April 24 marked the completion of the world's largest automation trade fair, Hannover Messe 2009. Despite mild undertones of the gloom surrounding the global economic recession and low confidence levels among the industrial community, the trade show boasted of a high turnout in terms of exhibitors and visitors. The trade fair showcased cutting edge technology, new product launches and a wide array of industrial solutions from some of the biggest names in the industry such as Siemens, ABB, Yokogawa, Emerson and Honeywell, though there were a few notable exceptions. True to its fame of dealing with broader and high impact themes related to industrial automation, the trade fair, this year, placed great emphasis on the current hot topics of energy efficiency, productivity and sustainability.

With customers facing shrinking capex and decreased profit margins, the timing cannot be better for the industrial community to focus and emphasize on energy efficiency. Mr. Thorsten Herdan, Managing Director of the VDMA energy forum, observed that "for some time now, developments in ­mechanical and plant engineering have been largely governed by efficiency-related considerations. In today's mechanical and plant engineering sector, we are already seeing about €80 billion of the overall sales of €160 billion being allocated to measures for increasing efficiency." End users are looking for efficient means of production at lower costs and effectively utilizing existing assets. The demand is clearly for reliable solutions that can ­improve productivity while offering maximum possible energy efficiency.

How Can it be Achieved?

At the individual components level - motors, drives, pumps etc. - there exists the potential to not only save energy, but also limit carbon dioxide emission. For instance, motor driven ­applications in Europe consume 65 - 70 % of total ­industrial ­energy usage. Energy efficiency, in these applications, could be improved by using high efficiency motors, variable speed drives, soft starters and regenerative components. An ideal situation would be to have them all integrated and thus enable greater energy saving potential. According to Mr. Jens Michael Wegmann, CEO of Siemens Industry, Industry Solutions, an integrated ­approach to this challenge would enable even greater sustained success for customers. Mr. Wegmann notes that "consideration of all forms of energy and energy-related processes: heat, compressed air, steam, maintenance, production, greenhouse gas emissions, management awareness, subsidies etc. would result in a sustainable reduction of energy costs". There is evidence of success where Siemens Industry ­Solutions achieved energy savings for customers across different industries such as Waste­water Treatment and Pulp & Paper in the range of 70 - 78 %. Furthermore, a strong industry expertise and vast presence across end user verticals have enabled the automation giants to synergize innovation with ­experience and offer sector specific energy efficient solutions.

Mr. Klaus Helmrich, CEO of Siemens Industry, Drives Technologies notes: "The company's philosophy of Totally Integrated Automation, which is driven jointly by the Industrial Automation and Drives Technology port­folio enables us to have a successful structured approach in ­offering customers productivity increasing and energy efficient solutions." With Energy efficient products/systems, ­Energy Monitoring Systems and Energy Management Systems (ex: MES Solutions), Siemens offers complete end to end energy efficient solutions to its customers, examples of which were displayed at the Hannover fair.

Growth Prospects in Tough Times

Along with energy efficiency, the other important trends which are currently and in the future likely to increase in significance include productivity, sustainability, growth prospects from specific vertical markets and wireless automation. As an ­aftermath of recession, end ­users have placed greater importance to productivity and sustainability. The developments in wireless automation which promises to offer cost effective way of improving overall plant efficiency and the greater focus on automation services are likely to address these ­issues. With shrinking capital expenditure, end users are likely to increase the operational expenditure vis-à-vis investments in maintenance services, in order to sustain or improve plant productivity levels.

Also, driving the automation market will be the rising demand from renewable energy as well as water and waste­water markets. Wind power as well as solar power markets are increasing investments into automation and it would be ­interesting to see how soon automation penetration level will increase in these markets. The water market too offers a steady demand due to infrastructure activities across Europe, especially in Eastern Europe. The rapid developments in electric vehicles space is also expected to offer a broader scope for industrial automation vendors due to a possible increase in demand for electric motors and drives and other automation equipments.

Conclusion

Overall, services are expected to offer high growth prospects with end users trying to achieve maximum asset utilization. Apart from maintenance services, consulting services are also likely to gain prominence due to energy efficiency and productivity measures from end ­users. Many automation vendors have adopted the main automation contractor (MAC) approach in order to demonstrate their service capability and maximize business prospects. With delay in project commencements and diminishing hardware revenues, the automation vendors may well have to re-align their business structure in order to capitalize on the available ­opportunities offered by the services segment.