Can a company known as the leading automation supplier to discrete manufacturers in the U.S. make a serious run into the process industry?
Rockwell Automation, which for a number of years has said its Logix control architecture is a good fit for such market segments as hybrid/batch processing, recently upped its own ante in the process market at its annual Automation Fair, held in November in St. Louis.
There, Rockwell chairman and chief executive Keith Nosbusch raised eyebrows by putting unprecedented emphasis on the company's process market efforts in 2005 and its future plans.
"The batch/hybrid market is the largest market extension for Logix and the single largest opportunity for Rockwell Automation," he told financial analysts in St. Louis. "We have displaced and converted a number of DCS installations. We are a DCS player."
Rockwell's heightened interest in the DCS market is no doubt influenced by trends in its traditional programmable logic controller (PLC) business. In 2005, the company's PLC business declined 10%. Rockwell's Logix-based business has now surpassed the PLC business in size and in future importance, it was suggested.
The goal in the process market is to tap into what Rockwell sees as a growing opportunity to replace aging DCS products in selected vertical markets such as water/wastewater, gas transportation, boiler management, blending, pulp, and paper, and specialty chemicals. The conversions mentioned by Nosbusch but not identified by name amounted to about $100 million in revenue in 2005, he said. But 2006 holds far greater promise. This year, Nosbusch says, the opportunity could be as much as $300 million.
In comparative terms, that's a small business for $5 billion Rockwell, but the growth rate is attractive. Combined with other initiatives such as safety products and intelligent motor control in vertical markets and in what the company calls plant-wide information systems -- an emerging layer of technology between ERP systems and plant floor systems -- Rockwell's efforts in the process market are angled to enable the automation supplier to reach a 7% to 9% revenue growth rate for this year.
With respect to the process market in general, "There's been a lot of skepticism about our ability to compete in this area," Nosbusch said in an interview with Managing Automation. "But last year was great for us, giving us the ability to validate the strategy. It's too premature to say we've won, but now we have proof points."
Logix is a control architecture that combines discrete and process control systems. Last year, Rockwell says, the value of the installed Logix base was about $1.2 billion, generating about $400 million in revenue, a 25% year over year increase. Nosbusch estimates that the value of the installed base will increase to $3 billion by 2008, and will represent $1 billion in revenues in 2009. Rockwell expects this growth to be influenced by what it sees as a huge opportunity in the oil and gas market.
Countries such as China and India are building out processing plants. In addition, there are increased investments in oil exploration in Asia, Eastern Europe, and Latin America. Moreover, much of the North American oil, gas, and refining infrastructure must be rebuilt in the wake of the hurricane season. As a result, the worldwide DCS market, which was just over $10 billion in 2004, is projected to grow to over $14 billion by 2009, according to an ARC Advisory Group report.
Rockwell hopes to participate in that growth by capitalizing on at least a slice of the market. Nosbusch says he is well aware that Rockwell can only compete in the batch-hybrid space. "A refinery is a good application for a DCS ... it is running the whole plant with one process, and we won't do that," he said. "But we can do the pipelines. Not making it but moving it."
This article originally appeared in the January 2006 issue of Managing Automation magazine.