Amid the economic doldrums affecting growth expectations for just about every company in the electrical industry, there are bright spots — often discrete business units within larger companies that continue to post double-digit sales gains. At Rockwell Automation, Milwaukee, the company's Systems and Solutions group, which provides engineering services to support applications of the company's automation and control products, posted growth of 29 percent in 2008.
People in the electrical product channel are most familiar with Rockwell Automation's various lines of industrial automation and control products, especially the Allen-Bradley brand. Some may not realize the extent of the company's engineering operations. In a presentation earlier this year to investors at a Barclays Conference, Rockwell Automation CEO Keith Nosbusch highlighted solutions and services as a key growth area and a $16 billion market opportunity.
The move into engineering services has been “partly defensive and partly offensive,” says Terry Gebert, vice president and general manager. “Many of our competitors have been doing this longer than Rockwell has.” The expansion of engineering services has been driven not just by the available market, but by the nature of customer demands and expectations in increasingly sophisticated manufacturing and process industry applications around the world.
Having a group doing applications engineering would seem to put Rockwell in competition with some of its customers — especially systems integrators and systems designers who spec the company's products. That's seldom a problem, Gebert says. “That is something that has to be managed. But we're partners with a lot of our Sis and SDs,” he says. “A lot of our customer base requires the owner of the technology to be the implementer. It's probably 50-50. So there's 50 percent of our customer base that's not going to buy from a third party. We use our partners as part of our execution, so they're part of our team.”
The Systems and Solutions group has 2,500 to 3,000 engineers in hundreds of offices around the world, and between 600 and 650 engineers in the United States, working in a mix of large offices concentrated around process industries and smaller satellite offices in most major metro areas. The group's largest offices are in Cleveland, Houston, Denver, London, Singapore, Shanghai, Buenos Aires, Sal Paulo and Mexico City.
Systems and Solutions has grown over the past 10 years partly through acquisitions and partly through organic growth. The growth has been particularly strong over the past three years, with five major acquisitions in that time, and most of that growth has been international. This group does more business outside the United States than it does domestically, says Gebert.
“Certainly in the developing part of the world — Latin America and Asia — the customers moreso demand it because the infrastructure and the capabilities aren't as strong,” Gebert says.
Rockwell's recent acquisition of Rutter Hinz, Saskatoon, Saskatchewan, gives the group a larger presence in the Canadian process industries as well as the mining industry around Denver. Previous acquisitions over the past three years have brought similar advantages in domain expertise and geographic coverage — ProsCon and ICS/Triplex in Europe added to the group's capabilities in oil and gas and process safety; CIE in Latin America brought life sciences expertise; and Xi'An Hengsheng in central China last December gave them a presence in China's fast-growing power industry.
Systems and Solutions plays an important role in Rockwell Automation's product development. “It's a symbiotic relationship,” Gebert says. “They do ask us our opinions on where the product needs to evolve to. We like that, because we're the people on the front lines, so we're the ones the making the products do great and wonderful things. We also know what the customer expectations are. Rockwell also has user groups that give direct feedback. As we get into the information space, a lot of that is custom solutions developed off our platform. We share the applications we develop with the software group so they can enhance the product or ‘product-ize’ some of the things we've developed.”
Being on the front end of applying Rockwell's products means the Systems and Solutions group gets to play with all of the company's latest technology, often in unusual settings. “When you get into upstream oil and gas, the offshore oil and gas is moving subsea, so with our critical control system, which is completely redundant — it's not easy to replace a board when it's miles below the sea — we're working with Statoil Hydro on several fields they're developing. We have our control systems embedded in that, sitting at the bottom of the sea,” says Gebert.
Another big push is in the area of alternative energy sources. “We are really focused on sustainable solutions and alternate energies,” he says. “We're working on an algae-to-biofuel plant — working with a customer on a pilot plant to prove that technology and control it.”
The focus on sustainability extends to older technologies due for an upgrade, as well. “As the stimulus package gets defined, especially in the States, we talk about infrastructure improvements and power systems. That's an area where we have expertise, and the Rutter Hinz acquisition gives us even more expertise. We're looking at that to figure out what that means and how we can get embedded in the upgrade process.”
With the acquisition of ICS/Triplex, Rockwell also picked up a new scalable process safety system, and deploying that in critical applications has been exciting, Gebert says.
The Systems and Solutions group is specifically focused at the project level, on plant expansions, retrofits and greenfield construction projects. A “sister group” called Customer Support and Maintenance (CSM) provides aftermarket support, working closely with the Systems and Solutions group. “We do go hand-in-hand, we often talk about the solutions and services. There's a lot of emphasis now on asset performance, so that's something we work together on. If we go into a greenfield project and set up the requirements for the assets' performance, then the CSM group has the capability of maintaining that and using our installed diagnostics to help the customer make good decisions.”