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
Eye of the Storm: The Environment
for Manufacturing and Automation
in 2009 and Beyond
Craig Resnick
Research Director
ARC Advisory Group
cresnick@ARCweb.com
Larry O’Brien
Research Director
ARC Advisory Group
lobrien@ARCweb.com

2
© ARC Advisory Group
OutlineOutline
 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
Where 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 could
have negative consequences down the line

4
The Global RecessionThe Global Recession
 US has been in recession since December 2007
 Europe officially fell into recession in November
2008
 China economic growth dips below 10 percent for
first time in three years
 “After years of boom, China's GDP growth has now
slowed for the last five consecutive quarters.” –
October 2008 Report
 “Brazil’s economy may grow as little as 1.5
percent this year as the global recession reduces
demand for commodities and curbs consumer
spending, said Itau Corretora de Valores SA, the
brokerage unit of the nation’s biggest bank.” --
Bloomberg

5
Impact on Manufacturing: A look at Recent
PMIs from Around the World
Impact on Manufacturing: A look at Recent
PMIs from Around the World
 PMIs, or Purchasing Managers Indices are a good
indicator of overall health of manufacturing.
 Shows purchasing manager trends in orders for
materials.
 Number of Below 50 indicates a general
contraction in manufacturing.
 “At 33.2 in December, the JPMorgan Global
Manufacturing PMI posted its weakest ever
reading and has sunk to new lows in each month
of Q4 2008. Based on the average reading for the
headline PMI, the performance of the worldwide
manufacturing sector through 2008 is the worst
for a calendar year since 2001.”

6
December 2008 Manufacturing ISM Report On
Business
December 2008 Manufacturing ISM Report On
Business
Month PMI Month PMI
Dec 2008 32.4 Jun 2008 50.2
Nov 2008 36.2 May
2008
49.6
Oct 2008 38.9 Apr 2008 48.6
Sep 2008 43.5 Mar 2008 48.6
Aug 2008 49.9 Feb 2008 48.3
Jul 2008 50.0 Jan 2008 50.7
Average for 12 months — 45.6
High — 50.7
Low — 32.4
“Manufacturing contracted in December as the PMI registered
32.4 percent, 3.8 percentage points lower than the 36.2
percent reported in November. This is the lowest reading
since June 1980 when the PMI registered 30.3 percent.”

7
China Manufacturing PMIChina Manufacturing PMI
(Jan1, 2009, CEP News) - CLSA's Chinese performance of manufacturing index
grew 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 contracted
at 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-back
PMIs signalling contraction, the manufacturing sector, which accounts for 43% of
the Chinese economy, is close to technical recession," he said.

8
European Manufacturing PMIsEuropean Manufacturing PMIs
BERLIN, Jan 2 (Reuters) - Collapsing orders sent Germany's manufacturing sector into
its biggest contraction in more than 12 years in December 2008, even though a slump in
input costs allowed producers to cut their prices, a survey showed on Friday.
The headline index in the Markit Purchasing Managers' Index (PMI) for Europe's biggest
economy fell to 32.7 in December from 35.7 in November. The fall took the index deeper
below the 50 threshold separating contraction from expansion.

9
Industrial Production and Manufacturing
Capacity Utilization in the US
Capacity Utilization in the US
“Industrial production decreased 0.6 percent in November with declines widespread
across industries. The drop in output in September was revised down, and the
rebound in October was revised up, in large part because both the decrease due to
the September hurricanes and the subsequent partial recovery in October were
larger than previously reported. “ – US Fed

10
Capacity Utilization in Europe
Capacity Utilization in Europe
Source: Eurostat

11
Another Key Indicator: the Price of OilAnother Key Indicator: the Price of Oil
 Lower prices have
stalled capital
investment and
caused project delays
 Long-term demand is
still increasing
 Lack of capital
investment will cause
slingshot effect as
prices begin to
increase again
Pending Legislation in U.S. to Better Control
Oil Futures Speculation.

12
Industry Trends: Oil & GasIndustry Trends: Oil & Gas
 Oil & Gas Projects
Delayed
 Increased volatility and
risk
 Low price of oil deters
investment in alternative
fuels, oil sands, etc.
 BUT…..
 There are still many
projects going on –
Refiners are making
money now!
 Upstream oil and gas is
still growing significantly
Source: Hydrocarbon Processing
Process plant industry bookings for contractors;
manpower requirements grew by over 90% between
the start of 2004 and the end of 2007.

13
IEA report Shows Long-term Shortage and
Supply Concerns
IEA report Shows Long-term Shortage and
Supply Concerns
 “For the next couple of years, the oil pipeline is
well supplied. But that trails off after 2010. By
2015, the world needs to find an additional 7
million barrels per day of oil above and beyond all
the exploration projects currently in the pipeline.
And to get that oil to market by the middle of the
decade, those exploration projects need to get
started now. “
 According to IEA, massive investments are needed
in the global oil infrastructure ($26 trillion).

14
2009: A Rough Year Ahead for Pharma and
Biopharma
2009: A Rough Year Ahead for Pharma and
Biopharma
 To meet the challenges in
2009, the industry needs to
improve innovation,
introduce new
technologies, and
ultimately improve
efficiencies. Even though
2009 will not be as
lucrative as previous years,
the industry will continue
to be profitable.
 Regulation, congressional
activities, and innovation
will continue to play an
important role in the
industry for 2009.

15
Global Recession Curbs Demand for SteelGlobal Recession Curbs Demand for Steel
 The global recession has
curbed demand for steel,
prompting mills in Asia,
Europe and North America
to reduce purchases of raw
materials, including iron
ore. Rio has postponed a
$2.15 billion expansion of
the Corumba iron ore mine
in Brazil as part of its plan
to cut spending globally by
$5 billion.
Source: Bloomberg, IISI, China Metallurgical

16
Global Automotive Industry on the SkidsGlobal Automotive Industry on the Skids
 Japan auto sales seen at
31-year low in 2009
 Toyota suspends domestic
production
 2009 U.S. sales seen at
12.5 million, lowest in 18
yrs
 Big three bankruptcy?
 Goldman Sachs cuts global
auto production, sales
forecasts
Domestic and National Auto Production 2007-08
Source: Automotive News

17
How has ARC Revised its Growth Forecasts?How has ARC Revised its Growth Forecasts?
 We have cut our growth
estimates significantly for
2009
 North America, Japan,
Western Europe will
Contract for 2009-2010
 BUT we still expect the
global market to grow
 Recovery will take place
after 2010 Revised DCS Market CAGRs

ConsolidationConsolidation
Suppliers and Users of Automation
Have been Consolidating.

19
End User Industry Examples of
Consolidation
End User Industry Examples of
Consolidation
 Exxon and Mobil; Chevron, Texaco, Unocal and Phillips; BP and
Amoco, Total acquires 50% of AMSO, ...
 Dow Chemical, Union Carbide, Rohm&Haas; SABIC acquires GE
Plastics; …
 Pfizer acquired Warner-Lambert & Pharmacia; Glaxo Wellcome
and SmithKline Beecham merger; Bristol-Myers bought drug
unit of DuPont Chemicals; …
 InBev acquires Anheuser-Busch; Heineken acquire Drinks
Union (Czech Rep); too many to list,…
 International Paper Acquires Argentina's Bolsaflex, Stora Enso
finalises acquisition of Vinson [Brazil],…
 Tangshan Iron & Steel Co., Handan Iron and Steel Group Co.
and Chengde Xinxin Vanadium and Titanium Co. will become
the Hebei Iron and Steel Group once the merger is complete
 Tata Motors acquires Jaguar-Land Rover, Daimler divests
Chrysler
… Near misses and speculation
 BHP Billiton bids for Rio Tinto Canceled
 General Motors and Chrysler?
Bottom line: Newly created enterprises need help to
develop strategic plan!

20
SiemensInvensys
Marcam
Eurotherm
Wonderware
SimSci
APV
Triconex
L&N
SCADA
N-Pignone
SCADA
PacSim
ABB
Cellier
Engineering
Elsag Bailey
(H&B, F&P)
August
Systems
Combustion
Engineering
Alfa Laval
Automation
Honeywell
POMS
Measurex
Allied
Signal
Profimatics
InterPlant
Consulting
P&F Safety
Systems
SACDA
L&N
Walsh
Automation
= Most
Recent
Systems Mod.
Dynapro
ETG
Entek IRD
Sequencia
Anorad
EJA
Rockwell
ICS Triplex
Pavillion
Tesch
DataSweep
Eutech
Entrelec
APV (Divest) UGS
CEDES
HSB
CMS
Tecnologia Incuity Soft.
DLI Eng.
ORSI
Milltronics
Turbo-Werk
Moore
Compex
Vickers
Danfoss Flow
US FilterTata Hon
Goldstar Hon
Emerson
DMI
Bristol Bab.
Westinghouse
Intellution
(Divested)
Fisher
Kenonics
CSI
HD Baumann
PC&E
Daniel
Saab Marine
Electronics
Orion CEM
Solartron Mob.
Damcos IndXInterCorr
Enraf
PAS APC
MDC
Autom. Grp.
Gepa
Applied Aut.
Robicon
Propack
Samsung
SAT
Quantum
Engineering
Xian Hensheng
Ber-Mac
Kuhlman Elect
Vectek
Electronics
Morgan
Shinwha
BJC
Innotec

21
The People Challenge: Aging WorkforceThe People Challenge: Aging Workforce
Exodus of Workers is Reducing Companies’ Ability to Sustain Operational Excellence
0
10
20
30
40
50
60
70
80
1900 1920 1940 1960 1980 1990 2000 2010 2020 2030
MillionsofPeople
Year
People Over Age 65
Source: 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 54
Number of People 55 to 64
Changing Workforce Demographics from 2000 to 2010
Source: US Bureau
of Labor Statistics
 US Bureau of Labor Statistics
• By 2010 more than 25% of working
population will reach retirement age
• Trend will continue into foreseeable
future
 Globally – Workers are Getting Older
• Largest Group of Workers – over age
45 and will double in next ten years
• Fastest Shrinking Age Group of
Workers between 35 and 44 –
arguably the most productive
 Europe is expected to lose 1 million
jobs annually for the next 25 to 30
years
• Severe shortage of skilled workers
and engineers!
 Oil & Gas Industry
• 50% of its production engineers will
reach retirement age by 2010

22
Investments Must Continue to be Made in Key
Industry Segments, In Spite of Economy!
Investments Must Continue to be Made in Key
Industry Segments, In Spite of Economy!
 America’s Crumbling
Infrastructure
 Roads & Bridges
 Water & Wastewater
 Power industry
 Aging control systems
 Nanotechnology
Sustainability is the Issue!
Sustainability of Your Business!
 Innovation Instrumental in
Driving Economic Growth
 Users and Suppliers Must
Continue to Invest in R&D

23
Infrastructure Needs ModernizationInfrastructure Needs Modernization
 ARC Estimates Total of $65 Billion in Installed
Process Automation Systems are Reaching the
end of their Useful Life
 The Majority of this is in the Hydrocarbons
Sector in North America, Europe, and Middle
East
33.7%
16.1%
50.2%
New Plant
Expansion
Modernization

24
Obama’s Infrastructure Plant and What it
Means to the Automation Business
Obama’s Infrastructure Plant and What it
Means 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 public
buildings for long-term energy savings
 $19 billion: Water projects
Obama Mentioned
Science in His Inaugural
Address

25
Obama Stimulus Plan Targets EnergyObama Stimulus Plan Targets Energy
 Energy: $58 billion
 Where does the money go?
 $32 billion: Fund a smart
electricity grid
 $20 billion-plus: Renewable
energy tax cuts and a tax
credit for research on energy
efficiency and clean energy,
plus a multiyear extension of
the green energy production
tax credit
 $6 billion: Weatherize
modest-income homes

26
What the Plan Means for AutomationWhat the Plan Means for Automation
 Power and Water will see
Huge Investments
 Increased Investment in
Intelligent Building
Automation Systems
 Increased Emphasis on Boiler
Efficiency
 Sophisticated Approaches to
Energy Management
 Hundreds of Millions of
Dollars Worth of New
Systems and Instrumentation
Will be Required
 Money won’t enter the
system until 2010-2011

27
The Sustainability ChallengeThe Sustainability Challenge
 In addition to having to deliver to a highly
competitive, flat world economy, manufacturers have
to meet the new SUSTAINABILITY challenge
 Sustainability is the response to the increased
pressure on the environment, the rising demand for
natural resources, energy, and the need for a socially
responsible approach to business
 Sustainability will drive towards a higher level of
COLLABORATION between organizations and systems
and most likely a complete rethinking of traditional
organizational structures
 Automation Suppliers are uniquely positioned to help
manufacturers meet the SUSTAINABILITY challenge
with Collaborative Power and Control Solutions

28
 Information and Communication Advances Have Made the World
More “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 launch
Business Drivers
Dynamic Customer Requirements
Shrinking Product Lifespan
More Demanding Customers
Fierce Global Competition
Global Markets, Supply Chains
Greater Product Variety
Compliance and Tracking
Many Others
Manufacturing Today: Flat World has Raised
the Bar for Manufacturers and Processors
Manufacturing Today: Flat World has Raised
the Bar for Manufacturers and Processors

29
Sustainability Will Raise the Bar Even HigherSustainability Will Raise the Bar Even Higher
To create zero
waste
25% reduction in
solid waste in 3
years
To be supplied
100% by
renewable energy
Stores 25% more
efficient in 7 years
 Fleet 25% more
efficient in 3 years
To sell products that
sustain resources &
the environment
20% supply base
aligned in 3 years
Wal-Mart Corporate Environmental Sustainability Goals

30
“Green” BuildingsEnergy Recovery Package Innovation
Ft. Pierce FloridaFt. Pierce Florida
PepsiCo’s responsibility is to continually improve all aspects
of the world in which we operate – environment, social,
economic – creating a better tomorrow than today.
Respect and
Fairly Treat our
PEOPLE
Provide
Trustworthy
PRODUCTS
Conserve and
Respect our
ENVIRONMENT
Sustainability Will Raise the Bar Even Higher
PepsiCo
Sustainability Will Raise the Bar Even Higher
PepsiCo

31
Economic Stimulus: Clean Energy
 Stimulus Push Gets Greener Tint - “President-elect Barack Obama and
congressional Democrats are intensifying work on a stimulus plan that
would dole out roughly a half-trillion dollars on an array of "green“
projects and infrastructure initiatives such as building renewable
energy plants, improving the electrical grid & installing "smart"
meters” Wall Street Journal, Dec 6, 08
 Jobs, Clean Energy are Key to Obama Stimulus Plan - “Obama aide
states: "Given the magnitude of the problems, you're going to need a
large plan. Much of what we would do is double duty, with the effect
of helping aggregate demand today but also enhancing the
productivity of the economy for years and decades to come”. "Green
jobs, healthcare technology and infrastructure fit that.“ Los Angeles
Times, Dec 6, 08
 China's $586 billion stimulus package is its - "biggest contribution to
the world," Premier Wen Jiabao said Monday, as hopes rose that
heavy spending on construction and other projects would help support
global growth by fueling demand for imported machinery and raw
materials. AP, Nov 10, 08
 European Economic Recovery Plan ”… immediate budgetary impulse
amounting to 200B Euro and kick-start investment to modernize
infrastructure. It will drive a competitive Europe ready for the low-
carbon future.” Jose Manuel Durao Barroso, Pres., European
Commission Nov 26, 08

32
AgendaAgenda
Setting the Stage for
Sustainability

33
Climate Change Creating HavocClimate Change Creating Havoc
Mean Temperature Change
World CO2 Emissions
CO2 Concentration
Scientists project a 3º to 7º F
rise in global temperatures by
2100 – Consequences could
be dramatic
• 3.7º F = Arctic ice disappears
• 5.4º F = Amazon disappears
• 7.2º F = Agriculture declines

34
The Addition of Power Generation Capacity is Getting
Harder Energy Conservation and Management a Must
The Addition of Power Generation Capacity is Getting
Harder Energy Conservation and Management a Must
 Asian demand for equipment and
services drives up Capital Goods
Prices globally
 The cost of new plants is rising
very rapidly
 Example: US estimated costs
for new PowerGen capacity
• Up 19% in the last year
• Up 69% since 2005
• Up for all types of plants
• Steam
• Combined cycle
• Wind
• Nuclear
• Hydro
IndexValue
(These measures includes design, equipment, and construction; exclude fuel costs)

35
Manufacturers and Processors Have The
Most To Gain By Saving Energy
• Uses more energy than any other
single sector; >1/3 of U.S. energy
consumption
• Produces approximately 30% of U.S
greenhouse gas emissions
• Accounts for more than 35% of U.S.
natural gas demand
• Accounts for 28% of U.S. electricity
demand
• Energy is key to economic growth in
domestic manufacturing
• Many companies have been unable to
pass higher energy costs on to their
customers, which has impacted their
profit margins negatively
Industry
33.4%
Transportation
27.2%
Commercial
17.9%Residential
21.5%
Energy Use
Source: US Department of Energy

36
Major Energy-Intensive Industries
Sustainability impacts ALL!
Major Energy-Intensive Industries
Sustainability impacts ALL!
Energy Consumption (Trillion Btu)
Petroleum
Chemicals
PaperPrimary
Metals
Food Processing
Nonmetallic
Minerals
Tobacco/Beverages
Furniture
Leather Machinery and Computers
Wood
Transportation
Fabricated Metals
Textiles/Apparel
Plastics/
Rubber
Electrical
Printing
Miscellaneous
1
10
100
1000
10 100 1000 10000
EnergyIntensity
(ThousandBtu/$GDP)
Energy-Intensive
Industries
Industrial Energy Intensity vs. Energy Consumption
Mining
Source: US Department of Energy

37
Energy Challenges Create Drivers
For Sustainability
Energy Challenges Create Drivers
For Sustainability
 The World Commission on Environmental and
Development defined Sustainability as the development
that meets the needs of the present without
compromising the needs of future generations
 The Core Principle is care and respect for the environment
and the society we live in
 By applying this approach manufacturers judge the
success of product designs not only by the financial but
also by the contribution to society and the ecosystem
 The concept of sustainability reaches beyond
environmental stewardship
 Sustainability is a positive business approach that has as
much to do with delivering economic benefits, and being a
responsible member of the community, as it has to do
with reducing the environmental impact

38
AgendaAgenda
What does Sustainability mean
for Manufacturers?

39
Infrastructure
•Real-time Plant Support
•Technology Platform
•Applications Platform
•Business Processes
•Security
•Role-based Portals
•Unified view
Integration
•Enterprise
•Design & Engineering
•Operations, Controls, &
Equipment
•Supply Chain & External
Operations
•Product Support Ops
Functionality
•Production Planning
•Production Execution
•Product Data Tracking
•Visibility & Analytics
•Quality Enforcement
•Inventory Logistics
•Asset Mgmt
•Product Support
Operations Management
To the Pillars of Operations Management…

40
ECONOMIC
•Customers
•Employees
•Suppliers
•Government
•Community
ENVIRONMENT
•Climate
•Energy
•Water
•Emissions
•Waste
SOCIAL
•Wellness
•Diversity
•Products
•Safety
•Community
The Triple Bottom Line
… add three more for Sustainability

41
ARC’s CMM provides a Model to help
achieve Sustainability
ARC’s CMM provides a Model to help
achieve Sustainability
 Manufacturers must deploy Collaborative
Manufacturing Management (CMM) tools to
effectively connect to their customers and
suppliers, as well as to connect within their own
enterprises
 CMM is the management practice that controls the
key business and manufacturing processes of a
manufacturing enterprise
 CMM builds upon a collaborative infrastructure,
business process management services, and real-
time strategic business management tools
 CMM leverages critical applications, production
systems, and enterprise information, to maximize
the responsiveness, flexibility, and profitability of
the manufacturing enterprise

42
ARC’s CMM Model Stresses Collaboration Via A
Three Domain Service Based Infrastructure
ARC’s CMM Model Stresses Collaboration Via A
Three Domain Service Based Infrastructure
Lifecycle Domain
Lifecycle Domain
Value Chain Domain
Enterprise Domain
Lifecycle Domain
Value Chain Domain
Enterprise Domain
Value Chain
Domain
Enterprise Domain
Service Based
Infrastructure
Business
Operations
Systems
Plant/Factory
Operations
Systems
Supply-Side
Materials
Management
Systems
Customer &
Order
Fulfillment
Systems
ARC’s Three Domain CMM Model
External
Internal
Excellence Throughout Operations
is Essential to Value Chain &
Enterprise Performance
External

43
Business
Production
Suppliers Customers
ARC’s CMM Model Requires Processes To Be
Synchronized And Integrated In Real-Time

44
Questions Manufacturers Must Address To Be
Synchronized And Integrated In Real-Time
 Hardware – Do manufacturers have the hardware
platforms at the plant floor and at IT level, that
enable collaboration between power, automation,
and the enterprise?
 Software – Are manufacturers deploying software
platforms at the plant floor and at IT levels that
enables collaboration between power, automation,
and the enterprise?
 Services – Do manufacturers have access to the
services required to install, deploy, and maintain the
necessary platform infrastructure?
 Human Capital – Is the entire organization, from CEO
on down, committed to eliminating all silos and
deploying the collaboration necessary to achieve
sustainability?

45
Multi-domain functionality on a single platform:
power, logic, motion, HMI, and process control
Capability to deploy multiple control applications on
a single platform for End Users and OEMs
Common engineering development platform for the
design and integration of multi-domain power and
automation systems
Open, modular, and scalable control architectures
that enable highly distributed automated
manufacturing environments
Use of de-facto standards for network interfaces,
languages, etc., allowing data exchange as part of
networked multi-vendor systems
What Characteristics Are Required To Be
Synchronized And Integrated In Real-Time?

46
AgendaAgenda
Driving towards a Solution

47
Motion
Networks
Domain Specific Solutions Are Converging
to Improve Performance
Device
Network
Control
Network
Common Tagging &
Single Database
Common Development
Platform & Configuration
Tools
Logic HMI
Process
Control
Power
Logic HMI
Motion
Process
Control
Power
Motion
C-PACS Model

48
Collaborative Power And Control SolutionsCollaborative Power And Control Solutions
C-PACS articulate the convergence of multiple
disciplines on a common platform
C-PACS specify functions under a single
environment
C-PACS promote the value of the common
communications infrastructure
C-PACS recognize the value of standards in
automation
C-PACS demonstrate the importance of a single
power, and control platform

49
Enterprise
Systems
Business
Processes
Operations ManagementOperations Management
Service-Based
Architecture Service-Based Infrastructure
Production
Processes
Factory
Operations
Systems &
Services
POWER: Power Meters, Circuit Breakers, Transfer
Switches, Intelligent Motor Control Centers,…
Automation: Motor Drives, Logic, Motion, HMI,
Sensors, Actuators,…
C-PACS – The Foundation for CMM
Mfg Ops &Mfg Ops &
ProductionProduction
ProcessesProcesses
ProductProduct
DefinitionDefinition
ProductionProduction
ManagementManagement
FactoryFactory
AutomationAutomation
ISA 95
Models
Business Process Components
Supply Chain Management
Product Lifecycle Management
Business Process Components
Supply Chain Management
Product Lifecycle Management
Work Flow
OPC-UA
C-PACS
Control & Device
Networks: Real-Time

50
C-PACS and Operations Management Enables
Collaborative Production Systems CPS
C-PACS and Operations Management Enables
Collaborative Production Systems CPS
Enterprise/Business
Operations
Outbound
Supply Chain
& Logistics
Inbound
Supply Chain
& Logistics
Product/Plant
Design and
Engineering
CRM
Collaborative
Production
Environment
Operations
Management
Production
Resources

51
Business Planning & Supply
Chain Management
Operations Management
Manufacturing Operations
Management
BatchContinuous Discrete
C-PACS - Power Management,
Controllers, Devices, Machines,
Networks
Production
Definition
Production
Capability
Production
Plan
Production
Information
Common Information Infrastructure
CPS Incorporates The Plant Floor, Power,
and Operations Management
C-PACS
CPS
CMM

52
 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 analysis
in real-time
• Operational Perspective/Financial Impact
 Common View
• Plant and Corporate ―single version
of the truth‖
• Aggregation of Operations Intelligence
and Business Intelligence
Context
Data Quality MgmtCommon Time
Dynamic Plant
Reference Model
Application Portfolio
Data Model
Work Processes
& State
Context
Data Quality MgmtData Quality MgmtCommon TimeCommon Time
Dynamic Plant
Reference Model
Dynamic Plant
Reference Model
Application PortfolioApplication Portfolio
Data ModelData Model
Work Processes
& State
Work Processes
& State
Maintenance
RPM
Dashboards
Real-time
Accounting
System
Real-time
Accounting
System
Real-time
Operations
Data
Real-time
Operations
Data
Key
Performance
Measures
Key
Performance
Measures
CEO
CFO
Engineer Worker
Plant
Manager
CPS Turns Data into Actionable Information
The Knowledge Workplace
Requires added Dimensions of
Context

53
Application Example*
UPS Worldport - Louisville, KY
The world’s largest fully automated package sorting facility
Sort Capacity Per Hour: 421,000 packages
Number of Conveyor Drives: 25,314
Miles of Transport Conveyors: 128 miles
Power consumption: 72 MVA
(City of Louisville: 114MVA)
Facility Size: 5.6 million square feet
YTD Overall Investment > $2 billion
IT Equipment 4,500 Scanners
6,000 PCs
1,500 Printers
>500 Data Comm Devices
380 Servers
*Source: Presentation by ARC at
Schneider Electric Initi@tive 2008

54
UPS Worldport - Scope of Supply by C-PACS
Solution
UPS Worldport - Scope of Supply by C-PACS
Solution
Redundant 13.8 KV Feeders
– 1220 Amp Main
Switchgear
– Mimic Panel
44 4000 Amp Substations
10 High Voltage Lineup’s
> 100 Power Logic Panels
(energy metering)
790 Motor Control Panels
(MCP’s)
3,750 Remote Control Panels
(RCP’s)
POWER AUTOMATION
23,700 Variable
Frequency Drives
3,100 PAC’s & PLC’s

55
UPS Worldport - Louisville, KY
System Schematic for C-PACS Solution
Sorting
System No.1
Vendor A
Sorting
System No.3
Vendor C
Sorting
System No.2
Vendor B
Content:
• PACs & PLCs
• Motor Drives
• Power Logic Energy
Metering
High Level
Control
(CPS)
These
separate
sorting
systems
are fully
integrated
at the data
(C-PACs)
level
Global
Message
Hub
20 Enterprise Applications (aprox.)
Data Collector Data Collector Data Collector
Content:
• PACs & PLCs
• Motor Drives
Metering
Content:
• PACs & PLCs
• Motor Drives
Metering
Database Application

56
KPI Efficiency Goals Accomplished through
Advanced Automation Solutions !
1999
Grade Lane
(manual)
2007
Worldport
(automated)
%
Volume 495,000 pps 812,000 pps 64
Design Capacity 215,000 pph 304,000 pph 41
Staffing (Sorting) 1984 2362 19
Productivity (per
person)
48 pph 93 pph 94
Injuries (LTI) 10.9/yr 2.0/yr -82
Missorts 1/2226 1/4554 -51
pps: packages per sort (1 sort: aprox. 2.4hrs) pph: packages per hour

57
ECONOMIC
•Customers
•Employees
•Suppliers
•Government
•Community
ENVIRONMENT
•Climate
•Energy
•Water
•Emissions
•Waste
SOCIAL
•Wellness
•Diversity
•Products
•Safety
•Community
The Triple Bottom Line
Impact on Sustainability ?

58
• 82% Reduction in Injuries (LTI)
Increased Efficiency Impacts
Sustainability Positively
Increased Efficiency Impacts
Sustainability Positively
ECONOMIC
ENVIRONMENT
SOCIAL
• Information leverage and system flexibility enhancement
through enterprise collaboration
• Energy efficiency maximization through use of variable
speed drives for motors wherever possible
•Throughput increase and sorting error reduction through
advanced automation solutions implementation
• Jet and truck fuel reduction by maximization of the sorting
intelligence of material handling solutions
• Increased visibility and regulation of power consumption
through Power and Automation collaboration

59
Summary and Recommendations
 Manufacturing and Processing Companies face significant
challenges not only from a flat world, but also from
Sustainability requirements
 Sustainability demands collaboration across organizational
silos (e.g. infrastructure vs. manufacturing)
 C-PACS creates opportunities for Manufacturing and
Processing Companies to optimize across the entire
enterprise:
 Energy consumption for infrastructure and process
 Coordination between consumption and cogeneration
 C-PACS is a key component of CPS, and it empowers
knowledge workers through actionable information
 Common actionable context and KPIs that link
manufacturing performance to business and
sustainability goals
Automation Suppliers help meet these challenges with
Collaborative Power and Control Solutions

60
What Can We Collectively Do To Navigate
Through The Economic Turbulence ?
What Can We Collectively Do To Navigate
Through The Economic Turbulence ?
√ Recession is global
√ Recent economic news is pretty much all bad
√ Manufacturing is being hit hard
But:
√ Investments still need to be made!
√ Curbing investment in certain sectors now could
have negative consequences down the line
√ Companies cannot cut their way to growth and
prosperity
Industry Leaders
Need to Plan Now for
the World Beyond the
Current “Gloom and
Doom”

61
AgendaAgenda
Consider ARC Your Partner In
Navigating Through This
Difficult Period!

62
Thank YouThank You
For more information, contact the author at
cresnick@arcweb.com
or visit our web pages at www.arcweb.com

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

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