by Gary Mintchell | Feb 11, 2016 | Automation, Operations Management, Process Control, Standards
The undercurrent talk of the ARC Advisory Group Industry Forum this week in Orlando was how ARC’s Andy Chatha promoted the ExxonMobil/Lockheed Martin initiative to develop a new type of distributed control system.
I have to dash this initial thought off since I have about 20 minutes to get to my plane home. My week has been non-stop meetings from 7 am until at least 11 pm all week. This morning was a bit of a breather. Lots of stuff going on.
However, the ExxonMobil initiative provoked much discussion, rumors, speculation, whatever.
Part of the problem is that the program has just been announced and therefore is not defined.
The basic problem seems to be that Exxon is operating with very old DCS technology and has a great need to upgrade. But “ripping and replacing” would be very expensive. From conversations that I can report without naming names, I gather that they are looking for a software-defined distributed control residing above the current hardware control layer. The further wish is that the hardware layer would include parts interchangeable from supplier to supplier.
It hopes that this would be an industry-wide consortium that would drive standards for the software and the hardware. It has requested cooperation from technology suppliers as well as its peers in the oil & gas industry.
There are pieces of this that look very interesting. And, of course pieces that stand probably the proverbial snowball’s chance.
“Software defined” is of course developing in several industries (think Ethernet switches?).
My experience is that this sort of industry-wide standards development takes so much time that the technology it envisions is obsolete.
I’ll have more later after giving the idea more thought.
Meanwhile, I have announcements from Inductive Automation, Honeywell, Bentley Systems, Yokogawa, ABB, Bedrock Automation, and more coming tomorrow when I get a chance to think and write.
by Gary Mintchell | Feb 3, 2016 | News
ABB has had a rugged financial period, but its latest financial results indicate a righting of the ship. I’m not a financial analyst; I didn’t sleep at a Holiday Inn Express; but, I’m interested in corporate strategies and performance especially among industrial technology suppliers.
What follows is mostly from the company press release. However read CEO Ulrich Spiesshofer’s remarks. There are two significant comments. One–recovery in the Power Systems business. ABB moved some talented individuals from the process automation business over to Power Systems. It wasn’t an overnight success, but the team has made an impact. Two–“productivity improvements”, which is usually a euphemism for fewer people doing more work.
Anyway, I noticed a little bounce in ABB’s stock price in the last week. Looks promising.
Full-year 2015 Summary:
- Next Level strategy delivering positive results
- Orders and revenues stable, order backlog up 5%
- Operational EBITA margin up 60 bps to 11.8%
- Operational earnings per share +5% (constant currency)
- Cash return on invested capital up 70 bps to 13.4%; free cash flow +16%
- Power Systems ‘step change delivers strong financial turnaround in 2015
- 7th consecutive dividend increase to CHF 0.74 per share proposed
- 4 new Board members proposed for election at the next annual general meeting
Q4 Summary:
- Orders (-2%) reflect challenging market conditions; base orders -6%
- Operational EBITA margin up 60 bps to 11.7%
- Power Systems reached target margin corridor; strategic portfolio review of Power Grids on track
- Accelerated productivity and cost out measures in white collar, supply chain and operational excellence
- Net income of $204mn including a total $496mn restructuring and related expenses
- Cash flow from operating activities +18%
Full-year and Q4 financials impacted by currency translation due to strong appreciation of US dollar
“We took decisive actions to improve our customer focus and realized profitable growth in target segments to mitigate the impact of significant market headwinds. At the same time, we simplified the organization, drove productivity improvement and accelerated our cost reductions,” said CEO Ulrich Spiesshofer. “As a result, we increased margin and free cash flow. The successful turnaround in Power Systems demonstrates our execution capabilities and our focus on sustainable value creation. With our strong financial position and a leaner, more market oriented organization we are well placed to manage through the global uncertainties which we will continue to face in 2016.”
Short-term outlook
Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2015. The market remains impacted by modest growth in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.
Full-year 2015 Group Results
“We are shifting our center of gravity, fully in line with our Next Level strategy by driving organic growth in targeted segments, strengthening competitiveness and lowering risk,” said CEO Ulrich Spiesshofer. “We drove technology leadership with the launch of YuMi, the first truly collaborative robot. We strengthened our technology leadership position in the area of the Internet of Things, Services and People, for instance with our innovative Octopus offering for optimized vessel operations. Furthermore, our focus on high growth markets such as food and beverage and Africa is paying off.”
Orders were steady for the year (down 12 percent in US dollars). Large orders (above $15 million) grew 10 percent (down 5 percent in US dollars) and offset a base order decline of 3 percent (14 percent in US dollars). The order backlog at the end of December 2015 amounted to $24.1 billion, an increase of 5 percent (down 3 percent in US dollars) compared with the end of 2014. The book-to-bill ratio remained steady at 1.03x.
Revenues were steady (down 11percent in US dollars) compared with 2014 as revenue growth in Power Systems and Power Products offset the decline in Discrete Automation and Motion and Process Automation. Service revenues grew 6 percent (down 8 in US dollars) and grew 1 percentage point as a percent of total group revenues (adjusted for divestitures; 0.5 percent prior to adjustment).
ABB continued to execute its Next Level strategy in 2015 which resulted in a 60 basis points improvement of the operational EBITA margin to 11.8 percent and free cash flow generation improving 16 percent in constant currency (6 percent in US dollars) to $3 billion. The main drivers for the group’s enhanced profitability were the successful turnaround of Power Systems and continued cost savings and productivity measures.
“The strong execution of our strategy is showing results,” said Ulrich Spiesshofer. “In 2015 we continued to focus on growth opportunities in a disciplined way while mitigating the impact of market headwinds through capacity adjustments, productivity measures and cost reductions. Transforming ABB, we have made good progress towards enhancing our performance culture by implementing our new performance management and compensation model for more than 70,000 people in 2015. The divisional realignment has been completed and the strategic portfolio review of the Power Grids division is to be completed in 2016 as previously announced.”
Net income for the year amounted to $1.9 billion and was impacted by $626 million of restructuring and related expenses for capacity adjustments and white collar productivity measures. Successful measures to improve net working capital contributed to higher cash flow from operating activities (constant currency) and free cash flow conversion and supported an increased cash return on invested capital2 (CROI) of 13.4 percent. Basic earnings per share in the period was $0.87 and operational earnings per share2 on a constant currency basis was $1.35, an increase of 5 percent.
by Gary Mintchell | Nov 30, 2015 | Automation, News, Operations Management, Organizations, Standards
New power generation technologies will only optimize when high capacity storage becomes reality. You never know when or where you might learn about advances.
Consider this example of always remaining open toward gaining new knowledge and contacts. My wife and I were at breakfast in a Napa Valley Bed and Breakfast on vacation last September. We began a conversation with another couple about our age regarding which winery tours might be best.
The man asked me what I did. “Write about industrial technology and applications.” You might be interested in this, he replied. Turns out he was an electrical power utility general manager and had become involved with a standards initiative–MESA. No, not the MESA (MES Association) that I’m involved with. This one develops standards for connecting to energy storage. This area holds immense importance for the future of the power grid.
Storage Standards Association
So he shared some contact information and connected me with the association. I’ve talked with people there and am sharing some information from the Website to introduce this important initiative. Expect more in the future.
(All of this information comes from the Website.)
Why MESA?
Grid-connected energy storage promises large potential benefits. And yet, before safe, affordable energy storage can deliver on its promise, electric utility customers and their suppliers must solve significant problems. Many of these problems boil down to lack of standardization.
Standards are required for any technology to be deployed at scale. The personal computer industry grew from few to millions of units per year, while dramatically improving price-performance, based on standards for its software and hardware components. Like other industries, the energy storage industry needs to organize for scale, based on a cohesive industry vision and technology standards.
MESA Standards clear barriers to growth in energy storage. By making standard connections between components possible, MESA frees utilities and vendors to focus on delivering more cost-effective electricity to more people.
Today’s Problem
Current utility-grade energy storage systems (ESS) are project-specific, one-off solutions, built using proprietary components that are not modular or interoperable. Connecting these proprietary systems with key utility control software such as SCADA platforms is cumbersome and time-consuming.
Before an ESS can function, the batteries, power converters, and software that make up the ESS must be intelligently “plugged into” each other and the electrical system. Then the ESS as a whole must be intelligently plugged into the utility’s existing information and operations technology. Without established standards, components and systems offer their own proprietary connectors, and the process of plugging them together must be repeated for each new project.
Time, Money, Safety
Connecting the proprietary pieces can result in a motley collection of custom interfaces, or “kludges,” designed to address vendor-specific hardware. Creating such systems is a complex process that comes with its own heavy baggage:
- High project costs, and decreased reliability and safety.
- Component vendors tempted to stretch their expertise and offer a complete ESS solution, losing focus on their own core competency. Instead of developing innovative, best-of-breed components—such as a better, cheaper battery—these vendors simply re-invent yet another proprietary wheel.
- One-off, proprietary solutions that are inflexible, not easily scaled, and have limited operational control. The utility customer becomes dependent on a single ESS supplier, with few options to upgrade, expand or re-purpose their energy storage investment.
Despite willing buyers (electric utilities) and willing sellers (battery, power converter, and software suppliers), market growth is limited. Significant opportunities – for example, the potential for broad deployment of standardized ESS configurations at many utility substations – are beyond the industry’s reach in its current form.
To fully enable broad deployment of grid-connected storage, and grow the market for all, standards are required to address these limitations.
The MESA Solution
Modular Energy Storage Architecture (MESA) is an open, non-proprietary set of specifications and standards developed by an industry consortium of electric utilities and technology suppliers. Through standardization, MESA accelerates interoperability, scalability, safety, quality, availability, and affordability in energy storage components and systems.
Key MESA Goals:
- Standardize communications and connections, which will accelerate interoperability and scalability.
- Give electric utilities more choice by enabling multi-vendor, component-based ESS.
- Reduce project-specific engineering costs, enabling a more robust energy storage market.
- Enable technology suppliers to focus on their core competency, facilitating quality, safety, and cost-effectiveness.
- Reduce training costs and improve safety for field staff through standardized procedures for safety and efficiency.
