Mature markets such as North America, and Europe, the Middle East and Africa (EMEA) constitute the bulk of the market for automation services, but revenue growth will be concentrated in the developing economies of China, the rest of Asia, and Latin America.
From the retiring wave of baby boomers in North America to the shortfall of qualified engineers in Asia and other parts of the world, the labor shortage is the primary factor behind growth in demand for services. In a recent interview, managers at a major refining company stated they had lost 2,500 years of experience last year when 100 operators retired at one site, each with an average of 25 years of experience. As further evidence, a major chemical company analyzed its plant demographics and found one of its largest plants would lose 75 percent of its operating staff to retirement by the end of this decade. The same is also true of many discrete manufacturers.
At the same time, the engineering and construction firms that used to have deep expertise in automation are instead concentrating on their core business of managing projects and licensing technologies. This leaves the automation suppliers to pick up the slack and provide an increasing array of services across the plant lifecycle, from control system design, installation and startup to the operational phase of the plant.
Skills crisis
The influx of less experienced workers into the world of automation and manufacturing is spurring extremely high growth in the training segments, with both suppliers and end-users stepping in to fill the need. It is clear that employee and skills retention will become more important than they have been for many years. Replacing a lost employee is already a costly exercise, especially for specialists such as process control engineers and process operators. However, that pre-supposes that the replacements are available.
Our research has shown that manufacturers are slow at reacting to the impending skills crisis, as most of them still provide less than 2 percent of work time per year in training time for their employees. The leaders are responding though, by putting programs and standards in place to ensure that skills are retained, and that employees are given the training to do their jobs. Some of these leading manufacturers are trying to address the issue by working closely with local educational establishments to put together good technical curricula and providing pilot plant equipment and control systems.
Many of the world’s leading end-users, particularly in the process industries, are applying the concept of using suppliers as main automation contractors or main instrumentation vendors (MAC/MIV) to all of their capital projects. The benefits can be considerable. One major end-user in the hydrocarbon industry, for example, has reported up to a 30 percent savings on projects vs. the traditional approach. Costs are reduced in nearly all areas of the project, from training to commissioning and installation.
End-users should consider automation suppliers to fill their increasing list of skills gaps, and to serve as training and education providers. Many end-users are outsourcing to automation suppliers more and more of the functions they used to perform in-house, and they have reaped considerable benefits. End-users should also consider the MAC/MIV concept for new projects. There are real cost benefits associated with this approach, but this again requires a comprehensive analysis of capabilities.
Larry O’Brien, [email protected], is Research Director, Process Automation, at ARC Advisory Group Inc.,
in Dedham, Mass.
