The main implication of this fall in demand is that solution suppliers without an installed base of existing products risk being marginalised due the lack of truly ‘open’ opportunities.
Nonetheless, the counterbalancing trend is that chemical manufacturers are expected to invest in retrofits and upgraded systems in order to improve their production efficiency and counter intense competition from low-cost suppliers. The clear findings of Frost & Sullivan research among end users shows that chemicals firms are favouring existing suppliers for upgrades, particularly in the key distributed control systems (DCS) product sector where relationships are well-entrenched.
Even as new technologies are brought to the market, the uptake within Europe's chemical industry has been slow due to a cyclical decline in investment. Solution providers have had to work harder to convince chemical customers of the
long-term cost reduction benefits in the new generation of automation and control solutions, particularly when trying to develop new supply relationships.
Chemical firms are particularly reticent about investing in supervisory control and data acquisition (SCADA) solutions, and SCADA suppliers in particular are faced with convincing them of increased functionality and reliability of SCADA, particularly in batch-oriented chemical manufacturing. Moreover the importance of branding and reputation are paramount among larger customers seeking a complete ‘solution’ concept.
Suppliers of new-generation systems like MES and IAM solutions in particular, face a considerable challenge in persuading chemical customers to additionally purchase their solutions at a time when clients need to be convinced of the ROI in each and every purchase. The challenge of educating end users of the potential cost efficiencies and production benefits will undoubtedly aid in growth of these sectors. Ironically it is the build up of competitive pressure from low-price competition from outside the EU, this will boost chemicals firms perception of many cost-saving solutions. These products are being developed and exploited by large branded solution suppliers, which is also fuelling the projected rate of uptake throughout the industry as a whole.
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