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Yokogawa MD says it’s a buyers’ market in 2010

Yokogawa Australia’s managing director speaks to PACE about the benefits the economic slowdown will reap for customers in the coming year, Sarah Falson writes.

Though the Australian instrumentation and control systems market is gearing up for a brighter year in 2010, the next 12 months will pose some new challenges for vendors, allowing buyers to pick and choose from the best, says Yokogawa Australia managing director, John Hewitt.

In an interview with PACE magazine, Hewitt suggested that the year ahead will bring stiff competition from overseas imports and major supply contract bidding will be fraught with competition from vendors trying to get ahead of the game.

“Last year was a tough year, but I think 2010 will be tougher. I don’t believe that Australia has dodged a bullet in terms of recession, and I don’t believe that we have seen the worst of it,” he said.

According to Hewitt, manufacturers and processing companies will be the winners in 2010, benefitting from hot competition between vendors vying for a slice of the market. Though many industrial firms have expansion plans in their sites, a lot of industries are taking a cautious approach.

“Industrial companies will be spending on an ‘as required’ basis. This will bring focus to other parts of the Yokogawa Australia business, such as maintenance and optimising control and process systems,” Hewitt said.

“Our business was very active throughout 2009 with customers looking to spend more on maintenance on existing plants rather than building new facilities. This means that the level of competition we’re seeing in the marketplace is more intense than ever, and I’m sure our competitors have found the same. It’s tough out there, and it’s going to be a very hard year.”

For Yokogawa Australia, projects in 2010 will be hard-fought, allowing customers to pick and choose from vendors offering a range of prices and services. Though some suppliers are moving their engineering off-shore to save money on labour, Yokogawa does not plan to do this.

“I’ve seen a strong push in the last year to take engineering offshore, which is a trend I find quite disturbing. I suspect this has been driven by competition and a more cautious market. Customers are demanding the lowest price possible, and unfortunately many companies respond by going offshore. We have a very strong engineering team in Australia and are committed to completing our work in Australia whenever possible.

“We also have the option of involving Yokogawa staff in other countries when they have expertise and experience that we are still building locally,” Hewitt said. “Some of our LNG projects, for example, will involve Yokogawa engineers based in Singapore, leveraging the best possible resources for our customers.”

Yokogawa Australia maintains that supplying top-quality instrumentation and control systems is as important as after-sales support for its customers, and will bode well for the company in 2010. Hewitt’s business moved into 2009 with a strong order book, and has recently enjoyed a major project win to supply the front-end engineering design (FEED) for the new INPEX Browse Ichthys LNG project in the Northern Territory. The company hopes to supply an integrated control system, plant information system, resource manager and training system for the site throughout the year. The move will entrench Yokogawa Australia as a serious player in the local LNG market.

“We have a strong market presence with instrumentation and we can compete very well with quality. Our biggest local market is supplying to the power industry, but now with the Ichthys LNG project up our sleeves, we will become a serious player in the LNG market for the first time,” Hewitt said.

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