Challenges for some, opportunities for others
"Information and the energy sector" are why things will be looking pretty good during the next several years for North American economies, the process industries and IT-based automation and instrumentation markets, say executives at instrumentation supplier Endress + Hauser.
The dominance of U.S.-headquartered information-technology vendors, and new-found strength in North America’s energy sector, are bringing dynamism back to an economy that until recently was still reeling from the 2008 great recession.
Endress + Hauser, a privately held, $2.5-billion supplier of sensors, devices and systems for level, flow, pressure and temperature measurement, as well as analytics, is betting its own money on a healthy U.S. economy, expanding product-manufacturing and customer-service capabilities at its headquarters in Greenwood, Indiana, and elsewhere. It says it’s invested more than $150 million in the U.S. markets in the last five years.
In addition, as a participant in the migration of computerized intelligence from the process-control room to the instrument-device level, i.e., as close to the process as possible, the company sees a further evolution that will bring the analyses that follow measurement out of the lab and onto the facility floor. In the recent past, Endress + Hauser made technology-supplier acquisitions that will allow it to more easily than ever combine measurement and analysis — in situ and at the process — or even design processes in the lab.
Endress + Hauser first entered North American process-industry markets in a meaningful way in the early 1970s, and it soon acquired an empty 50-acre field near Indianapolis, Indiana, and started to build. Today, a substantial campus of buildings occupies the place, with facilities that rival some Silicon Valley has to offer. What’s more, the facility ships, for example, about 30,000 flowmeters a year, about 90 percent of which are supplied solely from its U.S. resources.
It’s clearly evident to visitors to the Greenwood site that company executives find on-going inspiration in the realization they see today of the "vision" they had back in the 1970s. And in light of its success, if Endress + Hauser says there is an opportunity to accomplish even more, it might well pay to listen.
Stability precedes growth
"There are troubles everywhere in the world," says CEO Matthais Allendorf. "But as to Europe and North America you can say the societies are stable. The addition of our customer training centers demonstrates our commitment to the U.S."
If there is a dark cloud around the economic silver-lining described above, it is the U.S. education deficit and growing challenges in process industries to find qualified personnel. Statistics indicate 100,000 people will be retiring each day for the next 20 years, while hiring has been suppressed the last 15 years. Yet Endress + Hauser executives say in the last five years it’s doubled the number of its employees considered knowledge workers.
As Kiran Patel, an analyst with HIS, recently noted, as workforces in the process industry are retiring companies are choosing between training new staff and outsourcing responsibility to an instrumentation vendor. "With fewer people taking up apprenticeship schemes, the knowledge to operate and maintain these devices is not always being passed down," he says.
The proliferation of customer and product centers, as opposed to sales centers, in the process control industries shows the technology suppliers get it, and that what they must do now for users goes far beyond the traditional "sales" center approach.
Kids clambering
Endress + Hauser recently hosted a tour of middle-school children as part of programs meant to accomplish things like foster interest in the engineering professions. Todd Lucey, general manager of the U.S. sales center, says he "got a real kick" out of seeing kids clambering — safely he adds — all over its recently installed process training unit (see photo).
The unit is a fully functional "mini process plant" equipped with four 700-gallon tanks, two 7.5 horsepower pumps and more than 120 field instruments, as well as a SpectraSensors TDL gas analyzer and Kaiser Optograf analyzer. It is managed by a Rockwell Automation DCS platform. Lucey notes the unit is equipped with full tank gauging, WiFi capability, the most advanced flowmeters and a separate oil/water column to demonstrate interface measurement.
Rockwell Automation and Endress + Hauser says their partnership delivers the "highest impact" in applications that require "precise flow measurement with high-value ingredients" that are blended in-line without a tank; dispensed with high accuracy into a container or larger batch; or that are heated or cooled while flowing.
Starting with extraction
The energy sector has already been mentioned as another source of optimism when it comes to the U.S. economy. The price of natural gas in Europe is twice that in the U.S.; in Asia, it’s four times the U.S. price.
According to Patel, the oil & gas industry is the largest sector of the process instrumentation market, accounting for 25 percent of revenue in 2012. "This sector is very process intensive," he notes, "with many applications in extraction, separation, treatment, environmental monitoring and distribution."
Custody transfer of commodities is a critical application, with instrumentation having accuracy within 0.1 percent. Coriolis flowmeters and radar level-measurement technology therefore are commonly used. And in fact, Stephen Grotzer, an executive with Endress + Hauser Flowtec, notes the "extraordinary" growth in Coriolis markets the last year.
Patel says that as differential-pressure devices are being replaced by Coriolis meters, for example, the instrumentation vendors have benefited by selling optimization services as well.
Natural gas on sale
It’s estimated the process control and instrumentation market for oil & gas is growing at more than 16 percent per annum, while other process industries lag with a still-healthy six percent growth.
"The advent of shale oil and gas," Patel goes on to note, "has proved a boon for process-instrumentation suppliers. Extracting hydrocarbons out of shale typically involves use of liquids at high pressures, high-pressure pumps and advanced instrumentation. Following fracturing, a well is drilled and then depressurized. The pressure differential created allows gas to flow out of the shale and into the well. The fracturing fluid returns to the surface as wastewater product.
Selling into the oil & gas industry has its challenges, Lucey says. "The oil & gas industry is very demanding and will switch vendors quickly when dissatisfied. For the upstream, you’re working in remote locations and they need to drill wells fast."
That same remoteness, however, is driving innovation, as upstream oil & gas is at the forefront when it comes to use of wireless and low-power technologies. Legitimate safety concerns must always be addressed. "They are dealing with higher temperatures and pressures than ever before," concludes Lucey, "and they are very conservative, but capable of moving quickly."
An analytics angle
"Our customers want robustness," says Allendorf, "besides measuring they want to know the composition, and there is a strong trend away from lab testing."
He adds that if you want to anecdotal confirmation that analytics is the future, consider the following. In some parts of Europe recently, baby-food shortages were noted. What was the reason? Concerned Chinese parents were hand-carrying baby food from Europe back to China on airline flights, based on fears connected with tainted-food scandals in that country.
"We can tell you what’s in that food," says Allendorf.
The lack of qualified personnel in process industries is only complicated by greater use of on-line analytics. "Companies don’t have the resources to support analytic solutions. Conventional technologies will be replaced by solutions that operate remotely and largely without maintenance," says Michael Zeisemer, Endress + Hauser COO.
Think of it this way, by combining analytics with measurement, a supplier furnishes a solution and an application, rather than simply a parameter. The latest acquisitions from Endress + Hauser move the company in this direction.
Endress + Hauser Conducta, Anaheim, California, is involved in liquids analysis, producing electro-chemical sensors for pH, ORP and D02; optical photometers; transmitters and other related equipment and systems. It will ship 140,000 units in 2014 with just more than 100 employees.
SpectraSensors is found in Houston, Texas, and was established only in 2012. It is a provider of laser-based spectrometers for on-line gas analyzers, including tunable diode laser technology. It has more than 100 employees and will ship more than 900 units in 2014.
Kaiser Optical Systems, Ann Arbor, Michigan, is also involved with laser-based spectrometers, in this case for laboratory and process chemical composition measurements of solids, liquids, and gases using Raman technology. Its 88 employees will ship about 90 units in 2014.
Merging disciplines
While field devices today are endowed with greater intelligence than ever before, Endress + Hauser doesn’t see the device level as being the locus of control, "although the network could be such," says Allendorf.
Software as a feature of instrumentation has been here for some time, "and this kind of merging will continue," says Ziesemer. "What’s new is the data centricity and regression analysis. Rather than a simple pressure transmitter you have something that mirrors the process."
Regression analysis is a statistical technique for estimating relationships among variables, especially when there is relationship between a dependent variable and one or more independent variables.
These kinds of changes too, are going to impact the human factor in the process industries. "Different disciplines are going to merge," says Ziesemer. "Engineers will need a good foundation in mechanical or electrical, but they will also need to understand software, data and other things. But it is exactly when progress is being made that historically you see disciplines merge."
In conclusion, combined with the power of the Internet, Ziesemer says, "the good news is that energy and information are two forces driving the re-industrialization of the U.S. economy."
Endress + Hauser is a leader in measurement instrumentation and solutions for industrial process engineering. The group employs 12,000 people across the globe, and generating net sales of approximately 1.8 billion Euros in 1213. Endress + Hauser is one of the largest instrument manufacturers in the United States, where it employs more than 1,300 people, including its external sales and service partners.
