Attend PACK EXPO – this year’s can’t-miss event in Chicago, Oct 23-26.
Discover solutions from 2,000+ exhibitors to advance your operations and network with colleagues at PACK EXPO International.

OEMs Travel Choppy Economic Waters

Projected market opportunities for original equipment manufacturers (OEMs), or machine builders, are rapidly undergoing revision in light of the downturn beginning late 2008.

Aw 3079 0904 Indust

For example, in its most recent shipments study, published in August 2008, the Arlington, Va.-based Packaging Machinery Manufacturers Institute ( forecast that U.S. packaging machinery shipments would grow modestly in 2009, then substantially in 2010. But events have superseded the forecast.

Still, forward-thinking OEMs are taking advantage of this economic slowdown, observes Linda Onnen, market director of consumer products and OEM with automation vendor GE Fanuc Intelligent Platforms (, Charlottesville, Va. “They’re designing their next-generation machine that will leapfrog their competition when the economy does turn around. We [also] do see more attention being placed on efficiency of operation and energy usage.” But, not surprisingly, she suggests that OEMs are now moving cautiously. “Like most companies, clearly, they are taking a ‘wait and see’ approach to many internal decisions, not knowing what tomorrow will bring for them or their end customers.”

Energy management will be “very important” in 2009 to OEM clients of Palatine, Ill.-headquartered automation supplier Schneider Electric USA (, predicts Gregg Morasca, vice president of U.S. OEM Sales. Schneider will partner with them “to design and develop new energy-efficient solutions,” he continues.

End-users not only seek to reduce their energy usage, but also look to their OEMs to help with sustainability efforts, Morasca comments. “OEMs will be in a better position to meet these requirements if they align with suppliers that understand and focus on energy management. As end-users continue to expand their definition of sustainability, green and energy-efficient, they will apply these concepts and practices to their supply-chain partners.”

Help is needed elsewhere to simplify manufacturing. Jeff Jervah, business director of Schneider’s Automation and Drives Group, in Raleigh, N.C., says, “Intelligent systems are required that can be simply incorporated into their (OEMs’) machines.” To achieve that, he suggests, “Suppliers should test, validate and document these architectures so the OEM can further take advantage of efficiency gains.”

Products that offer multiple connectivity options are attractive to OEMs. “These options allow the OEM to control and monitor device parameters that will aid in the design of efficient systems and/or machines,” Jervah says. Communication networks also allow OEMs to offer extensive online troubleshooting capabilities for their customers, decreasing telephone-support costs, he forecasts. He notes that Schneider’s OEM customers also now expect higher levels of supplier support. To meet this need, Schneider offers, among other things, support through its OEM Technology and Solutions Center, in Raleigh.

Core focus

Christine Bush, senior applications engineer at the Raleigh-based Center, sees another trend developing from the current economic crisis. “This is leading them to focus on their core competencies, and outsourcing things that can be done more cost-effectively.” She suggests that as end-users continue to reduce costs and limit capital expenditures, immediately and in the mid-term, “pressures will be placed on OEMs to respond quickly.”

That makes sense. And that drives OEMs and suppliers to recognize and develop better relationships.  Bush says the Center at which she works “will help reduce OEMs’ engineering time.”

So with all these issues, what’s the most pressing challenge now facing OEMs? Overcoming interoperability issues, Morasca suggests. “As products become more intelligent, and more connectivity to communication networks is utilized, the level of complexity tends to rise with device interoperability.” The increasing expectation he sees? “That suppliers will ensure their products not only work together seamlessly, but also work better within the entire application.”

Translated: OEMs seek bigger bang for the proverbial buck, euro, franc, pound, peso or yuan.

C. Kenna Amos,, is an Automation World Contributing Editor.

Packaging Machinery Manufacturers Institute

GE Fanuc Intelligent Platforms

Schneider Electric USA

Subscribe to Automation World's RSS Feeds for Columns & Departments

Test Your Machine Learning Smarts
Take Automation World's machine learning quiz to prove your knowledge!
Take Quiz
Test Your Machine Learning Smarts
Barriers to Cyber-Attacks
How to apply defense-in-depth cybersecurity strategy to protect your company. Learn from your peers in industry.
Download Playbook
Barriers to Cyber-Attacks