The '2.5 Generation' Industry
ACS: Making Factories Smarter
Its business is hard to describe, but many petrochemical, steel and technology companies can't do without it. Advanced Control & Systems has a lock on large-scale factory upgrades, spinning a fortune out of intelligent plant service integration.
ACS: Making Factories SmarterBy Elaine Huang
From CommonWealth Magazine (vol. 444 )
Stacked in a utility room at the offices of Advanced Control & Systems in the Nangang district of Taipei, a shipment of "passenger information display systems," destined for use on the Taipei Rapid Transit System's new Sinjhuang and Lujhou lines, is about to undergo durability testing.
"Give me the worst conditions possible for testing," advises Hwei-Nan Yih, the hulking chairman of Advanced Control & Systems Inc., chemical engineering whiz and 20-plus-year veteran of ACS's mother company CTIC Corp.
With operating revenue of around NT$1.5 billion, ACS's main business involves subcontracting CTIC projects, performing plant automation, systems integration and computerization across a variety of disciplines.
The company's client list includes everything from petrochemical titans like Chinese American Petrochemical Co., Ltd. and Chinese Petroleum Corp. to steel giant China Steel Corp., and technology innovators such as ProMOS Technologies, Yageo and Philips, all vastly bigger in scale than ACS.
But despite the near invisibility of its services, ACS seems to be the choreographer behind these Goliaths' upgrades.
'Intelligent Plant' Makes Production Smarter
In addition to onsite factory upgrades, the company performs system consolidation and optimization, and semiconductor fab yield rate testing. In addition, with the 24-hour-a-day operations of petrochemical plants, improvements to operational efficiency and upgrades must be executed in play, essentially "tailoring clothes while they're being worn." These are all important ACS services.
"Friends often ask my wife what the heck it is ACS does. How do I explain? It's a question that's vexed me for 30 years," Yih says.
His lack of a simple explanation directly reflects the fresh integrated services approach of the "2.5 generation" industry, in particular his nascent concept of the "intelligent plant."
Over the years, as ACS has serviced the projects of its mother company CTIC both at home and abroad, it has accumulated a roster of hugely experienced engineers specializing in the management of entire factory automation and systems integration projects.
As Yih envisioned it, ACS would create an "intelligent plant" as a tailor-made, integrated services package, moving the client's future production facility toward more intelligent production capable of compiling, analyzing and forecasting data.
"Mr. Yih, don't just give me slogans – make it happen," CTIC chairman John T. Yu remarked skeptically upon hearing Yih's pitch, taking the wind out of Yih's sails.
Yih decided to start with his strong suit, his specialization in petrochemical plants.
Once a petrochemical plant has been in operation for a while, hidden bugs often present themselves. For example, when the temperature begins to rise in a plant's overheated transformers, there should be a marked decline in current, but the readings in the control room will indicate normal operating parameters – a situation that could lead to unmitigated disaster if left unchecked. ACS used artificial intelligence modeling and neural network technology to analyze the transmitted values and give advance warning, allowing the plant to operate normally.
The future will bring exports of intelligent plants. Overseas projects currently account for about 30 percent of ACS operating revenue, a figure expected to double within 10 years. For example, an ACS engineer traveling in Thailand once observed the smokestacks of a petrochemical plant spewing an inordinate amount of smoke and immediately surmised operational error as the cause. With the Thai government's increasingly tough environmental policy, such pollution-belching factories had become a target of environmental protection authorities, drawing interest in ACS smart factory technology among the Thai petrochemical industry.
And it's not just for the petrochemical industry. ACS has stepped into the hugely competitive and rapidly growing semiconductor side of the business, looking to enter the field of control systems for advanced semiconductor production processes.
ACS is well aware of the difficulties in getting aboard with the big boys like TSMC or UMC. The big players early on developed these systems in-house or contracted with foreign companies. The opportunity for ACS lies in going after second-tier technology companies, by engaging in "disruptive innovation" – as Asus did with the introduction of its low-cost Eee PC – providing essential functions at low cost. ACS is entering the Taiwan and China DRAM defect testing market, offering what Yih describes as something whose value exceeds its cost.
To penetrate the China market, ACS even has a cooperative venture pooling its cost-control capabilities with plant resources and $1.8 billion renminbi in operating revenue from Zhejiang Supcon Holdings, to go after foreign businesses operating in China and large state-run enterprises.
Shrinking Talent Pool Looms over Growth
Companies in the 2.5 generation industry like ACS can see the business that is available, but the hard part is getting their hands on it. Their biggest Achilles' heel is a shortage in talent with "domain knowledge."
Formerly a consultant in a different industry and currently CEO of Atelligent Global Consulting, Dr. Ho-ming Huang notes that as manufacturing businesses move toward providing services, the biggest challenge they face is the quality of the people within the organization.
"This affects service quality," Huang stresses.
These engineers working to create intelligent plants must stay out ahead of the client if they are to stay on top of the client's requirements and provide precision services. It's a knack that tends to come through years of practical experience.
ACS operates an in-house mentoring program where older, experienced engineers are paired with newer personnel to help them acquire experience.
"It takes at least five years of hands-on experience to produce a mature engineer capable of tackling the most complex integrated services," Yih concedes, and they must meet demands even higher than those placed on engineers at most top technology companies. Talent is a rare commodity.
A talent shortage looms over the otherwise healthy start to the 2.5 generation industry. It will be the decisive issue in taking the competition to the next level, for ACS as for anyone else.
Translated from the Chinese by Brian Kennedy