Eye of the Storm: The Environmentfor Manufacturing and Automationin 2009 and BeyondEye of the Storm: The Environmentfor Ma...
2© ARC Advisory GroupOutlineOutline Where are We Now? Current Climate and Outlook for Manufacturing Impact on Emerging ...
3© ARC Advisory GroupWhere are we now?Where are we now? Recession is global Recent economic news is pretty much all bad...
4© ARC Advisory GroupThe Global RecessionThe Global Recession US has been in recession since December 2007 Europe offici...
5© ARC Advisory GroupImpact on Manufacturing: A look at RecentPMIs from Around the WorldImpact on Manufacturing: A look at...
6© ARC Advisory GroupDecember 2008 Manufacturing ISM Report OnBusinessDecember 2008 Manufacturing ISM Report OnBusinessMon...
7© ARC Advisory GroupChina Manufacturing PMIChina Manufacturing PMI(Jan1, 2009, CEP News) - CLSAs Chinese performance of m...
8© ARC Advisory GroupEuropean Manufacturing PMIsEuropean Manufacturing PMIsBERLIN, Jan 2 (Reuters) - Collapsing orders sen...
9© ARC Advisory GroupIndustrial Production and ManufacturingCapacity Utilization in the USIndustrial Production and Manufa...
10© ARC Advisory GroupIndustrial Production and ManufacturingCapacity Utilization in EuropeIndustrial Production and Manuf...
11© ARC Advisory GroupAnother Key Indicator: the Price of OilAnother Key Indicator: the Price of Oil Lower prices havesta...
12© ARC Advisory GroupIndustry Trends: Oil & GasIndustry Trends: Oil & Gas Oil & Gas ProjectsDelayed Increased volatilit...
13© ARC Advisory GroupIEA report Shows Long-term Shortage andSupply ConcernsIEA report Shows Long-term Shortage andSupply ...
14© ARC Advisory Group2009: A Rough Year Ahead for Pharma andBiopharma2009: A Rough Year Ahead for Pharma andBiopharma To...
15© ARC Advisory GroupGlobal Recession Curbs Demand for SteelGlobal Recession Curbs Demand for Steel The global recession...
16© ARC Advisory GroupGlobal Automotive Industry on the SkidsGlobal Automotive Industry on the Skids Japan auto sales see...
17© ARC Advisory GroupHow has ARC Revised its Growth Forecasts?How has ARC Revised its Growth Forecasts? We have cut our ...
ConsolidationConsolidationSuppliers and Users of AutomationHave been Consolidating.
19© ARC Advisory GroupEnd User Industry Examples ofConsolidationEnd User Industry Examples ofConsolidation Exxon and Mobi...
20© ARC Advisory GroupSiemensInvensysMarcamEurothermWonderwareSimSciAPVTriconexL&NSCADAN-PignoneSCADAPacSimABBCellierEngin...
21© ARC Advisory GroupThe People Challenge: Aging WorkforceThe People Challenge: Aging WorkforceExodus of Workers is Reduc...
22© ARC Advisory GroupInvestments Must Continue to be Made in KeyIndustry Segments, In Spite of Economy!Investments Must C...
23© ARC Advisory GroupInfrastructure Needs ModernizationInfrastructure Needs Modernization ARC Estimates Total of $65 Bil...
24© ARC Advisory GroupObama’s Infrastructure Plant and What itMeans to the Automation BusinessObama’s Infrastructure Plant...
25© ARC Advisory GroupObama Stimulus Plan Targets EnergyObama Stimulus Plan Targets Energy Energy: $58 billion Where doe...
26© ARC Advisory GroupWhat the Plan Means for AutomationWhat the Plan Means for Automation Power and Water will seeHuge I...
27© ARC Advisory GroupThe Sustainability ChallengeThe Sustainability Challenge In addition to having to deliver to a high...
28© ARC Advisory Group Information and Communication Advances Have Made the WorldMore “Connected”• Easier exchange of inf...
29© ARC Advisory GroupSustainability Will Raise the Bar Even HigherSustainability Will Raise the Bar Even HigherTo create ...
30© ARC Advisory Group“Green” BuildingsEnergy Recovery Package InnovationFt. Pierce FloridaFt. Pierce FloridaPepsiCo’s res...
31© ARC Advisory GroupEconomic Stimulus: Clean Energy Stimulus Push Gets Greener Tint - “President-elect Barack Obama and...
32© ARC Advisory GroupAgendaAgendaSetting the Stage forSustainability
33© ARC Advisory GroupClimate Change Creating HavocClimate Change Creating HavocMean Temperature ChangeWorld CO2 Emissions...
34© ARC Advisory GroupThe Addition of Power Generation Capacity is GettingHarder Energy Conservation and Management a Must...
35© ARC Advisory GroupManufacturers and Processors Have TheMost To Gain By Saving Energy• Uses more energy than any others...
36© ARC Advisory GroupMajor Energy-Intensive IndustriesSustainability impacts ALL!Major Energy-Intensive IndustriesSustain...
37© ARC Advisory GroupEnergy Challenges Create DriversFor SustainabilityEnergy Challenges Create DriversFor Sustainability...
38© ARC Advisory GroupAgendaAgendaWhat does Sustainability meanfor Manufacturers?
39© ARC Advisory GroupInfrastructure•Real-time Plant Support•Technology Platform•Applications Platform•Business Processes•...
40© ARC Advisory GroupECONOMIC•Customers•Employees•Suppliers•Government•CommunityENVIRONMENT•Climate•Energy•Water•Emission...
41© ARC Advisory GroupARC’s CMM provides a Model to helpachieve SustainabilityARC’s CMM provides a Model to helpachieve Su...
42© ARC Advisory GroupARC’s CMM Model Stresses Collaboration Via AThree Domain Service Based InfrastructureARC’s CMM Model...
43© ARC Advisory GroupBusinessProductionSuppliers CustomersARC’s CMM Model Requires Processes To BeSynchronized And Integr...
44© ARC Advisory GroupQuestions Manufacturers Must Address To BeSynchronized And Integrated In Real-Time Hardware – Do ma...
45© ARC Advisory GroupMulti-domain functionality on a single platform:power, logic, motion, HMI, and process controlCapabi...
46© ARC Advisory GroupAgendaAgendaDriving towards a Solution
47© ARC Advisory GroupMotionNetworksDomain Specific Solutions Are Convergingto Improve PerformanceDeviceNetworkControlNetw...
48© ARC Advisory GroupCollaborative Power And Control SolutionsCollaborative Power And Control SolutionsC-PACS articulate ...
49© ARC Advisory GroupEnterpriseSystemsBusinessProcessesOperations ManagementOperations ManagementService-BasedArchitectur...
50© ARC Advisory GroupC-PACS and Operations Management EnablesCollaborative Production Systems CPSC-PACS and Operations Ma...
51© ARC Advisory GroupBusiness Planning & SupplyChain ManagementOperations ManagementManufacturing OperationsManagementBat...
52© ARC Advisory Group Common Actionable Context• Role based dissemination of information Real-time Performance Manageme...
53© ARC Advisory GroupApplication Example*UPS Worldport - Louisville, KYThe world’s largest fully automated package sortin...
54© ARC Advisory GroupUPS Worldport - Scope of Supply by C-PACSSolutionUPS Worldport - Scope of Supply by C-PACSSolutionRe...
55© ARC Advisory GroupUPS Worldport - Louisville, KYSystem Schematic for C-PACS SolutionSortingSystem No.1Vendor ASortingS...
56© ARC Advisory GroupKPI Efficiency Goals Accomplished throughAdvanced Automation Solutions !1999Grade Lane(manual)2007Wo...
57© ARC Advisory GroupECONOMIC•Customers•Employees•Suppliers•Government•CommunityENVIRONMENT•Climate•Energy•Water•Emission...
58© ARC Advisory Group• 82% Reduction in Injuries (LTI)Increased Efficiency ImpactsSustainability PositivelyIncreased Effi...
59© ARC Advisory GroupSummary and Recommendations Manufacturing and Processing Companies face significantchallenges not o...
60© ARC Advisory GroupWhat Can We Collectively Do To NavigateThrough The Economic Turbulence ?What Can We Collectively Do ...
61© ARC Advisory GroupAgendaAgendaConsider ARC Your Partner InNavigating Through ThisDifficult Period!
62© ARC Advisory GroupThank YouThank YouFor more information, contact the author atcresnick@arcweb.comor visit our web pag...
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ARC’s Larry O’Brien and Craig Resnick’s Business Environment & Trends Workshop @ 2009 ARC Industry Forum

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ARC’s Larry O’Brien and Craig Resnick’s Business Environment & Trends Workshop @ 2009 ARC Industry Forum
Eye of the Storm: The Environment for Manufacturing and Automation in 2009 and Beyond
Where are We Now?
Current Climate and Outlook for Manufacturing
Impact on Emerging vs. Industrialized Economies
Current Climate and Outlook for Automation
Impact on Emerging vs. Industrialized Economies
How are Different Industries Affected?
Where are We Going?

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ARC’s Larry O’Brien and Craig Resnick’s Business Environment & Trends Workshop @ 2009 ARC Industry Forum

  1. 1. Eye of the Storm: The Environmentfor Manufacturing and Automationin 2009 and BeyondEye of the Storm: The Environmentfor Manufacturing and Automationin 2009 and BeyondCraig ResnickResearch DirectorARC Advisory Groupcresnick@ARCweb.comLarry O’BrienResearch DirectorARC Advisory Grouplobrien@ARCweb.com
  2. 2. 2© ARC Advisory GroupOutlineOutline Where are We Now? Current Climate and Outlook for Manufacturing Impact on Emerging vs. Industrialized Economies Current Climate and Outlook for Automation Impact on Emerging vs. Industrialized Economies How are Different Industries Affected? Where are We Going?
  3. 3. 3© ARC Advisory GroupWhere are we now?Where are we now? Recession is global Recent economic news is pretty much all bad Manufacturing is being hit hard Investments still need to be made! Curbing investment in certain sectors now couldhave negative consequences down the line
  4. 4. 4© ARC Advisory GroupThe Global RecessionThe Global Recession US has been in recession since December 2007 Europe officially fell into recession in November2008 China economic growth dips below 10 percent forfirst time in three years “After years of boom, Chinas GDP growth has nowslowed for the last five consecutive quarters.” –October 2008 Report “Brazil’s economy may grow as little as 1.5percent this year as the global recession reducesdemand for commodities and curbs consumerspending, said Itau Corretora de Valores SA, thebrokerage unit of the nation’s biggest bank.” --Bloomberg
  5. 5. 5© ARC Advisory GroupImpact on Manufacturing: A look at RecentPMIs from Around the WorldImpact on Manufacturing: A look at RecentPMIs from Around the World PMIs, or Purchasing Managers Indices are a goodindicator of overall health of manufacturing. Shows purchasing manager trends in orders formaterials. Number of Below 50 indicates a generalcontraction in manufacturing. “At 33.2 in December, the JPMorgan GlobalManufacturing PMI posted its weakest everreading and has sunk to new lows in each monthof Q4 2008. Based on the average reading for theheadline PMI, the performance of the worldwidemanufacturing sector through 2008 is the worstfor a calendar year since 2001.”
  6. 6. 6© ARC Advisory GroupDecember 2008 Manufacturing ISM Report OnBusinessDecember 2008 Manufacturing ISM Report OnBusinessMonth PMI Month PMIDec 2008 32.4 Jun 2008 50.2Nov 2008 36.2 May200849.6Oct 2008 38.9 Apr 2008 48.6Sep 2008 43.5 Mar 2008 48.6Aug 2008 49.9 Feb 2008 48.3Jul 2008 50.0 Jan 2008 50.7Average for 12 months — 45.6High — 50.7Low — 32.4“Manufacturing contracted in December as the PMI registered32.4 percent, 3.8 percentage points lower than the 36.2percent reported in November. This is the lowest readingsince June 1980 when the PMI registered 30.3 percent.”
  7. 7. 7© ARC Advisory GroupChina Manufacturing PMIChina Manufacturing PMI(Jan1, 2009, CEP News) - CLSAs Chinese performance of manufacturing indexgrew to 41.2 in December from 40.9 in November, according to Markit.The index has been below 50 - indicating contraction - since August 2008."Chinese manufacturing activity was very weak in December. Output contractedat a record pace, employment fell for the fifth month and work in hand declined,"said Eric Fishwick, head of CLSA Economic Research. "With five back-to-backPMIs signalling contraction, the manufacturing sector, which accounts for 43% ofthe Chinese economy, is close to technical recession," he said.
  8. 8. 8© ARC Advisory GroupEuropean Manufacturing PMIsEuropean Manufacturing PMIsBERLIN, Jan 2 (Reuters) - Collapsing orders sent Germanys manufacturing sector intoits biggest contraction in more than 12 years in December 2008, even though a slump ininput costs allowed producers to cut their prices, a survey showed on Friday.The headline index in the Markit Purchasing Managers Index (PMI) for Europes biggesteconomy fell to 32.7 in December from 35.7 in November. The fall took the index deeperbelow the 50 threshold separating contraction from expansion.
  9. 9. 9© ARC Advisory GroupIndustrial Production and ManufacturingCapacity Utilization in the USIndustrial Production and ManufacturingCapacity Utilization in the US“Industrial production decreased 0.6 percent in November with declines widespreadacross industries. The drop in output in September was revised down, and therebound in October was revised up, in large part because both the decrease due tothe September hurricanes and the subsequent partial recovery in October werelarger than previously reported. “ – US Fed
  10. 10. 10© ARC Advisory GroupIndustrial Production and ManufacturingCapacity Utilization in EuropeIndustrial Production and ManufacturingCapacity Utilization in EuropeSource: Eurostat
  11. 11. 11© ARC Advisory GroupAnother Key Indicator: the Price of OilAnother Key Indicator: the Price of Oil Lower prices havestalled capitalinvestment andcaused project delays Long-term demand isstill increasing Lack of capitalinvestment will causeslingshot effect asprices begin toincrease againPending Legislation in U.S. to Better ControlOil Futures Speculation.
  12. 12. 12© ARC Advisory GroupIndustry Trends: Oil & GasIndustry Trends: Oil & Gas Oil & Gas ProjectsDelayed Increased volatility andrisk Low price of oil detersinvestment in alternativefuels, oil sands, etc. BUT….. There are still manyprojects going on –Refiners are makingmoney now! Upstream oil and gas isstill growing significantlySource: Hydrocarbon ProcessingProcess plant industry bookings for contractors;manpower requirements grew by over 90% betweenthe start of 2004 and the end of 2007.
  13. 13. 13© ARC Advisory GroupIEA report Shows Long-term Shortage andSupply ConcernsIEA report Shows Long-term Shortage andSupply Concerns “For the next couple of years, the oil pipeline iswell supplied. But that trails off after 2010. By2015, the world needs to find an additional 7million barrels per day of oil above and beyond allthe exploration projects currently in the pipeline.And to get that oil to market by the middle of thedecade, those exploration projects need to getstarted now. “ According to IEA, massive investments are neededin the global oil infrastructure ($26 trillion).
  14. 14. 14© ARC Advisory Group2009: A Rough Year Ahead for Pharma andBiopharma2009: A Rough Year Ahead for Pharma andBiopharma To meet the challenges in2009, the industry needs toimprove innovation,introduce newtechnologies, andultimately improveefficiencies. Even though2009 will not be aslucrative as previous years,the industry will continueto be profitable. Regulation, congressionalactivities, and innovationwill continue to play animportant role in theindustry for 2009.
  15. 15. 15© ARC Advisory GroupGlobal Recession Curbs Demand for SteelGlobal Recession Curbs Demand for Steel The global recession hascurbed demand for steel,prompting mills in Asia,Europe and North Americato reduce purchases of rawmaterials, including ironore. Rio has postponed a$2.15 billion expansion ofthe Corumba iron ore minein Brazil as part of its planto cut spending globally by$5 billion.Source: Bloomberg, IISI, China Metallurgical
  16. 16. 16© ARC Advisory GroupGlobal Automotive Industry on the SkidsGlobal Automotive Industry on the Skids Japan auto sales seen at31-year low in 2009 Toyota suspends domesticproduction 2009 U.S. sales seen at12.5 million, lowest in 18yrs Big three bankruptcy? Goldman Sachs cuts globalauto production, salesforecastsDomestic and National Auto Production 2007-08Source: Automotive News
  17. 17. 17© ARC Advisory GroupHow has ARC Revised its Growth Forecasts?How has ARC Revised its Growth Forecasts? We have cut our growthestimates significantly for2009 North America, Japan,Western Europe willContract for 2009-2010 BUT we still expect theglobal market to grow Recovery will take placeafter 2010 Revised DCS Market CAGRs
  18. 18. ConsolidationConsolidationSuppliers and Users of AutomationHave been Consolidating.
  19. 19. 19© ARC Advisory GroupEnd User Industry Examples ofConsolidationEnd User Industry Examples ofConsolidation Exxon and Mobil; Chevron, Texaco, Unocal and Phillips; BP andAmoco, Total acquires 50% of AMSO, ... Dow Chemical, Union Carbide, Rohm&Haas; SABIC acquires GEPlastics; … Pfizer acquired Warner-Lambert & Pharmacia; Glaxo Wellcomeand SmithKline Beecham merger; Bristol-Myers bought drugunit of DuPont Chemicals; … InBev acquires Anheuser-Busch; Heineken acquire DrinksUnion (Czech Rep); too many to list,… International Paper Acquires Argentinas Bolsaflex, Stora Ensofinalises acquisition of Vinson [Brazil],… Tangshan Iron & Steel Co., Handan Iron and Steel Group Co.and Chengde Xinxin Vanadium and Titanium Co. will becomethe Hebei Iron and Steel Group once the merger is complete Tata Motors acquires Jaguar-Land Rover, Daimler divestsChrysler… Near misses and speculation BHP Billiton bids for Rio Tinto Canceled General Motors and Chrysler?Bottom line: Newly created enterprises need help todevelop strategic plan!
  20. 20. 20© ARC Advisory GroupSiemensInvensysMarcamEurothermWonderwareSimSciAPVTriconexL&NSCADAN-PignoneSCADAPacSimABBCellierEngineeringElsag Bailey(H&B, F&P)AugustSystemsCombustionEngineeringAlfa LavalAutomationHoneywellPOMSMeasurexAlliedSignalProfimaticsInterPlantConsultingP&F SafetySystemsSACDAL&NWalshAutomation= MostRecentSystems Mod.DynaproETGEntek IRDSequenciaAnoradEJARockwellICS TriplexPavillionTeschDataSweepEutechEntrelecAPV (Divest) UGSCEDESHSBCMSTecnologia Incuity Soft.DLI Eng.ORSIMilltronicsTurbo-WerkMooreCompexVickersDanfoss FlowUS FilterTata HonGoldstar HonEmersonDMIBristol Bab.WestinghouseIntellution(Divested)FisherKenonicsCSIHD BaumannPC&EDanielSaab MarineElectronicsOrion CEMSolartron Mob.Damcos IndXInterCorrEnrafPAS APCMDCAutom. Grp.GepaApplied Aut.RobiconPropackSamsungSATQuantumEngineeringXian HenshengBer-MacKuhlman ElectVectekElectronicsMorganShinwhaBJCInnotec
  21. 21. 21© ARC Advisory GroupThe People Challenge: Aging WorkforceThe People Challenge: Aging WorkforceExodus of Workers is Reducing Companies’ Ability to Sustain Operational Excellence010203040506070801900 1920 1940 1960 1980 1990 2000 2010 2020 2030MillionsofPeopleYearPeople Over Age 65Source: US Census-10%21%52%-20%-10%0%10%20%30%40%50%60%Number of People 35 to 44 Number of People 45 to 54Number of People 55 to 64Changing Workforce Demographics from 2000 to 2010Source: US Bureauof Labor Statistics US Bureau of Labor Statistics• By 2010 more than 25% of workingpopulation will reach retirement age• Trend will continue into foreseeablefuture Globally – Workers are Getting Older• Largest Group of Workers – over age45 and will double in next ten years• Fastest Shrinking Age Group ofWorkers between 35 and 44 –arguably the most productive Europe is expected to lose 1 millionjobs annually for the next 25 to 30years• Severe shortage of skilled workersand engineers! Oil & Gas Industry• 50% of its production engineers willreach retirement age by 2010
  22. 22. 22© ARC Advisory GroupInvestments Must Continue to be Made in KeyIndustry Segments, In Spite of Economy!Investments Must Continue to be Made in KeyIndustry Segments, In Spite of Economy! America’s CrumblingInfrastructure Roads & Bridges Water & Wastewater Power industry Aging control systems NanotechnologySustainability is the Issue!Sustainability of Your Business! Innovation Instrumental inDriving Economic Growth Users and Suppliers MustContinue to Invest in R&D
  23. 23. 23© ARC Advisory GroupInfrastructure Needs ModernizationInfrastructure Needs Modernization ARC Estimates Total of $65 Billion in InstalledProcess Automation Systems are Reaching theend of their Useful Life The Majority of this is in the HydrocarbonsSector in North America, Europe, and MiddleEast33.7%16.1%50.2%New PlantExpansionModernization
  24. 24. 24© ARC Advisory GroupObama’s Infrastructure Plant and What itMeans to the Automation BusinessObama’s Infrastructure Plant and What itMeans to the Automation Business Infrastructure: $90 billion Where does the money go? $30 billion: Highway construction $10 billion: Rail and transit projects $31 billion: Modernize federal and other publicbuildings for long-term energy savings $19 billion: Water projectsObama MentionedScience in His InauguralAddress
  25. 25. 25© ARC Advisory GroupObama Stimulus Plan Targets EnergyObama Stimulus Plan Targets Energy Energy: $58 billion Where does the money go? $32 billion: Fund a smartelectricity grid $20 billion-plus: Renewableenergy tax cuts and a taxcredit for research on energyefficiency and clean energy,plus a multiyear extension ofthe green energy productiontax credit $6 billion: Weatherizemodest-income homes
  26. 26. 26© ARC Advisory GroupWhat the Plan Means for AutomationWhat the Plan Means for Automation Power and Water will seeHuge Investments Increased Investment inIntelligent BuildingAutomation Systems Increased Emphasis on BoilerEfficiency Sophisticated Approaches toEnergy Management Hundreds of Millions ofDollars Worth of NewSystems and InstrumentationWill be Required Money won’t enter thesystem until 2010-2011
  27. 27. 27© ARC Advisory GroupThe Sustainability ChallengeThe Sustainability Challenge In addition to having to deliver to a highlycompetitive, flat world economy, manufacturers haveto meet the new SUSTAINABILITY challenge Sustainability is the response to the increasedpressure on the environment, the rising demand fornatural resources, energy, and the need for a sociallyresponsible approach to business Sustainability will drive towards a higher level ofCOLLABORATION between organizations and systemsand most likely a complete rethinking of traditionalorganizational structures Automation Suppliers are uniquely positioned to helpmanufacturers meet the SUSTAINABILITY challengewith Collaborative Power and Control Solutions
  28. 28. 28© ARC Advisory Group Information and Communication Advances Have Made the WorldMore “Connected”• Easier exchange of info, ideas and money• Global access to product/service suppliers Business Has Become More Global• Many new, large markets to sell more products• Outsourcing of ―Core‖ activities• China (Manufacturing), India (Services)• New Capital Investments• Chevron Refinery (India), Dow (Middle East)• Increasingly complex global networks to manage Business Has Become More Competitive• More aggressive legacy-free competitors• Tougher Price/Product competition• Changing customer needs with local requirements• Product proliferation• Product innovation and new product launchBusiness DriversDynamic Customer RequirementsShrinking Product LifespanMore Demanding CustomersFierce Global CompetitionGlobal Markets, Supply ChainsGreater Product VarietyCompliance and TrackingMany OthersManufacturing Today: Flat World has Raisedthe Bar for Manufacturers and ProcessorsManufacturing Today: Flat World has Raisedthe Bar for Manufacturers and Processors
  29. 29. 29© ARC Advisory GroupSustainability Will Raise the Bar Even HigherSustainability Will Raise the Bar Even HigherTo create zerowaste25% reduction insolid waste in 3yearsTo be supplied100% byrenewable energyStores 25% moreefficient in 7 years Fleet 25% moreefficient in 3 yearsTo sell products thatsustain resources &the environment20% supply basealigned in 3 yearsWal-Mart Corporate Environmental Sustainability Goals
  30. 30. 30© ARC Advisory Group“Green” BuildingsEnergy Recovery Package InnovationFt. Pierce FloridaFt. Pierce FloridaPepsiCo’s responsibility is to continually improve all aspectsof the world in which we operate – environment, social,economic – creating a better tomorrow than today.Respect andFairly Treat ourPEOPLEProvideTrustworthyPRODUCTSConserve andRespect ourENVIRONMENTSustainability Will Raise the Bar Even HigherPepsiCoSustainability Will Raise the Bar Even HigherPepsiCo
  31. 31. 31© ARC Advisory GroupEconomic Stimulus: Clean Energy Stimulus Push Gets Greener Tint - “President-elect Barack Obama andcongressional Democrats are intensifying work on a stimulus plan thatwould dole out roughly a half-trillion dollars on an array of "green“projects and infrastructure initiatives such as building renewableenergy plants, improving the electrical grid & installing "smart"meters” Wall Street Journal, Dec 6, 08 Jobs, Clean Energy are Key to Obama Stimulus Plan - “Obama aidestates: "Given the magnitude of the problems, youre going to need alarge plan. Much of what we would do is double duty, with the effectof helping aggregate demand today but also enhancing theproductivity of the economy for years and decades to come”. "Greenjobs, healthcare technology and infrastructure fit that.“ Los AngelesTimes, Dec 6, 08 Chinas $586 billion stimulus package is its - "biggest contribution tothe world," Premier Wen Jiabao said Monday, as hopes rose thatheavy spending on construction and other projects would help supportglobal growth by fueling demand for imported machinery and rawmaterials. AP, Nov 10, 08 European Economic Recovery Plan ”… immediate budgetary impulseamounting to 200B Euro and kick-start investment to modernizeinfrastructure. It will drive a competitive Europe ready for the low-carbon future.” Jose Manuel Durao Barroso, Pres., EuropeanCommission Nov 26, 08
  32. 32. 32© ARC Advisory GroupAgendaAgendaSetting the Stage forSustainability
  33. 33. 33© ARC Advisory GroupClimate Change Creating HavocClimate Change Creating HavocMean Temperature ChangeWorld CO2 EmissionsCO2 ConcentrationScientists project a 3º to 7º Frise in global temperatures by2100 – Consequences couldbe dramatic• 3.7º F = Arctic ice disappears• 5.4º F = Amazon disappears• 7.2º F = Agriculture declines
  34. 34. 34© ARC Advisory GroupThe Addition of Power Generation Capacity is GettingHarder Energy Conservation and Management a MustThe Addition of Power Generation Capacity is GettingHarder Energy Conservation and Management a Must Asian demand for equipment andservices drives up Capital GoodsPrices globally The cost of new plants is risingvery rapidly Example: US estimated costsfor new PowerGen capacity• Up 19% in the last year• Up 69% since 2005• Up for all types of plants• Steam• Combined cycle• Wind• Nuclear• HydroIndexValue(These measures includes design, equipment, and construction; exclude fuel costs)
  35. 35. 35© ARC Advisory GroupManufacturers and Processors Have TheMost To Gain By Saving Energy• Uses more energy than any othersingle sector; >1/3 of U.S. energyconsumption• Produces approximately 30% of U.Sgreenhouse gas emissions• Accounts for more than 35% of U.S.natural gas demand• Accounts for 28% of U.S. electricitydemand• Energy is key to economic growth indomestic manufacturing• Many companies have been unable topass higher energy costs on to theircustomers, which has impacted theirprofit margins negativelyIndustry33.4%Transportation27.2%Commercial17.9%Residential21.5%Energy UseSource: US Department of Energy
  36. 36. 36© ARC Advisory GroupMajor Energy-Intensive IndustriesSustainability impacts ALL!Major Energy-Intensive IndustriesSustainability impacts ALL!Energy Consumption (Trillion Btu)PetroleumChemicalsPaperPrimaryMetalsFood ProcessingNonmetallicMineralsTobacco/BeveragesFurnitureLeather Machinery and ComputersWoodTransportationFabricated MetalsTextiles/ApparelPlastics/RubberElectricalPrintingMiscellaneous110100100010 100 1000 10000EnergyIntensity(ThousandBtu/$GDP)Energy-IntensiveIndustriesIndustrial Energy Intensity vs. Energy ConsumptionMiningSource: US Department of Energy
  37. 37. 37© ARC Advisory GroupEnergy Challenges Create DriversFor SustainabilityEnergy Challenges Create DriversFor Sustainability The World Commission on Environmental andDevelopment defined Sustainability as the developmentthat meets the needs of the present withoutcompromising the needs of future generations The Core Principle is care and respect for the environmentand the society we live in By applying this approach manufacturers judge thesuccess of product designs not only by the financial butalso by the contribution to society and the ecosystem The concept of sustainability reaches beyondenvironmental stewardship Sustainability is a positive business approach that has asmuch to do with delivering economic benefits, and being aresponsible member of the community, as it has to dowith reducing the environmental impact
  38. 38. 38© ARC Advisory GroupAgendaAgendaWhat does Sustainability meanfor Manufacturers?
  39. 39. 39© ARC Advisory GroupInfrastructure•Real-time Plant Support•Technology Platform•Applications Platform•Business Processes•Security•Role-based Portals•Unified viewIntegration•Enterprise•Design & Engineering•Operations, Controls, &Equipment•Supply Chain & ExternalOperations•Product Support OpsFunctionality•Production Planning•Production Execution•Product Data Tracking•Visibility & Analytics•Quality Enforcement•Inventory Logistics•Asset Mgmt•Product SupportOperations ManagementTo the Pillars of Operations Management…
  40. 40. 40© ARC Advisory GroupECONOMIC•Customers•Employees•Suppliers•Government•CommunityENVIRONMENT•Climate•Energy•Water•Emissions•WasteSOCIAL•Wellness•Diversity•Products•Safety•CommunityThe Triple Bottom Line… add three more for Sustainability
  41. 41. 41© ARC Advisory GroupARC’s CMM provides a Model to helpachieve SustainabilityARC’s CMM provides a Model to helpachieve Sustainability Manufacturers must deploy CollaborativeManufacturing Management (CMM) tools toeffectively connect to their customers andsuppliers, as well as to connect within their ownenterprises CMM is the management practice that controls thekey business and manufacturing processes of amanufacturing enterprise CMM builds upon a collaborative infrastructure,business process management services, and real-time strategic business management tools CMM leverages critical applications, productionsystems, and enterprise information, to maximizethe responsiveness, flexibility, and profitability ofthe manufacturing enterprise
  42. 42. 42© ARC Advisory GroupARC’s CMM Model Stresses Collaboration Via AThree Domain Service Based InfrastructureARC’s CMM Model Stresses Collaboration Via AThree Domain Service Based InfrastructureLifecycle DomainLifecycle DomainValue Chain DomainEnterprise DomainLifecycle DomainValue Chain DomainEnterprise DomainValue ChainDomainEnterprise DomainService BasedInfrastructureBusinessOperationsSystemsPlant/FactoryOperationsSystemsSupply-SideMaterialsManagementSystemsCustomer &OrderFulfillmentSystemsARC’s Three Domain CMM ModelExternalInternalExcellence Throughout Operationsis Essential to Value Chain &Enterprise PerformanceExternal
  43. 43. 43© ARC Advisory GroupBusinessProductionSuppliers CustomersARC’s CMM Model Requires Processes To BeSynchronized And Integrated In Real-Time
  44. 44. 44© ARC Advisory GroupQuestions Manufacturers Must Address To BeSynchronized And Integrated In Real-Time Hardware – Do manufacturers have the hardwareplatforms at the plant floor and at IT level, thatenable collaboration between power, automation,and the enterprise? Software – Are manufacturers deploying softwareplatforms at the plant floor and at IT levels thatenables collaboration between power, automation,and the enterprise? Services – Do manufacturers have access to theservices required to install, deploy, and maintain thenecessary platform infrastructure? Human Capital – Is the entire organization, from CEOon down, committed to eliminating all silos anddeploying the collaboration necessary to achievesustainability?
  45. 45. 45© ARC Advisory GroupMulti-domain functionality on a single platform:power, logic, motion, HMI, and process controlCapability to deploy multiple control applications ona single platform for End Users and OEMsCommon engineering development platform for thedesign and integration of multi-domain power andautomation systemsOpen, modular, and scalable control architecturesthat enable highly distributed automatedmanufacturing environmentsUse of de-facto standards for network interfaces,languages, etc., allowing data exchange as part ofnetworked multi-vendor systemsWhat Characteristics Are Required To BeSynchronized And Integrated In Real-Time?
  46. 46. 46© ARC Advisory GroupAgendaAgendaDriving towards a Solution
  47. 47. 47© ARC Advisory GroupMotionNetworksDomain Specific Solutions Are Convergingto Improve PerformanceDeviceNetworkControlNetworkCommon Tagging &Single DatabaseCommon DevelopmentPlatform & ConfigurationToolsLogic HMIProcessControlPowerLogic HMIMotionProcessControlPowerMotionC-PACS Model
  48. 48. 48© ARC Advisory GroupCollaborative Power And Control SolutionsCollaborative Power And Control SolutionsC-PACS articulate the convergence of multipledisciplines on a common platformC-PACS specify functions under a singleenvironmentC-PACS promote the value of the commoncommunications infrastructureC-PACS recognize the value of standards inautomationC-PACS demonstrate the importance of a singlepower, and control platform
  49. 49. 49© ARC Advisory GroupEnterpriseSystemsBusinessProcessesOperations ManagementOperations ManagementService-BasedArchitecture Service-Based InfrastructureProductionProcessesFactoryOperationsSystems &ServicesPOWER: Power Meters, Circuit Breakers, TransferSwitches, Intelligent Motor Control Centers,…Automation: Motor Drives, Logic, Motion, HMI,Sensors, Actuators,…C-PACS – The Foundation for CMMMfg Ops &Mfg Ops &ProductionProductionProcessesProcessesProductProductDefinitionDefinitionProductionProductionManagementManagementFactoryFactoryAutomationAutomationISA 95ModelsBusiness Process ComponentsSupply Chain ManagementProduct Lifecycle ManagementBusiness Process ComponentsSupply Chain ManagementProduct Lifecycle ManagementWork FlowOPC-UAC-PACSControl & DeviceNetworks: Real-Time
  50. 50. 50© ARC Advisory GroupC-PACS and Operations Management EnablesCollaborative Production Systems CPSC-PACS and Operations Management EnablesCollaborative Production Systems CPSEnterprise/BusinessOperationsOutboundSupply Chain& LogisticsInboundSupply Chain& LogisticsProduct/PlantDesign andEngineeringCRMCollaborativeProductionEnvironmentOperationsManagementProductionResources
  51. 51. 51© ARC Advisory GroupBusiness Planning & SupplyChain ManagementOperations ManagementManufacturing OperationsManagementBatchContinuous DiscreteC-PACS - Power Management,Controllers, Devices, Machines,NetworksProductionDefinitionProductionCapabilityProductionPlanProductionInformationCommon Information InfrastructureCPS Incorporates The Plant Floor, Power,and Operations ManagementC-PACSCPSCMM
  52. 52. 52© ARC Advisory Group Common Actionable Context• Role based dissemination of information Real-time Performance Management• Performance Intelligence• Resolution to Unit Operation Level• Operator Engagement• Targets, progress and trouble analysisin real-time• Operational Perspective/Financial Impact Common View• Plant and Corporate ―single versionof the truth‖• Aggregation of Operations Intelligenceand Business IntelligenceContextData Quality MgmtCommon TimeDynamic PlantReference ModelApplication PortfolioData ModelWork Processes& StateContextData Quality MgmtData Quality MgmtCommon TimeCommon TimeDynamic PlantReference ModelDynamic PlantReference ModelApplication PortfolioApplication PortfolioData ModelData ModelWork Processes& StateWork Processes& StateMaintenanceRPMDashboardsReal-timeAccountingSystemReal-timeAccountingSystemReal-timeOperationsDataReal-timeOperationsDataKeyPerformanceMeasuresKeyPerformanceMeasuresCEOCFOEngineer WorkerPlantManagerCPS Turns Data into Actionable InformationThe Knowledge WorkplaceRequires added Dimensions ofContext
  53. 53. 53© ARC Advisory GroupApplication Example*UPS Worldport - Louisville, KYThe world’s largest fully automated package sorting facilitySort Capacity Per Hour: 421,000 packagesNumber of Conveyor Drives: 25,314Miles of Transport Conveyors: 128 milesPower consumption: 72 MVA(City of Louisville: 114MVA)Facility Size: 5.6 million square feetYTD Overall Investment > $2 billionIT Equipment 4,500 Scanners6,000 PCs1,500 Printers>500 Data Comm Devices380 Servers*Source: Presentation by ARC atSchneider Electric Initi@tive 2008
  54. 54. 54© ARC Advisory GroupUPS Worldport - Scope of Supply by C-PACSSolutionUPS Worldport - Scope of Supply by C-PACSSolutionRedundant 13.8 KV Feeders– 1220 Amp MainSwitchgear– Mimic Panel44 4000 Amp Substations10 High Voltage Lineup’s> 100 Power Logic Panels(energy metering)790 Motor Control Panels(MCP’s)3,750 Remote Control Panels(RCP’s)POWER AUTOMATION23,700 VariableFrequency Drives3,100 PAC’s & PLC’s
  55. 55. 55© ARC Advisory GroupUPS Worldport - Louisville, KYSystem Schematic for C-PACS SolutionSortingSystem No.1Vendor ASortingSystem No.3Vendor CSortingSystem No.2Vendor BContent:• PACs & PLCs• Motor Drives• Power Logic EnergyMeteringHigh LevelControl(CPS)Theseseparatesortingsystemsare fullyintegratedat the data(C-PACs)levelGlobalMessageHub20 Enterprise Applications (aprox.)Data Collector Data Collector Data CollectorContent:• PACs & PLCs• Motor Drives• Power Logic EnergyMeteringContent:• PACs & PLCs• Motor Drives• Power Logic EnergyMeteringDatabase Application
  56. 56. 56© ARC Advisory GroupKPI Efficiency Goals Accomplished throughAdvanced Automation Solutions !1999Grade Lane(manual)2007Worldport(automated)%Volume 495,000 pps 812,000 pps 64Design Capacity 215,000 pph 304,000 pph 41Staffing (Sorting) 1984 2362 19Productivity (perperson)48 pph 93 pph 94Injuries (LTI) 10.9/yr 2.0/yr -82Missorts 1/2226 1/4554 -51pps: packages per sort (1 sort: aprox. 2.4hrs) pph: packages per hour
  57. 57. 57© ARC Advisory GroupECONOMIC•Customers•Employees•Suppliers•Government•CommunityENVIRONMENT•Climate•Energy•Water•Emissions•WasteSOCIAL•Wellness•Diversity•Products•Safety•CommunityThe Triple Bottom LineImpact on Sustainability ?
  58. 58. 58© ARC Advisory Group• 82% Reduction in Injuries (LTI)Increased Efficiency ImpactsSustainability PositivelyIncreased Efficiency ImpactsSustainability PositivelyECONOMICENVIRONMENTSOCIAL• Information leverage and system flexibility enhancementthrough enterprise collaboration• Energy efficiency maximization through use of variablespeed drives for motors wherever possible•Throughput increase and sorting error reduction throughadvanced automation solutions implementation• Jet and truck fuel reduction by maximization of the sortingintelligence of material handling solutions• Increased visibility and regulation of power consumptionthrough Power and Automation collaboration
  59. 59. 59© ARC Advisory GroupSummary and Recommendations Manufacturing and Processing Companies face significantchallenges not only from a flat world, but also fromSustainability requirements Sustainability demands collaboration across organizationalsilos (e.g. infrastructure vs. manufacturing) C-PACS creates opportunities for Manufacturing andProcessing Companies to optimize across the entireenterprise: Energy consumption for infrastructure and process Coordination between consumption and cogeneration C-PACS is a key component of CPS, and it empowersknowledge workers through actionable information Common actionable context and KPIs that linkmanufacturing performance to business andsustainability goalsAutomation Suppliers help meet these challenges withCollaborative Power and Control Solutions
  60. 60. 60© ARC Advisory GroupWhat Can We Collectively Do To NavigateThrough The Economic Turbulence ?What Can We Collectively Do To NavigateThrough The Economic Turbulence ?√ Recession is global√ Recent economic news is pretty much all bad√ Manufacturing is being hit hardBut:√ Investments still need to be made!√ Curbing investment in certain sectors now couldhave negative consequences down the line√ Companies cannot cut their way to growth andprosperityIndustry LeadersNeed to Plan Now forthe World Beyond theCurrent “Gloom andDoom”
  61. 61. 61© ARC Advisory GroupAgendaAgendaConsider ARC Your Partner InNavigating Through ThisDifficult Period!
  62. 62. 62© ARC Advisory GroupThank YouThank YouFor more information, contact the author atcresnick@arcweb.comor visit our web pages at www.arcweb.com

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