Connected enterpriseJanuary 25, 2018
Safwat Hakam, country sales director for Saudi Arabia and Bahrain at Rockwell Automation, talks to TOGY about the company’s recent activities in the Saudi oil and gas market and the increased demand for automation services in the country. Established in 1903, the company changed its name to Rockwell Automation in 1996 and, in 2007, began supplying automation controls and drive systems within the oil and gas industry.
Rockwell Automation is a US industrial automation company operating in 80 countries. In Saudi Arabia, it services and supplies 500,000 products and automation systems to the local oil and gas industry as well as mining and construction sectors through three offices in Dammam, Riyadh and Jeddah. The company, then called Allen-Bradley, entered the Middle East market through a regional headquarters in Saudi Arabia in the 1970s. The regional headquarters was moved to the UAE in 1984. The company became Rockwell Automation in 1996. It reopened a local office in Saudi Arabia in 2005 to better serve the market. In 2007, it entered the hydrocarbons industry. Rockwell is one of Saudi Aramco’s preferred suppliers for automation systems.
On Vision 2030: “I’m excited about Saudi Arabia’s Vision 2030, which includes the digitisation of industries to become more competitive. At Rockwell Automation we’ve gone on our own journey to connect our plants into what we call a “Connected Enterprise” and realise significant savings and productivity increases. The findings and solutions can be applied across industries. We are now in the position that with our industry expertise, our experience and our industry-specific solutions – i.e. Connected Production for oil and gas – we can support our customers on their own journey to digitisation.”
On Saudi infrastructure: “There is scope for modernisation. We have a mix of old installations and new plants. The new plants are very modern, but there are also plants and installations from the 1970s, so there is room for improvement and migrations in those installations. We can see business opportunities there.”
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What services does Rockwell Automation bring to Saudi Arabia?
Rockwell Automation is a much diversified company and more or less covers the entire range of industrial automation and plant automation. We have over 500,000 different types of products ranging from thermal blocks to the very sophisticated DCS [distributed control system] and SCADA [supervisory control and data acquisition] systems.
What investment plans does the company have?
As part of the IKTVA programme, we plan to invest in the KSA market to comply with the government requirements.
We plan to keep all of the services that we offer for Saudi Arabia local, which means that our engineers will be local engineers. For this reason, we will continue to hire and train a local workforce.
We have also started what we call the “Young Graduate” programme. We work with local universities in Saudi Arabia to find graduates who are enthusiastic and interested to go through an intensive one-year training programme at the beginning of their professional career in an environment where they can develop their talents and help us to extend our global leadership.
At what stage in the client’s project does Rockwell Automation provide its services?
We are not a contractor. EPC companies work more in the early stages with customers and then we come in at a later stage. We are an automation-only company, so we do not work in construction at all. We provide our service once the project has already been assigned to an EPC provider or to a vendor or supplier of a machine because we only supply the automation systems.
For example, if someone is supplying a water treatment plant to a factory, normally we like to send an automation system for that plant. We do not do the water treatment, just the automation system. We have a life cycle management for our product and, for that, we work very closely with our customers just to make sure that the products that they have are well managed from a product life-cycle point of view. We keep them informed about obsolescence, expected replacements and improvement and we then plan how to retrofit and migrate the current installations to newer versions that we have.
What highlights have you experienced over the past year in Saudi Arabia?
From a business point of view, the last year was mainly about retrofits and migrations. However, what I’m excited about is Saudi Arabia’s Vision 2030, which includes the digitisation of industries to become more competitive. At Rockwell Automation we’ve gone on our own journey to connect our plants into what we call a “Connected Enterprise” and realise significant savings and productivity increases. The findings and solutions can be applied across industries. We are now in the position that with our industry expertise, our experience and our industry-specific solutions – i.e. Connected Production for oil and gas – we can support our customers on their own journey to digitisation.
What is the state of Saudi Arabia’s installed infrastructure?
There is scope for modernisation. We have a mix of old installations and new plants. The new plants are very modern, but there are also plants and installations from the 1970s, so there is room for improvement and migrations in those installations. We can see business opportunities there.
In oil and gas, the industry is very advanced here and up to date with technology. In other sectors, where there are more privately owned companies, I think there is room for improvement and catch up. The food and beverage sector, for example, is totally dependent on OEMs [original equipment manufacturers] in Europe. Cost pressure is very high in that sector, so owners tend to take the low-cost or cost-effective solution.
How would you assess the importance of the Saudi market to Rockwell Automation?
To Rockwell Automation, Saudi Arabia is a very important market. If we analyse the automation market as a whole, leaving Rockwell Automation aside, Saudi Arabia alone represents 33-40% of the automation market in the Middle East. That would make it very important to any company in our field.
Although the UAE is not a big market, the importance of the UAE is that everybody is there. It is a hub, so whoever operates in the UAE can reach out to everyone in the Middle East.
What is your outlook for oil prices over the coming year?
I think we have hit rock bottom already. We have suffered enough and it is time to go up now. That is my expectation. All of the science shows that there is going to be an improvement. It is not going to be a massive increase, but the current situation will begin to improve from now on. This will be through a combination of global economic growth and the reduction of stockpiles around the world following the OPEC cuts, which they are talking about making even deeper.
If you look at the industrial production index for Europe, the outlook for the financial year 2017-2018 is positive. Everybody expects the production index to go up in Europe and this means that the need for energy will go up. If the need for energy goes up, that will have an impact on the prices of the oil. The other thing is, if you look at many producers of oil around the world, they have reached the maximum capacity of their production so there is not much room for bundling more oil in the market than is already there.
How do Rockwell Automation’s partnerships with Cisco and Microsoft manifest themselves in Saudi Arabia?
Both companies have a huge set-up in Saudi Arabia, especially Cisco, whose Saudi branch is one of the biggest in the world. Rockwell Automation is the world’s largest company dedicated to automation and information. We are working with our Strategic Alliance partners, such as Cisco and Microsoft, to help bring digital transformation to life in The Connected Enterprise.
With Microsoft we are collaborating to help companies make the most of digital transformation within a Connected Enterprise. This includes scalable analytics, mobile collaboration tools and the digital twin. With Cisco, we collaborate on the industrial networking and security solutions that are integral to transformation. Here we look at a secure network infrastructure as manufacturers need to improve how information is shared across their operations and joint product developments.
As Aramco targets gas expansion, what lessons can Saudi Arabia take from other countries?
The world has learned the hard way the costs of hastily erected gas plants built in the US. Putting these plants up in the US very quickly and rapidly has caused the cost per cubic foot of gas production to become very high. When the first crisis came and prices started to drop, those companies faced hard times. Their production costs were higher than the selling price.
Better planning for new installations and better selection of the technology must be used to make sure that those producers have the minimum production cost possible. This is true for not only Saudi Arabia. The whole world has learned that lesson.
What future opportunities do you expect for Rockwell Automation in Saudi Arabia?
We have heard a lot about the plan for Saudi Arabia to diversify its oil and gas production and begin opening up new sectors. There is a lot of talk about the mining sector especially. Rockwell Automation is a technology leader for mining, so if Saudi is going in that direction, that is good news for us because that would mean a lot of opportunities for us in the next period.
This would be good for the country as well. If you are highly dependent on a single source and something happens to that source that is outside of your control, then you are going to end up in a financial crisis. Diversifying the economy is always a good thing.
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