors recognize this, as demonstrated by KBR and Yokogawa Electric Corporation’s strategic alliance to develop repeatable fertilizer automation solution packages. This exemplifies the market’s move towards standardized automation packs, which are tightly integrated with basic engineering design and proprietary technologies.
 

 
About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.
 

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