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 ResnickResearch Director

ARC Advisory [email protected]

Larry O’BrienResearch Director

ARC Advisory [email protected]

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?


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


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


Impact on Manufacturing: A look at Recent PMIs from Around the WorldImpact 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.”


December 2008 Manufacturing ISM Report On BusinessDecember 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 — 45.6High — 50.7Low — 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.”


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.


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.


Industrial Production and Manufacturing Capacity Utilization in the USIndustrial Production and Manufacturing 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


Industrial Production and Manufacturing Capacity Utilization in EuropeIndustrial Production and Manufacturing Capacity Utilization in Europe

Source: Eurostat


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.


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.


IEA report Shows Long-term Shortage and Supply ConcernsIEA 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).


2009: A Rough Year Ahead for Pharma and Biopharma2009: 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.


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

http://www.bloomberg.com/apps/quote?ticker=RIO%3AAU


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 2007-08Source: Automotive News


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.


End User Industry Examples of ConsolidationEnd 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!


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

CEDESHSB

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


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

Mill

ion

s o

f P

eo

ple

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


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


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


Obama’s Infrastructure Plant and What it Means to the Automation BusinessObama’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


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


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


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


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 ProcessorsManufacturing Today: Flat World has Raised the Bar for Manufacturers and Processors


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

http://walmartstores.com/


“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 andFairly Treat our

PEOPLE

ProvideTrustworthyPRODUCTS

Conserve andRespect our

ENVIRONMENT

Sustainability Will Raise the Bar Even HigherPepsiCo

Sustainability Will Raise the Bar Even HigherPepsiCo


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


AgendaAgenda

Setting the Stage for Sustainability


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


The Addition of Power Generation Capacity is Getting Harder Energy Conservation and Management a MustThe 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 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• Hydro

In

dex V

alu

e

(These measures includes design, equipment, and construction; exclude fuel costs)


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

Industry33.4%

Transportation27.2%

Commercial17.9%Residential

21.5%

Energy Use

Source: US Department of Energy


Major Energy-Intensive IndustriesSustainability impacts ALL!Major Energy-Intensive IndustriesSustainability impacts ALL!

Energy Consumption (Trillion Btu)

Petroleum

Chemicals

PaperPrimaryMetals

Food Processing

Nonmetallic Minerals

Tobacco/Beverages

Furniture

Leather Machinery and Computers

Wood

Transportation

Fabricated Metals

Textiles/Apparel

Plastics/Rubber

Electrical

Printing

Miscellaneous1

10

100

1000

10 100 1000 10000

En

erg

y I

nte

nsit

y(Th

ou

san

d B

tu/

$ G

DP

) Energy-Intensive Industries

Industrial Energy Intensity vs. Energy Consumption

Mining

Source: US Department of Energy


Energy Challenges Create Drivers For SustainabilityEnergy 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


AgendaAgenda

What does Sustainability mean for Manufacturers?


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…


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


ARC’s CMM provides a Model to help achieve SustainabilityARC’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


ARC’s CMM Model Stresses Collaboration Via A Three Domain Service Based InfrastructureARC’s CMM Model Stresses Collaboration Via A Three Domain Service Based Infrastructure

Lifecycle Domain

L ifecycle 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


Business

Production

Suppliers Customers

ARC’s CMM Model Requires Processes To Be Synchronized And Integrated In Real-Time


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?


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?


AgendaAgenda

Driving towards a Solution


MotionNetworks

Domain Specific Solutions Are Converging to Improve Performance

DeviceNetwork

ControlNetwork

Common Tagging & Single Database

Common Development Platform & Configuration

Tools

Logic HMI

Process Control

Power

Logic HMI

Motion

Process Control

Power

Motion

C-PACS Model


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


Enterprise

Systems

Business

Processes

Operations ManagementOperations Management

Service-Based

ArchitectureService-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 &Production Production

ProcessesProcesses

Product Product DefinitionDefinition

Production Production ManagementManagement

Factory Factory

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-P

AC

S

Control & Device

Networks: Real-Time


C-PACS and Operations Management Enables Collaborative Production Systems CPSC-PACS and Operations Management Enables Collaborative Production Systems CPS

Enterprise/BusinessOperations

Outbound Supply Chain& Logistics

Inbound Supply Chain& Logistics

Product/Plant Design and Engineering

CRM

Collaborative

ProductionEnvironment


Production Resources


Business Planning & Supply

Chain 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-P

AC

S

CP

S

CM

M


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

ContextData Quality MgmtCommon Time

Dynamic Plant Reference Model

Application Portfolio

Data ModelWork Processes

& State

ContextData Quality MgmtData Quality MgmtCommon TimeCommon Time

Dynamic Plant Reference ModelDynamic Plant

Reference ModelApplication PortfolioApplication Portfolio

Data ModelData ModelWork Processes

& StateWork Processes

& State

Maintenance

RPM

Dashboards

Real-timeAccounting

System

Real-timeAccounting

System

Real-time Operations

Data

Real-time Operations

Data

KeyPerformance

Measures

KeyPerformance

Measures

CEO

CFO

Engineer Worker

PlantManager

CPS Turns Data into Actionable Information

The Knowledge Workplace Requires added Dimensions of

Context


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 Devices380 Servers

*Source: Presentation by ARC at Schneider Electric Initi@tive 2008


UPS Worldport - Scope of Supply by C-PACS SolutionUPS 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


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• Power Logic Energy

Metering

Content:• PACs & PLCs• Motor Drives • Power Logic Energy

Metering

Database Application


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


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 ?


• 82% Reduction in Injuries (LTI)

Increased Efficiency Impacts Sustainability PositivelyIncreased 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


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


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”


AgendaAgenda

Consider ARC Your Partner In Navigating Through This

Difficult Period!


Thank YouThank YouFor more information, contact the author at

[email protected] or visit our web pages at www.arcweb.com