ARC: Latin American DCS Market to Grow 10% through 2012
January 28, 2009 // Published as a news service by IHS
The distributed control systems (DCS) market in Latin America is expected to grow at an average annual rate of about 10% through 2012 and will reach a total size close to $1.5 billion, according to ARC Advisory Group.
ARC attributed most of this growth to infrastructural industries, such as power generation and traditional heavy process industries, like oil and gas, refining and petrochemical. The mining industry is also a contributor.
Automation suppliers with the largest direct presence in Latin America are the most successful, ARC said. This means having local people who can fill critical roles, not only in sales and project support, but also in ongoing maintenance and operational services.
However, the company said it can be a challenge for suppliers to build their own local presence in Latin America because local talent can be hard to find. For this reason, suppliers have begun acquiring companies, including rep firms, in Latin America to boost their presence there.
Some suppliers also have developed large training centers, so aspiring engineers and technicians will have access to knowledge of their systems and tools. In order for one automation supplier to get a contract with a mining company in a remote location, for example, it had to help build a local training and education center.
Both end-users and engineering and procurement firms (EPCs) are looking to automation suppliers to provide them with automation project execution capabilities, and Latin America is no exception.
Many factors are contributing to growth in project and engineering services for automation suppliers, ARC said. As a result, suppliers are beginning to fill the role of a main automation contractor (MAC), overseeing all aspects of automation projects and providing a single point of responsibility for an automation project from design to startup.
The ability of the customer to influence project costs diminishes as the project nears its latter phases, but these latter phases are also where the bulk of project costs start to accrue.
The ability to have a single point of responsibility in an automation supplier that acts as a primary automation contractor is essential to controlling project costs. This, ARC said, is especially true when it comes to preparing proposals that portray a realistic and honest view of project costs so they can be managed effectively.
The increasing pressure faced by end-users and EPCs also means that projects need to be finished as quickly as possible. In industries, such as fine chemicals and life sciences, faster time to startup is a matter of competitive survival, ARC said.
Automation suppliers with the right capabilities can provide a single point of responsibility for project management, i.e., coordinating activities among multiple automation suppliers and subcontractors and freeing up the end-user and EPC to focus on what they do best.
More information on this study, "Distributed Control Systems (DCS) Latin America," is available online.
Source: ARC Advisory Group.