Keywords: Process Measurement, Flow, Pressure, Level, Temperature, Services.
ARC Advisory Group recently visited Endress+Hauser, USA headquarters in Greenwood, Indiana where top management provided us with a face-to-face briefing and we had the opportunity to tour the brand new US manufacturing facilities for many of the company's measurement products.
According to ARC research, E+H has been increasing its market share in process measurements. The company offers sensors and instrumentation in product segments for flow, pressure, level, temperature and analytical; but does not have its own automation or final control offerings. E+H believes that this actually provides them with a competitive advantage because while many of the major automation companies struggle to keep current in all facets of process measurements (primarily due to other product lines competing for investment dollars), E+H has focused on just sensors and instruments, gaining healthy market shares in flow, pressure, level, temperature and analytical measurement.
To gain a better understanding of how the company competes successfully in what many believe to be a commodity market dominated by large, full-line automation companies, ARC conducted in-depth interviews with E+H management, as well as senior marketing, service, projects and solution personnel.
Artist Rendition of E+H Facility in Greenwood, Indiana Showing Existing and Proposed Structures
The Benefits of Specialization
Today, most major automation suppliers to the process market have built comprehensive product portfolios that include control systems and production management software, in addition to basic sensors and other measurement products. While this can be attractive to customers seeking a single source of supply, it is very challenging for a full-scope automation supplier to be best-in-class across all product families, simply because there's just so much R&D money to go around. Rather than attempt to supply products at all levels of the ISA 95 automation hierarchy, E+H has focused on providing sensors and transmitters, enabling the company to dedicate its full attention and resources on process measurements.
E+H Finds Success in Its Market Segment
In today's global automation market, in which the lion's share of new business comes from mega projects and where full-scope main automation contractors (MACs) often win projects, to achieve success with a narrow product offering requires excellence in products and services.
According to Todd Lucey, General Manager of Endress+Hauser, USA, the company has been successful in this environment for three key reasons. First, E+H has attracted good people and invested in their training. Second, the company has invested in a good channel for both sales and service and continues to develop partnership networks that allow it to leverage business and be successful in the MAC environment. Third, it has developed a culture in which employees are motivated to not just meet, but exceed customer expectations. In addition, E+H has a business model of both manufacturing and supporting its products locally at facilities in each of the key world regions, such as the impressive US facility that ARC visited in Indiana.
ARC believes that another reason for the success of this specialized, privately held company lies in both the scope and depth of its solutions and services. The company not only manufactures its own measurement products in its own factories around the world (90 percent of all products for US customers are manufactured in the US), it has also invested heavily to be able to develop application-specific measurement solutions across a broad range of process industries, including chemicals, power & energy (conventional and renewable), oil & gas, water & wastewater, food & beverages, life sciences, pulp & paper, cement, and metals & mining. The company supports those solutions with local application engineering, field engineering, calibration, installation and commissioning, repair, refurbishment, and training services. The company has also a developed a complete portfolio of associated software and applications, including advanced FDT-based device management applications that can run on any FDT-compliant host systems.
Partnering to Win Projects
Strategic partnerships that help fill out their own portfolios can provide automation suppliers with an opportunity to participate in today's mega-size MAC projects. E+H's successful partnership with Rockwell Automation provides an excellent example. While Rockwell Automation has one of the most complete automation offerings in the industry, it partners with E+H for pressure, level, flow, temperature, and analytical process measurements. This helps Rockwell Automation to fill out its product portfolio, without having to devote valuable resources to developing, supporting, and servicing a comprehensive family of process measurement products; or patch together a full portfolio through acquisition.
ARC research indicates that Endress+Hauser is a major player across all the product categories in which it competes. Furthermore, in several categories, the company has shown considerable success in increasing its market shares. Clearly, even though it competes against several much larger, full- line automation suppliers, the company's single-minded focus on achieving excellence in process measurements – combined with its strong global presence – appears to be paying off.
Other automation suppliers with gaps in their measurement product portfolios may want to consider partnering with E+H to help plug those gaps without having to devote attention and resources to developing the missing products themselves or acquiring another company and the myriad distracting issues this often creates.
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