VDC Research: Industrial Sensing, Networking & Control Market Blog

Foxconn Initiative Shows a Growing Trend of Factory Automation in China

An article in today's Financial Times described the initiative of Foxconn in China to eventually replace and/or augment their workforce of 1 million workers with increased automation. Foxconn which is a leading contract manufacturer known for their work with Apple products including the iPad currently only uses approximately 10,000 robots. They plan to increase this number to 1 million by 2013. I had several thoughts on what this means.

The Financial Times article cited Alvin Kwock from JPMorgan where he noted ' that the cost of capital for purchasing and operating a robot has now met the cost of the workers it replaces.' In my opinion, the fact that this is happening in China is a particularly big deal. Why do I say this? In a highly automated factory, the main operating costs are for the facility, energy and raw materials. After that, you have the costs for a much smaller number of higher skilled workers. The tipping point comes at the point where China either has enough of these skilled workers to meet the increased demands or the labor costs for them increase to the point where there is not a significant Chinese advantage. At the same time, the governments in EMEA and the Americas are looking to increase job creation. Empty / underutilized factories, available workforces that have re-set expectations, and possible government incentives could drive a shift in the marketplace. The benefits that many N. American and European companies saw from outsourcing over the last 10 years are now drying up to the point that the problems from the logistics and quality are not being offset.

We saw some of this in the preliminary results from our recent level measurement survey. In the survey, we asked 'Do you see the regional percentages for your organizations demand for products changing in 2011 or 2012? Please indicate where you see your regional percentage for your company’s demand for Process Level and/or ITG Products and systems decreasing and increasing in 2011 or 2012.'

Quite simply, it looks like the trend moving the market demand from Americas and EMEA to APAC is slowing and even likely to be reversing.

My other thought is that's a lot of robots and it should make a pretty good impact on the industrial automation market regardless of where they are made.

Wireless Charging Could Empower Sensing in Industrial Applications

I saw an interesting article this morning about wireless charging that got me thinking about its possible use in industrial sensing. This technology is being developed by a MIT spin-off WiTricity and it's new partner MediaTek. The wireless charging they are working with is a big step beyond the inductive type charging plates that are currently on the market but, instead can charge devices at a distance. Obviously a cell phone that never needs charging and, perhaps, a much smaller battery geography would be a big deal on the consumer market but I'm thinking it could be a game changer in industrial settings.

Using wireless data transmission solves a lot of sensing problems particularly in equipment that has a lot of moving parts but that still leaves the problem of powering the device. Newer sensors with ultra low power demand and advanced long-life batteries solve some of this but, I suspect that they still leave some sense of concern that a dead sensor battery could idle an entire production line. Some of this concern could be alleviated by energy harvesting and/or solar technology but these are not ideal in all cases. But, if you could eliminate much of the battery size, combine energy harvesting and WiFi type power, you could have a really small wireless sensor that would be ultra-reliable. To me that's a pretty big deal.

Economic and Political Drivers for Industrial Functional Safety in Developing Regions

There is usually one main driver for any owner of an industrial facility with respect to the safeguarding of equipment and that is money. As long as a machine, site, facility, and/or process is in compliance with the standards recognized by the governing or judicial agency, there is little incentive to spend more to increase safety. A machine supplier that tries to go the extra mile with respect to the addition of safety interlocks and other automatic safeguarding will find it tough to market their products if the result of these added components increases the price.

In developing countries, there is usually little chance of an injured worker even being able to mount a lawsuit let alone succeed. For factory workers, the health insurance aspect of workplace injury is the public sector offering that is backstopped by the government. The government backed social infrastructure is also the sole support should that worker be permanently disabled. As long as the block of industrial facility owners have a strong voice in government, change is unlikely to happen.

In the space of Machine Automation, VDC is hearing that changes are starting to happen particularly in Brazil's northeast region that has a lot of industrial interest because of the large available labor pool of lower wage workers. The changes are being driven by the economy. With the downturn, governments such as Brazil's are being forced to bring their spending under control and become more in balance with their sources of tax revenue. Industrial facility owners are now being taxed based on an assessment of each site's machinery and the liklihood of an injury occuring. Whan this happens, those machine safety add-ons begin to look like a much smarter investment.

These tax driven political/economic changes are rippling through the market driving increases at the OEM, Integrator, Service Supplier and, of course safety product manufacturer levels.Our Machine Automatic Safeguarding report project is now in high gear and we are actively contacting suppliers to
accurately measure the changes that are happening in this market. This week, we will also be launching a comprehensive survey set looking at all demand side aspects of functional safety. Look to our site for more news and information in the next few weeks.

Isolation - Insurance for Equipment and Data Protection

This blog is based on the belief that incorporating isolation into some networking products is an effective means of insurance for personnel and equipment in many harsh industrial applications, such as motion control – motors, drivers, etc.  Networking suppliers offering this form of protection are able to differentiate themselves from other competitors when serving customers in these application environments in which the need for isolation is the greatest.

Isolation is employed to ensure physical safety and to protect system components against high voltages or currents caused by line surges or ground loops, degraded measurements, signal distortions, etc.   Typically the environments in which the need for isolation is greatest are in discrete and real-time applications 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.

However after reading this white paper  from Belden on the topic of redundancy I saw many similar concepts which could apply towards isolation as a form of insurance which could be deployed across a broader base of industrial applications.  The key to suppliers is effectively selling users on the concept of providing data integrity, ensuring equipment damage avoidance - of particular concern for capital intensive equipment in which the real and operational cost of downtime is significant, and the minimization of lost productivity caused by system component failure.

The networking products which typically possess greater levels of isolation include device servers, gateways and media converters (outside scope of our research).  Since Ethernet is inherently isolated the prevalence of isolation in products such as switches and routers is present but to a lesser degree. Some suppliers such as Ethernet Direct have been incorporating high potential (high voltage) HIPOT isolation into their switch products and have been using this added protection as an effective means of differentiation over a non-isolated switch.

Some suppliers indicated that the premium to incorporate isolation into their networking products amounts to 10%-20% above the cost of a non-isolated product. It is our belief that the customer may be rather short-sighted if they choose to not invest in an isolated networking product based solely on price, especially if the cost of equipment damage, lost or disrupted data and loss productivity as a result of an adverse impact avoided through isolation far exceeds the small premium. In that regards investing in isolation protection can be seen as buying a form of insurance against the elements.

I welcome your thoughts on the topic of isolation and networking products and whether you can share examples of your customers (or your competitor's customers) being burned for not investing in isolation insurance. Of course if you are a supplier and want to share some more details of your approach to isolation and the products and the level of isolation (i.e. basic, integrated, etc.) that you employ than I am all ears.

 

Functional Safety Solutions Market Expanding on Multiple Dimensions

Yesterday we held a webcast discussing summary results from our 2010 survey of users of functional safety solutions.

As the recent spate of industrial disasters continue to occupy headlines in business, technology and general interest media, the implementation of functional safety solutions has been highlighted as a critical operational, technical and financial management tool.

The benefits of investing in a functional safety program extend beyond simply satisfying regulations; functional safety also serves as a strategic tool—lowering costs, enhancing productivity and of course, improving safety.

Our data shows the market for functional safety solutions is rebounding as functional safety budgets grow and compliance requirements continue to develop. But the market is also faced with challenges, including cost barriers and lack of internal resources to implement or deploy these solutions.

To learn more about our findings, we encourage you to listen to the webcast recording and scroll through the slides below.

Functional Safety Solutions: Protecting Assets and Preventing Disasters

View more presentations from VDC Research Group.

What is the Cost of Not Having an Effective Functional Safety Program? Just Ask Tony Hayward and BP

VDC is not making judgments related to BP’s handling of the Gulf oil spill, nor are we placing blame solely on Tony Hayward.  Once the oil is gone and the media coverage has dissipated the facts will speak for themselves as to what went wrong, who is to blame and lessons learned.

Rather this tragedy is an opportunity to reinforce the importance of a company’s need to develop, and implement, an effective functional safety program; one that is embedded into the very DNA of a company’s operations. Not having or implementing an effective functional safety can damage a company’s reputation and impact its bottom line – BP is but an extreme example losing billions in market capitalization and $17 billion on the bottom line according to most recent financials.

At a minimum functional safety programs should be designed to protect a company’s most valuable assets – its employees and their morale and productivity and its equipment, property and processes. 

Treating functional safety as a critical part of a company’s business leads to improved productivity, enhanced employee morale, lower overall costs including liability insurance and worker’s compensation, and helps to position a company as a good corporate citizen.

VDC is launching its 2010 Functional Safety program covering intrinsically safe devices, machine safety, safety (SIL rated) sensors, process safety systems and the services and support required for a successful implementation.

Our goal is help companies frame what an effective functional safety program may entail, how they can continue to educate customers to help protect their own employees, equipment and processes and what are the requirements and preferences of their customer base. 

We welcome any questions, comments or feedback on how we can design the most valuable and actionable market research possible.