Outsourcing moves up the maintenance ladder

Outsourcing of non-core operations within a company, large or small, is now a well established corporate strategy. By entrusting services such as IT support, accounting, human resources and other “back office” activities to specialist firms prepared to do the job at an acceptable price, chemical companies can concentrate on their main business — where they are the specialists. That's the theory, at least.

By Mike Spear, editor at large

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Outsourcing of non-core operations within a company, large or small, is now a well established corporate strategy. By entrusting services such as IT support, accounting, human resources and other “back office” activities to specialist firms prepared to do the job at an acceptable price, chemical companies can concentrate on their main business — where they are the specialists. That’s the business theory at least and, in practice, it does appear to have benefited companies to such an extent that many are continually looking to outsource more and more of what they do.

But where should outsourcing begin and end?

Some chemical companies seem to place no limits on what they consider non-core competencies that can be outsourced. Quite a few farm out manufacturing to toll processors, who will take a client’s materials and process them to order, delivering the finished product as though produced in the customer’s own plant (see Tap into tollers for more on toll processing).

More typical, though, are those chemical operators only prepared to loosen the reins step by step, perhaps starting with outsourcing of plant utilities, building services and non-critical equipment maintenance, but all the while retaining tight control of what they still view as core assets. This has been the experience of Chuck Miller, who is director for solutions development in the industrial markets division of Johnson Controls, Milwaukee, Wis., a company well established in the building automation sector but perhaps less well-known in chemicals. “We’re the best kept secret in the process industries,” quips Miller about the company’s outsourcing services that embrace everything from building automation systems to plant utilities such as water, steam, air and power, and, increasingly, plant maintenance.

Secret or not, Johnson Controls has a client list that includes many blue chip names like BASF and ExxonMobil. Describing his division’s role as more of a consulting-type service, Miller says, “in the chemicals sector, operators still want to maintain ownership of the critical or core process technology, so we aren’t heavily involved in the process itself.”

While plant utilities might at one time have been considered critical to the process, Miller says the dividing lines between what companies consider core and non-core operations are no longer black and white, as the pressures grow on firms to cut costs and become more competitive. But if utilities are not deemed critical, what can be said about process control and automation systems? Clearly, they are core to the safe, reliable and profitable operation of the plant, but there is an increasing trend to farm out their maintenance and performance monitoring.

Deeper involvement

Most of the major process automation vendors are more than willing to enter into long-term maintenance agreements with customers that they have been working closely with throughout the lifetime of the plant. What is changing, however, is the degree of that on-going involvement — moving from the traditional “after sales” type of product and system support to a much more consultative, partnering approach in which vendors not only guarantee that their products will work but also guarantee the performance level at which they will work.

“We do see a trend towards more services being offered or provided to our customers,” says David Ochoa, director of strategic planning for Emerson Process Management’s Asset Optimization Division, Austin, Texas. Like Miller, however, he detects the same note of conservatism within the chemical industry. He says that “companies will outsource some aspects of their asset management, but they still maintain control and overall management of what’s being done on the plant.”

Operating on a global scale, Emerson offers insight into outsourcing trends around the world. “In North America,” says Ochoa, “we see companies being a little slower in adopting some of these services. They still want to combine them with their own capabilities — in which case we go in to help them set up their own program, providing them with training and mentoring — whereas in some Latin American countries we see a trend towards outsourcing the entire maintenance operation.”

Emerson set up the Asset Optimization Division three years ago and it is now looked upon as a business unit in its own right, says Ochoa, rather than as just a support operation to the plant automation side of the company. “What we focus on these days,” he explains, “is plant availability. That’s one of the main drivers for our customers — keeping the plant running longer, more safely, with fewer or preferably no unplanned shutdowns.”

An asset optimization program at the Huntsman Holland petrochemical complex at Rozenburg near Rotterdam typifies the work of the division. Following a consultative audit of its operations by Emerson, Huntsman is implementing a combination of planned and predictive maintenance using Emerson’s AMS asset management software suite that communicates with a PlantWeb network of intelligent field devices. Ochoa says that such higher-level maintenance forms the core of what his division does: “it’s those parts of the plant that require the use of diagnostics and more-predictive maintenance strategies — there is a willingness to outsource that.”

Huntsman’s goal is to use PlantWeb’s predictive technology to schedule maintenance requirements and reduce plant failures. “We see Emerson as much more than a product supplier,” says Laurence Thring, European integrity engineer at Huntsman. “We know we are getting expert advice that will provide an independent input to our future plans.”

On-site staff

Other automation vendors agree that operating companies now are looking to them more for expert advice. ABB Process Automation, Norwalk, Ct., for example, has its own chemical and pharmaceuticals business unit that specializes in taking on the outsourcing of maintenance and operational activities of many companies, not all of which are prime ABB customers. “We have about 5,000 employees out at customers’ sites around the world, according to Stephen Rahr, vice president for services processes.  “They are ABB employees but they are there to do the reliability engineering, the scheduling of preventative maintenance, everything from planning through to execution of the work itself.”

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