Paliwal Upbeat on Industry Future

Taking a break from ABB’s recent user conference in Atlanta, U.S. President Dinesh Paliwal told Automation World Editor Gary Mintchell that he is optimistic both about the health of industry and that of ABB.

The ABB users conference, April 19-22, in Atlanta, was notable for its overall feeling of energy and optimism. Against that backdrop, Dinesh Paliwal, president of ABB Inc. in the United States, ABB corporate group executive and head of its worldwide automation business, took a break from his duties for a one-on-one interview.

Automation World: How would you describe the current state of the automation industry?

Paliwal: We’ve been through a gloomy period with a lack of investment for several years. Some people say it has been seven years. But it cannot go on forever. I’ve been talking with some executives of big companies, and they are all saying that a recovery is due. We see some activity starting.

Companies realize that in the new chemicals facilities they have been setting up over the past few years, productivity is becoming an issue that they need to work on. There is also a re-focus on productivity in existing plants. Pulp and paper and metals are in the same basket to some extent. The pulp and paper industry has also not been spending a lot of money in the Western world. They’ve been doing lots of consolidation. The metals industry has already been through that, so it is very consolidated today. Consolidation means a lot of freeing up of facilities, which reduces the need for new plants.

Things seem to be a little more upbeat now in Europe and the United States. Our sales people are starting to see some inquiries starting. What is carrying forward very aggressively right now is Asia and the former Soviet countries in eastern Europe. We have had year-to-year growth in automation in China of 49 percent, and we’re not starting from ground zero there. India last year grew by 30 percent, and this is big. If these countries should start picking up, they should provide momentum to the West. The east block is also rapidly coming up. Its starting point is very different. They are starting with very little automation. Mining, steel, oil and gas, and pulp and paper are all affected. There are lots of greenfield projects coming up.

AW: What does that mean for automation companies?

Paliwal: Those that have skill and process competence will have a lot to gain. Some want to talk about interoperability and openness. We have been talking about those things for ten years. What is more important for customers putting up new plants now is size. They want to know if you will be around, if you will continue to invest in research and development. And the maintenance aspect is very important, something that was not always that important for decision making. People once said, “I don’t really care about maintenance. Just tell me what the cost is now.” That has changed. This is also an indication of staying power. Customers are not just investing in a new product but also the maintenance side of new products.

For example, our new AC drives have a built-in, remote asset optimizer. It’s like having a maintenance engineer out there without a human body. It reports much status information back to the control room. So we’re designing those things into the product because we are very heavily into service, too.

Companies are looking at asset management beyond a single transmitter or instrument. Now they’re considering asset management for the whole plant. That’s where the productivity counts.

I see the state of the industry as the customers looking at the Siemens and ABBs of the world for bigger scope and process competence. They are asking, “Do you understand my business? Can you handle my process?” Control is not getting simpler but more complex. That’s a fact of life. They are going to rely on suppliers’ knowledge of our equipment, our connected world of digital systems, our interoperability, beyond industrial control and system IT (information technology). They are asking how we work with the communications world, with our own equipment and with third party equipment. Then, they ask, “How do you optimize?” That’s the key. There are standards for connectivity—Foundation Fieldbus, Profibus. Now you raise the standard to application interoperability and portability. Can the application I have to optimize a chemical reactor or cracker also interoperate with the System 3 or System 5 of Dow or our older systems?

We’re not there yet, but that’s the interoperability we’re looking for. We have addressed that. Hopefully you’ll see it with the Industrial IT system we launched.

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