No company escaped the economic tumult of the past few years. What I’ve found most surprising, however, is how quickly many automation companies bounced back from the abyss while most other industries were still trying to figure out how to right their course.
Much of the credit for the automation industry’s bounce back is due to how well manufacturing has fared on a global basis. While the West was crashing and burning, the East was growing at double digits. Then, when the East began to sputter, the West—and North America in particular—began to stage a manufacturing renaissance. All of this supported a near constant stream of demand for automation suppliers.
But what now? As the East continues to wobble, though remaining in positive growth territory, and the West continues to define its manufacturing recovery, how are industrial automation companies dealing with this?
Given the opportunity to meet with Mike Caliel, president and CEO, and Gary Freburger, systems business president, both of Invensys Operations Management, I was eager to hear what they’re up to. After all, Invensys has made some major plays over the past year, including divesting itself of its rail business in May 2012. Caliel says the revenues from that sale will be spent addressing company pension liabilities, providing dividends to shareholders, and providing capital for investment in core industrial automation areas as well as residential and commercial automation.
Caliel says an example of such investment can be seen in Invensys’ acquisition last fall of Spiral Software. This acquisition was made to extend SimSci-Esscor’s (an Invensys business unit) refinery optimization product offering to include crude assay management software for trading and refining of crude oils.
Invensys will continue to use capital from the sale of its rail business for “bolt-on acquisitions” targeted at gaining greater exposure to specific vertical industries as well as geographic expertise, Caliel says. He explained that these acquisitions will include software, systems and instrumentation.
As for an outlook on the automation industry and what it means for end users in industry, Caliel cites three critical areas:
• The old age of many existing technologies still in place throughout industry and the prevalence of disparate technologies that “don't play well together.” Caliel says that Invensys is “not just focused on replacing these older technologies, but addressing broader operations opportunities.” To clarify, he said that instead of just looking at one-for-one replacements, Invensys is now focusing on conducting multi-day diagnostics at plants to determine specific causes of production problems. “In one case we were able to help a customer define a 10-year technology plan and support it with economic justification.”
• Retaining the know-how of experienced workers before they retire with technology-enabled knowledge capture. Invensys has long been focused on addressing this with a variety of software offerings ranging from operator workflow software to virtual reality simulation training.
• The evolution of the production and business sides of the manufacturing industry to focus on the entire supply chain. “We’re seeing the supply chain now as a control loop and are looking to integrate the disparate systems throughout it to provide the proper feedback,” Caliel says.
Explaining this concept of seeing the supply chain as a control loop, Caliel offered an example of business being able to adapt to new customer demands. “Who would have predicted rise in popularity of Greek yogurt three years ago? Caliel asks. “To address this we’re focusing on aligning manufacturing and the supply chain to deliver on trends like these.”
Another example Caliel offers is the shifting feed stocks in the oil and gas industries. “Refiners need the ability to look upstream and make decisions based on demand for end product,” he says.
Looking internally, Freburger notes that Invensys is shifting away from a regional operating model. The company’s former mode of operation led to investments being “diluted by regional points of view,” he says. “We’re aligning regional and core verticals so that all are connected. This means that strategy and investments will be rolled up and consistent across the company.”
A principal focus for Invensys strategy and investment moving forward will be in the DCS arena. “We’re taking ideas from the software sides of the business to make hardware easier to integrate,” Freburger says.
Another part of the company’s strategy involves the integration of control and safety. “There are still two camps out there on this issue,” Freburger says, illustrating the division of thought between those who believe control and safety networks should remain separate and those who think both can be effectively integrated on one controller. “We want to be able to deliver both,” Freburger says and, in the process, integrate the equipment and software sides of the business as they evolve.”
Caliel says that this approach “give us opportunity to put more complex control strategies in place that are easier to use and deploy.”