Automation Commoditized in Large Brazilian Projects

A recent report from the Brazilian Electrical and Electronics Industry Association (or Abinee, for Associação Brasileira da Indústria Elétrica e Eletrônica) indicates that the Brazilian Industrial Automation segment is performing below expectations in this year’s second half.

“While automation revenues increased 9 percent in the first half of 2010 compared to the same period in 2009, the forecast for the second half of the year is for an increase of 6 percent, resulting in an annual increase of only 7 percent,” Abinee said.  That falls short of an earlier projected 11 percent gain for the year.

Part of the issue relates to the “commoditization” of industrial automation, according to Jorge Ramos, Parker Hannifin Latin America Oil & Gas Development Business Manager, and the International Society of Automation (ISA) District 4/South America District Vice President-Elect for 2011/2012.

Brazil’s economy is currently well-positioned to attract international investment, Ramos says. But in many of the large turnkey projects that the country attracts, the value of the industrial automation is typically “negligible,” at no more than 5 percent of the total package, he notes.

As a result, the industrial automation portion of a project has now become a commodity, despite the proven importance of industrial automation for the competitiveness of any industry, Ramos says. And this can cause major problems in the projects. “Without ‘good’ automation, the problems range from the high operating costs to acceptance of poor quality final product, and may even lead to safety issues,” Ramos warns.

Sílvia Pereira, silviapereira@uol.com.br, is a freelance journalist based in Brazil. 

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