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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More often than not, of course, those ABB employees were originally part of the customer’s own organization, but are transferred over when a contract is signed with ABB. “We typically insert a few ABB people in key roles,” explains Rahr, “a site manager perhaps, or a reliability engineer, maybe a planner or scheduler — somebody that understands the way we do things and who can bring the rest of the organization along with them.”

Johnson Controls adopts a similar approach on some of its projects. Speaking of an operations-and-maintenance-type agreement with a starch manufacturer in the Midwest, Miller says that after the company had helped solve production problems on a drying process it was asked to take on all the production maintenance for the site. “Now, we aren’t necessarily experts in starch production itself (although we understood their drying problems), but the guys on site are. So we hired them.” In such cases, as Miller puts it, Johnson effectively says to its customer, “you transition these people to us and we will supplement them with expert technology and additional resources.” Those resources can include a Computerized Maintenance Management System (CMMS), Miller notes, adding that Johnson holds the largest number of licenses in the U.S. for Maximo software from MRO Software, Bedford, Mass.
Installing a CMMS is often one of the steps taken by ABB, too. But its first involvement with a service business customer can be relatively low key. “It starts out with almost a consultancy-type arrangement,” explains Rahr, “where we go in and do a feasibility study, collect the data, interview the people on the plant. And then we go back with a business case and, assuming the customer is interested, we put together a contract that is typically three-to-five-years duration.” The whole outsourcing process is, he says, “heavily driven by change management and really implementing new business processes around maintenance in the first year or so.”

Emerson’s approach is similar. “When we do a benchmarking or initial assessment,” says Ochoa, “it’s always sold at the highest level on the plant — even if it’s a small starting engagement, which is typical, plant managers are always involved. You’re dealing with changing work practices, changing the culture on the plant from one of reactive to predictive maintenance.”

Five-year maintenance service contracts are typical for Honeywell, Phoenix, Ariz. In September and October of 2005, the company announced two such contracts together worth more than $30 million. The first is to deliver maintenance services to four of Sonatrach’s plants in Algeria, while the other, across four refinery and petrochemical sites in Hungary and the Slovak Republic, is an integrated service agreement with a subsidiary of MOL Hungarian Oil and Gas Company.

Making a somewhat different commitment to taking on long-term maintenance responsibility for its automation products and systems, Invensys Process Systems, Foxboro, Mass., in March signed a contract with Sinopec Shanghai Petrochemical Company (SPC) for the full Foxboro line of I/A Series control system products. The wide-ranging agreement, which renews annually for the life of the Foxboro equipment covered, provides a combination of remote and on-site services, including on-line checking of devices, annual on-site checking, all emergency site technical support, training and other services. This is the first time SPC has given over its maintenance services to an automation vendor, although Invensys/Foxboro has had a working relationship with the company for more than 20 years.

Remote support

What many of these automation companies have in common is that if they are not actually on-site providing their back-up and asset management services they can offer comprehensive remote, on-line support. While this might not appear on the books as an “outsourcing” contract — because it could just as easily be included as part of the sales contract — the effect is pretty much the same. Having expert support on call in a vendor’s office means a company can carry one less overhead, a specialist that smaller companies in particular would find hard to justify.

Underscoring that point, ABB’s Rahr notes: “We have a group of people in ABB that specialize in vibration analysis, some of it very sophisticated. To have a specialist like that on staff if you are a small-to-medium sized chemical company is almost unthinkable. But through us you get the ability to have someone in another part of the world dial in and diagnose the situation. These smaller companies can access the tools and methodologies that they wouldn’t otherwise have themselves.”

That said, the tools and methodologies now being made available by automation vendors are becoming increasingly powerful. Asset performance management has benefited in recent years from the diagnostic capabilities of offerings like Emerson’s PlantWeb and Invensys’ series of “monitors,” introduced last year to help manage the performance of field devices, control loops and plant equipment. And Invensys, for one, now is eager to take on some of the responsibility for the burgeoning applications for wireless, especially in plant monitoring applications (see CP, January 2006, p. 68).

“Wireless communications will provide a new enabling technology for asset performance management,” says Chris Lyden, the company’s vice president for marketing, at the launch of its managed network approach to wireless applications. By providing access points for the plethora of proprietary wireless systems currently available, and integrating them into a company’s IT infrastructure, Invensys can deliver “significant upfront and ongoing cost savings,” notes wireless program manager Hesh Kagan. “With a standardized security model, we can now effectively manage the wireless infrastructure to help ensure appropriate levels of security and performance.”

For obvious reasons, operating companies might take some convincing about the benefits of outsourcing security issues, but automation vendors certainly are poised to play a role. Honeywell, for instance, now is using its own Geismar, La., chemical plant as a showcase of how it can integrate process control and physical and cyber security systems (see CP, April, p. 9).

Companies are certainly pushing the boundaries of what can and cannot (or perhaps should not) be outsourced.

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