Industrial Sensing Market - Problems With Doing More With Less

Recently, I have been making a lot of channel and OEM interviews supporting multiple projects we have running. There have been many interesting insights I have learned as part of this work but several conversations have correlated with recent demand side survey results we have provided to our clients.

The quick takeaway is that it is likely that some suppliers are losing business they could have easily won. Several distributors have griped that it takes a long time to get responses for quotations and delivery times. As a result, the customer who might have been attracted to a particular product goes another way with respect to product, brand, or channel. This latter is obviously irksome to the distributor who might have invested sales and even technical expertise in problem solving and product selection.

As I mentioned previously, this is a theme I picked up previously in our demand-side surveys. In fact, one vendor was repeatedly called out for not providing timely quotations to customers that attempted to buy from them directly. If the channel partners that deal with suppliers constantly are similarly being ignored this is significant. It is not a business strategy of driving low volume direct sales to distributors for aggregation, it means that suppliers are just not being responsive.

My theory is that suppliers may be asking their employees to do too much for too long and, as a result, things like responsiveness break down particularly during any uptick in business. Too many things are automated and/or being done by fewer people and some of the personal touches and details are being lost. In project management, you have three general pillars to any project that are applicable to this situation. They are Time, Scope/Quality, and Resources. Basically, if you reduce resources, time and/or quality suffer.

I'm kind of interested in what other sensor product distributors, OEMs, and Systems Integrators are seeing and what opinions they have about it. If you would like to chat about it, drop me a line.


Siemens Completes Exit Plans for Nuclear Market

As of yesterday, Siemens has announced plans to exit from the nuclear business. The final sticking point was the agreement with Rosatom which is a Russian state controlled nuclear power company. There was a risk here that this would offend the Russians who are or are likely to be customers for many of the other products and services inside the Siemens vast portfolio. Even so, Siemens still intends to supply the generator/turbines and control products that are used in both conventional and nuclear power facilities. This also frees up resources that can be applied to creating new products for renewable energy.

The breakup of the Rosotom deal also presents a benefit because it ends any non-compete complications that arose as a result of the Areva deal ending.

If there had been any doubt, the fact that Germany itself was phasing out nuclear, pretty much forced the hand of Siemens to take the risk of offending Russia instead of the German government and people that constitute a major share of its market. The fact that it might help appease Areva is a bonus.

Siemens does intend to continue supplying replacement parts and service for its installed base of reactors including the 17 in Germany.


Belden Looks to Secure Its Dominance In Industrial Networking, Acquires Byres Security

Belden continued its plans of maintaining, and expanding, its lead in the industrial networking space with the recent acquisition of Byres Security Inc. (BSI).  BSI’s award winning Tofino™ Security product line will strengthen Belden’s leadership in industrial networking solutions, and the deal will lead to higher investment in Tofino Security technology. BSI will continue to operate independently as a business unit under Belden and its security solutions will most likely be used with Hirschamann's and GarrettCom's branded industrial networking products. The Tofino Security brand remains. The result will be enhanced cyber security for critical industrial automation systems.

It appears that Byres Security can thank the creators of the Stuxnet cyber attack (speculation is that elements of US and Israel governments wanted to thwart Iran's nuclear plans) for the renewed interest in securing industrial automation networks and the acquisition by Belden. Although no details were provided one could speculate that BSI will receive much needed funding for new product development, channel expansion and perhaps a windfall for the husband and wife team that owned the firm.

Although most of VDC's coverage related to security issues as part of its Industrial Networking Infrastructure Products Market Intelligence program dealt with security concerns related to wireless networks, the concern over securing networks and data integrity is also as important factor among wireline networking operations. Belden's ability to market its industrial networking products as “Secured by Tofino” may provide a similar marketing advantage along the lines of "Intel Inside" did for PC suppliers.

Based on VDC's extensive research the markets for wireline and wireless industrial networking infrastructure products will grow at CAGRs of over 20% and 28%, respectively through 2015. It is our belief that the spending on industrial automation related security solutions will grow at even faster rates as a large share of the market is most likely lacking sufficient levels of security to fully protect their automation networks and equipment.

Belden's acquisition will help secure its dominance in industrial networking solutions by further cementing its capabilities in being a supplier of a comprehensive portfolio of networking solutions, of which security related solutions are a major component.


A Few Thoughts on the Huge Southwest Power Outage

I was a bit surprised to see the magnitude and duration (it's still ongoing) of yesterday's widespread power outage in Southern California, Baja Mexico, and points eastward going as far as Yuma, Arizona.

To me, the surprising thing is that a single point of failure could create such a huge and lasting effect. No doubt, there will be lessons learned from this by event by the many that will study it. The failure was apparently a procedural error during a maintenance operation at a power substation in Arizona. I have a few thoughts generally related to our recently published reports on power protection products.

  • If auto manufacturers or third parties could design some add-on hardware to Prius and other similar vehicles that would provide temporary generator / inverter function to power a few essential items at the owner's home or business, that would be a big seller.
  • This event should capture the attention of both grid/power station operators and terrorists. A power grid has components that are hard to protect like remote substations and transmission line towers. A single point of failure should never have this large an impact.
  • Businesses that invest in UPS, power protection, and standby generators will be doing tremendous business during events like these. That upfront expense with questionable ROI looks pretty good now.
  • Businesses that at least have protection on their POS systems would have been able to sell their perishable or suddenly in demand items more easily unlike the others that could only take cash.
  • People generally don't carry a lot of cash anymore. In the Southwest this morning, people without cash may never make that mistake again.
  • In the Southwest, and even in places that didn't lose power, you might think about not using and unplugging any computers, TVs, or expensive gadgets unless you have a really good surge suppressor.
  • My thoughts go out to those in the affected areas that have essential medical support devices in their homes, no doubt there are valiant efforts to make sure these devices and the people that need them are in good condition. The widespread blackout has caused massive traffic tie ups that surely made these efforts much harder.
  • The markets for power protection and backup generators will increase particularly in the Southwest US.
  • This was a good test of the emergency shutdown procedures and systems at the San Onofre Nuclear Generation Station (SONGS). It looks like they passed.

That's my quick take on it. I would be happy to hear other opinions on this subject. I may check back later once we see what happens next and find out more details of the corrective actions.


More Expensive Level Sensors Can Actually Decrease Costs

I just had an interesting conversation with a distributor of level sensing products. He provides a lot of level sensors for oil/kerosene tank manufacturers and was mentioning the transition from the old reliable/ low cost sight glass sensors to electronic units. One would think that these electronic units would be more expensive and you would be right but the newer units are more cost effective if you look at the big picture. There are several reasons and they become more compelling in the face of rising/volatile oil prices.

Price Contracts: Small business and residential customers can be severely affected by rising prices. This winter should be a good example as I heard a prediction today that local Northeast US home owners can expect to pay ~$230 more than 2010 over the entire heating season. As a result of this uncertainty home, small business, and farm owners will often contract with the heating oil delivery company on a fixed price basis.

Transportation/Delivery: Heating Oil usually has to be delivered to these types of customers by truck. Often times these locations are outside urban areas and therefore the heating oil deliveries are more difficult to do efficiently because of distance and customer's being less concentrated geographically.

One might wonder how replacing a mechanical level sensor with a more expensive electronic unit would possibly help with either of these two items but it's true. If you take that electronic level sensor and give it the ability to connect either via a modem/phone connection or wirelessly via the home/business Wi-Fi to the heating oil delivery company you effectively have remote monitoring or almost the same benefit as an electrical smart grid.

  • The delivery company can ensure the customer never runs out even if there is an unexpected surge in usage.
  • The delivery company can efficiently set up truck loads for given sections in its service area.
  • The delivery company can top off tanks when prices are low and let them run lower when prices are high - confident that they will not let customers run out.
  • The customer can get a lower price particularly if they sign the contract.
  • The delivery company can make sure that customers do not break an exclusive contract by taking deliveries from a lower priced competitor. If customers did this, the level sensor would inform the delivery company of an unexplained rise in level in their customer's tank.

And there you have it.  More expensive level sensors can actually decrease costs for heating oil delivery firms as well as their customers.

Isolation: A Smart Form of Insurance for your Data Acquisition Solution

Back in early March I blogged on the topic of isolation as it related to industrial networking products and the concept of investing in isolated network products as a form of insurance. It turns out the topic of isolation is also relevant to data acquisition hardware solutions. This topic is also relevant to a more recent blog in which we discussed the importance of accuracy and how that rated as the most important technical requirement cited by almost 600 survey respondents.

As the accuracy of a user's data acquisition measurements go up so does the need to protect their signals from noise as well.  The user needs to protect their signal on its entire path from the sensor input to the point of data conversion. In harsh environments such as those found in steel mills, automotive assembly, food & beverage and other applications in which the adverse impact of EMI, noise and other threats maybe more prevalent as is the need to protect against ground currents. Isolation eliminates ground loops between the measurement system and the signals you want to measure and protects the operator and equipment from effects of ground loops and high common mode voltages.

Isolation is defined as separation of one signal from another to prevent unintentional interaction between them. All multiplexed data acquisition systems contain a certain degree of channel-to-channel isolation; relay-based systems have galvanic isolation while solid-state systems do not. Galvanic isolation is the absence of any DC path. Most isolation methods eliminate all DC paths below 100 MΩ. Three major benefits of galvanic isolation are circuit protection, noise reduction and high common-mode voltage rejection, especially those developed by ground loops.

PC based data acquisition solutions makes possible an array of multiple channel measurements previously beyond economic reach of many applications. This has been accomplished by two major compromises, multiplexing and non-isolated inputs. Multiplexing is successful when the sampling rate is adequately high and the source impedances are sufficiently low. Lack of isolation places an entirely different kind of limitation on the type of input signals that can be connected.

If an application operates in an environment in which the need for isolation is prevalent VDC recommends users consider investing in a data acquisition solution with built-in isolation. Although there may be a cost premium associated to investing in a data acquisition solution with isolation, VDC believes that this will prove to be a wise investment in insuring that the data acquisition solution and equipment being monitored will provide a quick payback if the catastrophe of equipment failure is averted. 

Although the topic of isolation is not an integral part of the scope of VDC's 2011 Data Acquisition Solutions Market Intelligence Program we are always interested in covering topics which are germane to relevant research related issues or dynamics impacting the industrial automation world.


Can There Be Too Much Automation?

Within the VDC Industrial Automation and Control Practice we are always applauding the ever expanding role that automated processes are finding in new regional and vertical markets. In most cases, responsible/safe automation products and solutions are clearly superior to the manual industrial processes of the past. Outside of industrial plants there is another area where increased automation has paid dividends and that is in modern passenger aircraft. In either case, well tested industrial and aeronautic automation solutions transfers the control of mission critical processes to avoid operator/pilot type errors.

An article I read last week focused on some aircraft situations where the automated systems failed and, it appears the pilots had lost some of their edge with respect to the correct response they had to make. Planes that are in near stall condition need to point the nose down in order to pick up air speed. Pulling the nose up which might be the intuitive thing actually makes the stall condition more likely. Could there be a parallel from these aircraft situations and those that can take place in industry?  In my opinion, similar unexpected problems with automated processes could happen at almost any industrial facility. Most systems are designed with redundant and ultra-reliable components calculated to have the appropriate Safety Integrity Level (SIL) for the safety/process risk that is present.  On the other hand, recent events have shown that problems have already occurred in situations where combinations of failures and events overwhelm the automated systems. I was thinking about two obvious ones where this could have happened.

  • At Fukushima Daiichi, from what I understand, the earthquake severed the facility's connection to the electrical grid and, then, the resultant tsunami almost simultaneously, destroyed the backup power sources. In such a case would it have been better to keep generating power with at least one of the reactors to keep the facility pumps cooling pumps running? I would estimate that the safest conventional and likely automated process thinking would be throwing the control rods in the reactors and isolating the steam pipes but perhaps this was the wrong move because of the other combined factors.
  • In the case of the Deepwater Horizon, which was a well automated modern marvel of engineering we again see a chain of miss-interpreted tests, overridden alarms, and dependence on automated systems that could possibly delayed the reactions needed to save the rig by cutting the it loose from the blown out well. There were other factors in place here that I have discussed in earlier blogs but there is case to be made in that the automated safety systems fell short and it is likely that some manual reactions were not made or at least not in the correct timing and sequence.

Before I close, I do want to take some time to laud the efforts of the personnel directly involved with both cited incidents. They were in desperate situations and had to make difficult decisions and actions and, in many cases, lost their lives doing so. This posting was never intended as a slight to these fine individuals.

In closing I think that in many cases, industrial facility owners are increasingly looking for outside expertise to provide complete automated solutions with respect to process control and safety integrated systems. OEMS and equipment specifiers claim that 55% of their revenues are service related while at the same time end users are claiming ~38% of their expenses were for non-hardware related categories. To me that translates into a lower level of expertise at the point of use. It is unlikely that the automated systems that are put in place will fail but, if they do, hopefully the on-site personnel will have the expertise, decision making, and necessary reactions to prevent disasters.



Spectris Continues Building its Empire via Acquisition of Omega Engineering

On August 15, 2011 Spectris PLC announced the acquisition of Omega Engineering for about $475 million, a multiple of more than 2.8 x 2010 revenues of $168 million. I remember seeing the large and colorful Omega product catalogs in the office when I started here at VDC over 14 years ago.

As I recall Omega seemed to sell just about everything under the sun when it came to process measurement and control instrumentation including temperature, pressure, flow, level, humidity, strain and force; HMI, electric heaters and data acquisition products and software. Omega Engineering enjoys a strong brand name, enjoys high levels of repeat business, some customization capability and a reputation for providing quality customer service.

Omega Engineering will serve as an additional growth platform from which their Industrial Controls business, which is already comprised of Red Lion Controls and Microscan, will continue to expand its presence regionally as well as from a product platform basis. Spectris had already acquired N-TRON back in Q4 2010 as a means of expanding its footprint in network connectivity and to further leverage the company's industrial controls and test & measurement businesses.

No doubt Spectris will likely leverage the synergies afforded via the combined products and channel networks of Red Lion Controls and N-TRON along with the new product additions via the Omega acquisition to grow its presence in the process measurement and instrumentation, test & measurement, academic and even in-line instrumentation market segments. Omega enjoyed a wide base of customers that relied on the company's one-stop shop product portfolio to handle their small-scale project needs.

VDC believes the greatest value from this acquisition will come from being able to leverage a diverse product portfolio of products to gain traction with new customers with larger project requirements that prefer to deal with a supplier than can provide all their product and service requirements.


Internet Remains #1 Information Source Data Acquisition Users Rely On

Based on recently published research generated from VDC's 2011 Data Acquisition Solutions Market Intelligence program in which VDC surveyed 600 end users, OEMs and related stakeholders involved in using, purchasing and/or specifying data acquisition solutions (i.e. data loggers, paperless recorders, Compact PCI plug-in analog I/O boards, etc) searching the Internet remained the #1 information source respondents turned to when they wanted to learn more about data acquisition products and suppliers. VDC conducted similar research on data acquisition products back in 2008.

VDC added some new, more granular selections in terms of information sources from which respondents sought to learn more about data acquisition products and suppliers. Included among these new information source selections were Internet-search, vendor websites, direct email, professional networking sites and social networking sites. I already addressed the results from the latter two new selections in a blog posted back in June.

Interestingly the emphasis that survey respondents placed on different information sources varied by platform type as searching the Internet was the only one in which users of external chassis & modules, plug-in analog I/O boards and data acquisition software agreed upon as being #1. For example, vendor websites was cited as being the 2nd most sought out information source by users of boards and software while chassis users rated it 3rd most leveraged medium.

What is clear is that users of data acquisition solutions rely on a mixture of both traditional and digital mediums when they seek to learn more about data acquisition hardware and software solutions. Suppliers need to better understand what those preferred mediums are if they are at all interested in maximizing any marketing investments being made to capture greater mind share and, more importantly, greater business from both existing and new customers. Tailoring a marketing message chalked with informative and actionable information to the right audience is the holy grail of marketing 101. VDC's research into the purchasing behavior of data acquisition solution customers could prove to be an effective tool when employed properly.

We welcome the opportunity to learn more about some of your marketing success stories and which mediums your firm employs to reach your target audience.


George Devol - A Pioneer in Industrial Automation

This morning VDC Research Group's Industrial Automation & Control practice would like to note the passing of George Devol at the age of 99. George Devol was the inventor of the first industrial robotic arm that was placed into service at General Motors in 1961 which was the same year his 1954 patent for "programmed article transfer" was approved. Since then, automotive and industrial production facilities have never been the same. In the intervening time, industrial robots have moved to the mainstream from niche products designed for one-off hazardous location or extremely repetitive applications involving heavy materials. As many of our reports show, the position sensors, and machine safety products that go into industrial automation products can individually represent markets with hundreds of millions of revenue dollars annually.

In our opinion, all industrial automation market participants should have a few moments of reflection for George Devol as it appears we all have something to thank him for.