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India is Grossly Under Invested in Manufacturing Automation
India, over the past decade has witnessed significant increase in number of manufacturing facilities and has been targeted as one of the favorite emerging nations because of its fast growing economy with a large domestic market. "Albeit manufacturing sector's rapid growth, we remain grossly underinvested in the field of manufacturing automation" says Vijay Srinivasan, VP & MD, India Subcontinent, Invensys Process System. Developed nations are already over-invested in manufacturing and infrastructure and there are no new Greenfield projects coming up in those countries. Srinivasan foresees ample scope for investments in this field during the years to come.

Primary objective of operating a plant is to maximise the production value of the products produced and minimise variable costs that include production cost, feedstock cost and energy cost. Throughout the 1990s and early 2000s these variable costs used to remain constant for longer periods and manufacturers had to focus only on maintaining the inventories for regular production cycles and timely product delivery.

Manufacturing is an energy intensive sector where energy cost could sometimes account for almost 50 percent of overall operations cost (OPEX). Srinivasan observes that the last decade has witnessed sharp increase in energy costs, frequent changes in the feedstock and material costs, alteration in demand supply pattern that has gained significant attention of manufacturers, etc., Now they are more open towards adopting high end technologies to monitor business variables and integrate manufacturing operations with the board room to take strategic decisions to maintain company's profitability.

"Maintaining profit margins is an uphill task for any manufacturing set up unless the board room and shop floor are connected and these business variables are monitored in real time," emphasizes Srinivasan. In today’s dynamic market conditions it is important to track the business variables in real time to optimise overall cost of operations. This is in sharp contrast with the earlier trend where the inventories and feedstock for production were booked well in advance for months and the variable cost was constant for longer periods. These variables now need to be monitored closely and continuously and the production has to be more agile to respond to fluctuating markets. Although process industry has been using the feedback controls for a long time, the trends have changed dramatically over the past few years post deregulation of energy grid.

Earliest industrial plants relied on manual feedback control where the gauges were installed to monitor the parameters and based on the values operators would adjust the processes manually. Automated Distributed Control Systems (DCS) successfully replaced the operators and enabled the industries to run the production facilities, which are still in use in most of the plants. Although these feedback systems have been very successful in the past, however with the onset of globalisation, the industry is switching over to new integrated business models, which are driving the demand for new technologies to connect the business strategists with the production managers.

Ideally the cost of automation forms a small portion of the overall capital expenditure (CAPEX) for a process plant, which is only one time investment for the manufacturers but promises high returns in the long term. This reduces the plant’s operating expenditure (OPEX) along with improvement in the plant productivity, which is important for the plant owners to maintain the bottom line. The trend is gradually picking up in India.

It is important for the automation companies to communicate the importance and criticality of manufacturing automation and process optimisation to the CXOs of manufacturing organisations. Further, the CXOs will be keen to understand how the criticality of automation to integrate the process parameters with the business variables across multiple manufacturing units and product mix enables the company to optimise overall operations and produce better margins Diversification is the mantra, producers are following and setting up multiple manufacturing facilities to tap the tremendous opportunities in new markets. Automation plays a critical role for the producers to integrate process parameters with the real time business environment. It helps in the key role of integrating company’s manufacturing operations enabling the manufacturer to control the process from single remote location. One of the pressing challenges that the automation companies are facing currently is the availability of qualified professionals. Unlike Information Technology (IT), which can offer great opportunities for students from various backgrounds, the field of automation requires qualified engineers to run the process. However rampant growth of IT sector across the globe attracted the students to opt for careers in the field of computer sciences that offered lucrative salaries, campus like environment as a result of which not only automation but other sectors as well now face the dearth of qualified engineers. Another global challenge for the industries is that most of the process and manufacturing experts in developed countries have either retired or are on the verge of retiring which is creating a huge gap that needs to be bridged. “Though manufacturers are investing into setting up new state-of-the-art facilities in the country, nevertheless old industrial plants are automating the plants to optimise overall plant operations” says Srinivasan. Increasing demand of automation technology would create equivalent demand of engineers to run the operations.

India no doubt is a very tough market but it does offer ample scope of growth of automation players. Indian manufacturing sector is dominated by the small and mid size players (SME). If a manufacturing unit is running for 20 years the only way for the plant owner to leverage its capabilities is either to scale up or sell out. Selling out is not happening at present in SME sector thus only way out to sustain is upgrade from the existing systems and scale up the operations and improve the marketing efforts. By doing so SMEs can improve their brand equity and well position themselves in the market to tie up with foreign companies. “Indian SME sector is well aware and knowledgeable about the benefits of automation. The biggest challenges they face are capital and availability of skilled professionals to operate them.” Indian banks too are now more liberal and lend capital at nominal rates to help the companies to invest into improving their facilities. There has been a shift in the customer’s demands, which is heading towards advanced integration solutions to interconnect multiple factories to their respective boardrooms in a real time fashion to help take profit-making decisions.

On one hand there are a number of ageing plants across the world that require ongoing maintenance; and on the other hand new Greenfield plants are being set up in emerging countries at remote locations which enables these companies to have a small on-site team and reduce operations cost. Simulators gives the trainees an understanding of actual plant process and controls in a virtual environment. These enable the plant owners run the plants efficiently from remote locations and take right business decisions quickly. In the present scenario plant owners in the West are facing the challenge due to lack of staff, but with the help of this operations can be executed from offshore locations and Indian industry is not far from moving to this next level of advanced operating model.