Global Condition Monitoring Services Market

Transcription

1 Global Condition Monitoring Services Market Market to Continue Expanding Despite Competitive Pressures February 2012

2 Contents Section Slide Numbers Market Overview 3 Market Definitions 4 Market Drivers and Restraints 5 Market Trends 6 Revenue Forecast 10 Competitive Landscape 12 Conclusions 14 The Frost & Sullivan Story

3 Market Overview Introduction In 2011, Frost & Sullivan conducted extensive research on the condition monitoring equipment market. As a follow-up to that report, this market analysis will aim to identify key market dynamics and trends across the global condition monitoring service market. While both markets are complimentary to each other, noticeable differences exist, specifically with respect to the competitive landscape, customer requirements, and market growth potential. As a result, obtaining absolute market numbers is a challenge due to the dispersed nature of this market. While competitive boundaries are well defined on the equipment side, in the services market, competition ranges from specialized service divisions of condition monitoring equipment companies to industrial organizations, independent consultants, and local independent service providers specializing in the servicing of one type of asset or equipment. In addition, service contract rates vary significantly, depending on the qualification and expertise of service personnel, size of the organization, and nature of the service contract. While certain contacts are multiyear, multi-million dollar contracts, other contracts involve periodic, perhaps monthly or quarterly services that could range from a few hundred to a few thousand dollars

4 Market Definitions For the purposes of this study, condition monitoring services includes the following: Vibration Monitoring Services This primarily includes data collection and analysis, training, and asset management services. Lubricating Oil Analysis Services Oil analysis services are primarily carried out by independent oil analysis laboratories and oil analysis equipment vendors. Service personnel take oil samples from machinery at the customer site, which are then sent to the laboratory for analysis. The samples are then tested depending on the duration and the complexity of the analysis process, which can range from basic tests, such as oil characterization and property analysis, to advanced tests, such as ferrography and rotating ball oxidation. Thermography Services A majority of manufacturers of thermal imagers do not offer thermography services, but this is provided by independent service providers who specialize in thermographic inspection. Several smaller end-user companies outsource their inspection requirements from thermography service providers, as they are unable afford an in-house camera or cannot employ a thermographer on a full-time basis

5 Market Restraints Market Drivers Market Drivers and Restraints Condition Monitoring Services Market: Key Market Drivers and Restraints, Global, Aging Maintenance Workforce Driving Outsourcing of Services 1-2 years 3-4 years 5 th year Improving Global Economy Boosts Services Market Recognition of the Benefits of Condition Monitoring Drives the Services Market Low Barriers to Entry Creates Opportunities for Independent Service Providers End-User Companies Striving to Build Condition Monitoring Capabilities In-House Lack of Qualified/Certified Personnel Restricts Growth Pricing Pressure in the Data Collection and Analysis Segment Impact: Very High High Medium Low

6 Market Trends Hardware and Services Closely Integrated In today s highly competitive market, in addition to their hardware capabilities, condition monitoring equipment vendors are looking to provide various value-added services and capabilities to their portfolio. Conversely, equipment suppliers have played a vital role is driving the condition monitoring services market. The effort taken by vendors to improve their hardware and software capability has played a vital role in highlighting to the world the benefits of condition monitoring. As it becomes more widely accepted and understood across the globe, condition monitoring equipment and services has become pivotal to companies trying to maximize asset performance and life. Condition monitoring has become much more prevalent in the past with the widespread acceptance of hardware on not just critical assets, but noncritical machinery as well, which is tied to the strong growth of the services market. Trend toward Strategic Asset Management Services Concepts such as reliability-centered maintenance and asset prioritization are increasingly gaining interest as companies strive toward running their plants more efficiently and productively. These asset strategies are based on predictive maintenance, continuous monitoring and analysis of assets, and making informed decisions based on the behavior of a component or their vibration signature rather than just arbitrarily replacing components of an asset over a predetermined period of time. As a result, leading end-user industries will turn to Tier 1 condition monitoring service companies that can supply multi-technology certified, and trained dedicated resources that can collect and analyze the data and provide strategic and prioritization recommendations to the customer

7 Market Trends (continued) Maintenance Departments Feeling the Pinch of Shrinking Budgets Although in-house servicing creates the biggest competition for condition monitoring service companies, shrinking budgets and an aging workforce requires end-user industries to outsource their condition monitoring. Typically, within an organization, when maintenance personnel retire or move on to a different organization, it leaves a wide gap in the capabilities of the maintenance departments. An additional trend is the limited number of graduates passing through maintenance and training institutes. The maintenance profession is undervalued, with a limited number of applicants enrolling for condition monitoring related courses, creating a dearth of technicians and engineers capable of advanced diagnostics and prognostics. There has been an increasing trend toward adopting emerging condition monitoring technologies, such as electrical signature analysis or airborne ultrasonic inspection, among others, making it difficult for end-user companies to train their employees and integrate these technologies in-house. This again drives the trend of outsourcing condition monitoring services to equipment vendors or third party service providers

8 Market Trends (continued) High Competitive Pressure The competitive landscape in the condition monitoring services market varies quite drastically from the hardware segment. While the equipment market is dominated by incumbents such as GE, SKF, and Emerson, accounting for a significant portion of the market share, the services market comprises several regional, mom and pop shops, equipped with a limited condition monitoring capabilities and specializing in providing a very specific type of service. This is particularly evident in the data collection and analysis segment, where barriers to entry are relatively low and the level of expertise required to perform this function is not particularly high. Using portable equipment, an engineer or technician can walk around the plant and collect vibration data, thermographic data, or oil samples and take this back to the lab and analyze it. There are several local third party service companies that can provide this capability and make preliminary recommendations based on the data collected. From a business perspective, for Tier 1 vendors, this segment of the service market is unlikely to be profitable in the long term. In the high-end segment as well, competitive pressure is high with tight margins. Although there has been a trend toward asset strategy management, end users are unlikely to follow up an equipment purchase with a long-term service contract unless the sale involves millions of dollars worth of condition monitoring equipment, which is likely on remote, large power generation or oil and gas plants, but not on a smaller plant

9 Market Trends (continued) Remote Analysis While providing condition monitoring services, the most critical aspect is the analysis of the data rather than the actual data collection process. This is where certification and experience of the technician is vital and where third-party service providers can provide a real value-addition to their customers. With an aging workforce and customers struggling to keep their employees trained and equipped with the latest advances in condition monitoring hardware and software, they are increasingly turning to service providers for their data analysis needs. As such, there has been an increasing trend toward the customers collecting the data and then sending that data to the service provider who has the capability to analyze the data remotely. The data can be collected and transmitted using continuous online monitoring technology, portable/handheld instrumentation, or wireless transmitters, to a remote analysis center of the service provider where advanced diagnostics and prognostics can be performed on the data provided by the customer. The service provider then makes recommendations to the client on what type of follow-up actions need to be performed and when, as well as strategies to eliminate future problems