Low Voltage Drives Market Expected to Recover Slowly From the Covid 19 Slowdown

Blake Griffin, an analyst with Interact Analysis which is one market research firm whose methodology I like, has published a blog post reporting on his latest research into the low voltage drives market. Following a sales slow down this year, different regions of the world will see recovery at differing paces.

He also includes an analysis of the role of LV drives in applications such as predictive maintenance. I’ve been long impressed by the amount of motor, and even machine, performance data that may be gleaned from the sensors built into the typical drive. 

Coronavirus

As a company, Interact Analysis is positioned to model the impact of COVID 19. This is because of the MIO Tracker, which tracks and forecasts manufacturing output levels by country at the industry level. We also have a historical dataset to fall back on which reaches back to the 2009 financial crisis – an event that is comparable to Coronavirus in some key ways, and which has helped us to draw some conclusions about the short, medium and long-term effects of COVID 19 on the drives market.

For 2020, the report shows that a combination of COVID-related factors – such as stay at home orders causing a reduction in manufacturing output and demand, as well as factory closures and furloughed workers – will come together to cause a drop in the drives market of over 10%. However, the drop is not as severe as it was in 2009, and there is light at the end of the tunnel. There are strong prospects for a return to growth in 2021 and drives manufacturers and vendors should make their plans with this in mind.

Growth in the LV drives market sits just above that for the output of the manufacturing industry as a whole. This is a long-term trend and it helps lead to some key future conclusions about the drives market in the post-Corona world. Between 2007 and 2019, the underlying growth rate for LV drives was 3.8%; for the period 2020-2024, the forecast CAGR is significantly higher – at 5.3%. The implication is that the market will recover in a similar manner to how it did during the 2010-2014 period.

In terms of recovery to actual 2019 market levels, this is highly variable according to region. The earliest regions to recover to 2019 levels will be China, South Korea, and India – all of which will do so by 2021, and indeed China has already returned largely to normality. Meanwhile, France, Germany and Italy will not recover until 2024. In the case of Germany, this seems counterintuitive given how widely reported it has been that the country has managed the virus itself very well. The problem for Germany is that it is crippled by its heavy reliance on exports, many of which are to far more badly impacted countries. Of the top ten drives regions covered in the report, the UK stands alone as being the single worst impacted region and, even by 2024, will not have recovered to 2019 levels of drives sales.

The Trend for Low Cost Drives

The research shows that the trend for low cost, reduced functionality drives is becoming an ever more important segment of the market. Such drives tended to be cabinet mounted, to be rated at IP20 or lower, and to offer power ratings of 0.1-3.7 kW. Price points can be exceptionally low, with the most keenly priced products – generally 0.4 kW in Asia – coming in at around the $100 mark. The presence of higher regulations and, increasingly, tariffs, in the EMEA and the Americas is not stopping the growth in the low cost drives segment in these regions.

Hitting such a low price point requires advanced functionality such as encoder support, to be stripped out, although some still have additional plug-in options (e.g. for digital communications). ABB and Yaskawa have had low cost products since the mid-2000s, but the trend is being turbocharged by the rapid emergence of Chinese drives vendors onto the global stage, such as INVT and Inovance. While the high-end OEMs may have little use for low cost LV drives, many others report that they are very keen on such products because they can be bulk bought and easily stored to replace faltering drives as needed – helping to minimize production or machine downtime. Observing the behaviour of established vendors is key to determining just how marked the low cost drives trend will be, and seeing leading companies enter the low cost market such as Siemens (with the V20) or Yaskawa (with the GA500) is instructive.

Other Important Trends – Product Substitution and Predictive Maintenance

Other important trends include an increasing move for product substitutes actually displacing LV drives in certain areas. One of these is electronically commutated motors – or ECMs. ECMs are IP55+ rated brushless DC permanent magnet motors – similar to stepper motors. They are increasingly helping companies achieve energy efficiency objectives in high energy usage applications that do not require the computation capabilities an AC drive offers. Some can now achieve IE5 levels of efficiency, leading to dramatic cost savings. Uptake will be most notable in Europe where energy efficiency regulation is the most stringent.

Finally, a word on predictive maintenance… Drive manufacturers should move away from seeing predictive maintenance as a means of extending the life of only the drive itself. Though this is important, a larger consideration is about how to use the drive as a sensor to harvest useful data on motor health, preventing motor breakdowns on fast-moving production lines. A drive can produce data on motor behavior which cannot be produced by the majority of smart sensors. Namely, drives can produce a profile of the electrical behavior of the motor it is controlling. For example, if a motor is under undue stress, its electrical demands will increase.  If this data is used in conjunction with smart sensors, it allows an additional source of data for triangulation which can improve the accuracy of machine learning algorithms. Predictive maintenance is one of the most important up-and-coming industrial trends. Forward-thinking LV drives manufacturers should act now to ensure they capitalise on this.

Resilience A Priority in Global Supply Chains—McKinsey

I love irony. No sooner had I discussed with a colleague about the time I worked for a couple of McKinsey alums than I received an email promoting a new study undertaken by, you guessed it, McKinsey. Actually the McKinsey Global Institute (MGI). The paper’s authors researched global supply chains very timely in light of the Covid-19 pandemic. The report highlights vulnerabilities in global supply chains and how resilience takes priority, calculating ongoing cost of shocks and prospects for production to shift.

In brief:

  • Industries experience month-long disruptions every 3.7 years on average
  • Companies can expect supply chain disruptions to erase 40 percent of a year’s profits over the course of a decade on average—and extreme events take an even bigger toll
  • Up to a quarter of global trade flows could move to different countries over the next five years if companies restructure their supplier networks and governments take action. But moving supply chains is not the only way to build resilience.

The idea of chasing low-cost labor across the globe while ignoring supply chain risks and costs always seemed goofy to me. For, I didn’t waste my years as the unofficial chief manufacturing cost analyst for a medium-sized manufacturer. But here is some weighty analysis that emphasizes the risks.

The stakes are high, according to Risk, resilience, and rebalancing in global value chains, a new report from the McKinsey Global Institute (MGI). MGI analyzed 23 industry value chains to assess their exposure to specific types of shocks, including pandemics, conflicts, cyberattacks, trade wars, natural disasters, and climate risks. Industries have different exposure to these shocks based on their geographic footprint, factors of production, and other variables.

Based on the frequency and cost of disruptions, MGI scenarios show companies in most industries can expect shocks to erase 45 percent of one year’s EBITDA on average over the course of a decade. A single extreme event could cause even bigger financial losses. On top of this bottom-line impact comes the additional cost of rebuilding damaged physical assets, losing market share to competitors that are able to sustain operations, and significant societal harm such as loss of life, loss of jobs, shortages of critical goods, and damage to communities.

Geographic concentration can often produce supply chain bottlenecks when a shock hits. MGI finds 180 goods that are exported primarily from just one country, worth $135 billion in trade annually. Another issue is that large multinationals can have thousands of suppliers—but most have little visibility beyond the top tier of those tightly interconnected networks.

Will companies restructure their supply chains as part of a flight to safety? Yes and no, the report finds. There is an economic logic behind the way industry value chains have evolved. Given the scale, complexity, and interconnectedness of value chains, they are harder to move than is commonly realized.

MGI estimates that 15 to 25 percent of global goods exports, worth $2.9 trillion to $4.6 trillion annually, could conceivably move to new countries over the next five years. This is based on both economic factors, such as the cost of relocating production, and non-economic factors, such as governments changing policy to promote domestic production of goods deemed essential or important to national economic security.

“The prospect of a significant geographic rebalancing in global supply chains represents a risk for the companies and countries that might lose out—but a potentially significant opportunity for those that manage to capture a share of this production. This could have important consequences for future growth and employment,” says Susan Lund, a partner at the McKinsey Global Institute. “But supply chains involve thousands of independent firms, reflecting specialization, access to consumer markets around the world, substantial sunk costs, and long-standing relationships. Relocating is not a simple task.”

To attracting more production, countries need to develop strong supplier ecosystems, specialized workforce skills, robust infrastructure, and an attractive business environment.

There is more to resilience than changing where goods are made, however. Operational choices and the structure of a company’s supplier network can heighten or lessen vulnerability to disruptions. Common practices such as sourcing from a single supplier, relying on customized inputs with few substitutes, and carrying substantial debt can magnify the financial impact of a shock if they are not calibrated to account for current levels of risk.

Among the steps companies can take are mapping the sub-tiers of their supply chains in detail and connecting them digitally for better transparency; building the capacity to flex production across multiple sites; holding more inventory; and strengthening their balance sheets.

The COVID pandemic is prompting action at a time when cost structures are changing across countries and revolutionary digital technologies are gaining traction in global manufacturing.

“Supply chain shocks are not a new phenomenon, but only a handful of leading companies have really moved to minimize their risk until now,” says Katy George, senior partner and global leader of McKinsey’s operations practice. “That’s largely because of a perception that resilience has to come at the cost of efficiency. But that’s no longer true. Now companies have new tools at their disposal to become more resilient and more productive.”

Virtual Trade Show and Conference

This week I am attending the Festo Virtual Trade Show and Conference . The website provider is the same one as the Danish company I “toured” last week. It is similar to a concept I saw 20 years ago, but modern technology and design have made the experience very good.

I sat in a couple of conference sessions deepening my understanding of the latest in pneumatics and digitization. The discussion of digitizing and motion was good showing examples from OEE and energy savings. I am not a fan of OEE, but many companies seem fixated on it. It is a number–but I learned how the sausage was made 30 years ago and I remain unconvinced of its real utility. However, if you can digitize to calculate OEE, then you have data you could use in better ways for decision making.

I also learned about applications in process and water treatment.

The metaphor is a trade show lobby with doors for the auditorium for conference sessions, the show floor, information booth. Entering the show floor, there are a number of icons representing booths. Click on a booth and you can choose from short video demonstrations, downloadable papers, and product overviews.

You can attend yet today. It’s worth a look to see what perhaps may be a chunk of the future. I miss the energy and serendipity of live events. But this is an efficient way to collect information saving both the exhibitor and me great expense.

US Congress Briefed on Manufacturing

John Dyck is now CEO of CESMII, a US government initiative promoting Smart Manufacturing. I worked with him some at MESA International and in his previous role at Rockwell Automation. He sent me this note the other day, “I wanted to share with you a link to a recording of a Congressional Briefing (virtual) that I participated in (with ASME) on rethinking the manufacturing supply chain. My contributions start at the 10:20 mark and are ~10 minutes. This is part of a significant initiative that we’ve started here, which you see in the final 2 minutes of my presentation.”  There are few people in Congress with any kind of science or engineering background. Let alone manufacturing and production. I hope they take the time to watch and learn.

 Unlike the initiatives in Germany and China that have the full support from the top of the government, American government might fund initiatives such as CESMII, but as far as the top reaches of Congress and the administration are concerned, the outcomes are more along the lines of wishing and anxiety.

If you are American and involved in this area, listen and see where you might help. If you are outside America, you’ll find it interesting what we’re working on.

Data Remains Key Challenge for Artificial Intelligence Projects

70 Percent of Companies Report C-Suite Involvement into AI Projects, with COVID-19 Driving Acceleration of AI Strategies – But Businesses Still Name Data as Key Challenge.

“Artificial Intelligence is neither,” according to my favorite quip. This field of computer science is perhaps the most misunderstood thanks to possibility thinkers like Ray Kurzweil and the many dystopian movies. Nevertheless, AI in its realistic form powers much modern technology. And not only for home artificial listening devices. Business and industry use it often, as well.

Appen Limited, the leading provider of training data for organizations that build effective AI systems at scale, has announced its annual State of AI Report for 2020. The report highlights increasing C-suite involvement and investment in enterprise AI projects as well as data being a key challenge as AI models get more frequent updates in production. The report also reveals the recent acceleration of AI strategies in the wake of the COVID-19 pandemic.

According to the report, nearly 75 percent of businesses now consider AI critical to their success, and AI continues to grow in importance across companies of various sizes and industries. Yet, almost 50 percent of those who responded to the 2020 State of AI survey feel their company is behind on their AI journey, suggesting a critical gap exists between the strategic need and the ability to execute.

“Many organizations have adopted the use of the internet at the core of their processes, and AI is on a similar journey from fringes to core value offering. Increasing investment in AI projects and greater involvement by the C-suite, along with accelerating enterprise adoption in the wake of COVID-19, are clear indicators that AI is core to business success,” said Appen CEO Mark Brayan. “However, most companies are still in the early stages and facing challenges, especially around training data.”

Key Takeaways from the 2020 State of AI Report

The C-Suite is now far more heavily invested and involved in the development of AI projects

Executive visibility and involvement in AI have increased over 30 percent year-over-year, with 71 percent of organizations reporting C-suite involvement in AI projects. What’s more, the percentage of companies investing over $5 million has effectively doubled compared to last year. With this level of executive involvement and increased budgets, ethics, governance, and risk management initiatives have become important topics for technologists building AI.

COVID-19 is not slowing AI Investment

Continuing investment in AI shows that businesses are choosing to spend in times of turbulence. Two-thirds of companies do not expect any negative impact on their AI strategies. Nearly 50 percent of companies have accelerated their AI strategies, 20 percent doing so “significantly,” betting their AI projects will have a positive impact on their organization’s resiliency, efficiency, and innovation.

“COVID-19 has changed everything about the way companies are operating today, but not everyone has adapted in the same way,” added Wilson Pang, CTO at Appen. “The State of AI report shows despite turbulent times, more than two-thirds of respondents do not expect any negative impact from COVID-19 on their AI strategies. Those that are prioritizing AI see the power of digital transformations as a way to improve their resiliency and long-term performance.”

Data remains the key AI challenge

Training data is the key to successful AI, with 3 out of 4 companies updating their models at least quarterly. However, 40 percent of those updating quarterly feel that a lack of data or data management is a challenge.

“Many businesses are still early on their AI journey and they are finding that their data needs span beyond in-house resources when looking for high-quality, annotated training data that drives AI success,” added Pang. “Industry leaders are turning more and more to third-party providers like Appen to help them deploy their AI projects.”

Updates With GE Digital

GE Digital had not updated me for a while. So, an invitation to a conversation with new GE Digital CTO Colin Parris was welcome—even if in the middle of several virtual user conferences. Naturally we talked about digitalization, something GE Digital was early to the game with. Also AI. Digital Twin continues to form the base of the company’s strategy.

Most welcome, there was no talk of optimization and Six Sigma. Instead business transformation through Lean plus Control plus Digital Twin was the focus of conversation.

As an example of the importance of digitization, he discussed a business that was so focused on optimization that it didn’t want to invest in digital. Then COVID came knocking. The company had been reluctant to digitize, but did it in five days when forced to when employees had to work from home. It then improved the system over the ensuing three months.

Here is another example Parris related.

The Prime Minister of India asked citizens to turn off their lights for nine minutes in a show of solidarity in the fight against COVID-19. With meticulous planning by India’s Power System Operation Corporation (POSOCO), national and state agencies, and supported by the GE Digital Grid Software team and Advanced Energy Management System (AEMS) solutions, the nation’s power grid withstood a 31- gigawatt drop and recovery.

When the request came down, POSOCO and its extended team of national and state agencies had less than 60 hours to prepare. For 1.3 billion consumers this would be a simple, yet powerful, way to unite with their fellow countrymen and the world, but it would also put tremendous stress on the nation’s power grid. A sudden decrease in demand could cause grid instability, leading to system collapse.

Due to national lockdowns associated with the pandemic, the normal daily peak demand of 160 GW had already fallen by 50 GW due to the significant reduction in demand from the commercial and industrial sectors. For the April 5 “lights out” event, POSOCO estimated a reduction in demand of 12 GW within two to four minutes. Power systems can handle gradual drops, but a sudden drop caused by lights switching off across the nation risked collapsing the world’s largest synchronous grid. Consumers would expect the power to return at full capacity at the end of the nine-minute vigil.

Preparations to meet the unprecedented reduction in load and recovery began in earnest on April 3 to create and test guidelines for reliable grid operations across POSOCO’s five regions. Hydro and gas generators, which require the least amount of time for ramp-up, were tested the morning of April 5. The Ministry of Power announced that the country’s electricity grid was robust, stable and ready to handle the demand.

At 9:00 pm on April 5, an estimated 80% of the nation’s citizens (approximately a billion people) turned off their lights and illuminated candles, lamps and flashlights in a show of national strength and unity. The resulting power drop and recovery was 31 GW – more than double the projections, but by connecting with control centers remotely, observing key parameters, and continuously monitoring system health, POSOCO was able to provide uninterrupted supply to consumers.

Given India’s strict lockdown response to COVID-19, the GE Digital teams were not able to hold in-person planning meetings, but by using GE Digital’s remote work capabilities, the team’s engineers were able to support POSOCO while working safely from their own homes.

I also received update information about GE Digital’s APM 4.4 (Asset Performance Management).

  • GE Digital’s APM 4.4 uses Digital Twins, Advanced Visualizations, and improved Connectivity to help Asset and Process Intensive Companies in Power Generation, Oil & Gas and Chemical Processing Industries to Rapidly Reduce Costs while Adapting to Changing Market Conditions
  • Power Generation companies using existing APM solutions enjoy availability / uptime increases of up to 20%; with O&M Cost Reduction up to millions of dollars per year
  • Oil & Gas and Chemical Processing companies using APM enjoy up to 6% improvements in availability, up to 40% reductions in reactive maintenance and up to 20% reduction in costs associated with Health, Safety and Environment issues

Available both as a cloud and on-premises solution, APM allows companies in asset and process intensive industries like Oil & Gas, Chemical and Power Generation to align key technologies with critical work processes and functions across their businesses.

This release has focused on driving tighter integration across capabilities within the APM solution as well as to existing systems such as Enterprise Asset Management / Computerized Maintenance Management System (EAM/CMMS) solutions. In addition, APM focuses on automating work processes with enhancements to allow users to automate tasks and provide a more seamless experience to have the right information at the right time to make critical business decisions.

“Our software helps customers to better operate, analyze and optimize their business processes with simplicity, speed and scale,” said Linda Rae, General Manager, GE Digital Power Generation and Oil & Gas. “APM helps industrial companies to efficiently and rapidly reduce costs while adapting to changing market conditions. With more than 30 years’ experience delivering software for our partners in industry, we’re always learning how to help them rise to today’s challenges.”

The latest APM release added more than 30 new Digital Twin blueprints for Oil & Gas, Chemical, Fossil and Nuclear Power Generation as well as Mining, to its catalog of more than 300 pre-configured analytic and diagnostic models for various equipment classes and systems across industries. Built by reliability subject matter experts, the blueprints monitor asset health by detecting degradation or performance loss across the asset or system to provide a diagnostic recommendation. This significantly reduces the time to value for our customers, with built-in detection and remediation information guidance.

Several new reports are also available for predictive diagnostic users including Sensor Health Reporting and the Predictive Diagnostic Coverage report. These help users understand diagnostic coverage relative to an asset’s designed capabilities.

For Predix APM cloud customers, Advanced Visualization capabilities are being introduced to enable rich dashboarding, analysis, and reporting on APM alerts, cases, and more. Dashboards are now available through the integration of a Business Intelligence (BI) tool for additional dashboarding capabilities.

GE Digital has also announced enhancements and unlimited availability of Predix APM for European customers via its Frankfurt, Germany operations center. In partnership with Amazon Web Services (AWS), GE has made technology investments to enhance customer experience and further support GDPR regulations.

The GE Digital APM Roadmap continues to advance the state of technologies for APM as well as features and functions. APM 4.4is now generally available from GE Digital. More information can be found here.