North America is Following European Lead in Applying Intrinsically Safe Methods for Hazardous Environment Protection

9/18/2002 - A new market research study from Venture Development Corporation (VDC) titled "European and North American Markets For Intrinsically Safe Equipment" forecasts that over the next five years there will be relatively strong growth within certain geographic locations and product groups where this equipment is used.

Intrinsic safety is a method used to prevent equipment from causing fires and explosions in areas with hazardous atmospheres, such as explosive gas-air mixtures. Equipment and wiring is intrinsically safe if it is incapable of releasing sufficient electrical or thermal energy to cause ignition of a hazardous atmosphere in its most ignitable concentration. Equipment going into hazardous areas for intrinsically safe applications is classified as either simple or non-simple devices.

Simple devices have limitations on voltages, currents, and energy. These include products such as switches, thermocouples, RTDs, non-inductive potentiometers, and resistors.

Non-simple devices, which include field transmitters, solenoid valves, and many other types of equipment, can create and store energy levels high enough to create an explosion, if not limited. The devices have safety limits on the amount of inductance, capacitance, and temperature operating levels. Field wiring to these devices is through intrinsic safety barriers (which are located outside the hazardous region). The barriers limit the voltage and current levels to the devices below those that could cause an explosion.

Both simple and non-simple devices are connected through intrinsic safety barriers. Simple devices connected to an approved intrinsic safety barrier do not have to be approved as being intrinsically safe. Certification for the design and installation of systems with non-simple devices is required.

Products Studied
VDC investigated the following products used in intrinsically safe applications:

In Europe and North America
VDC estimates that the North American market for these products will increase at a compound annual growth rate (CAGR) of 6.5%, from about $191 million in 2001 to about $261 million in 2006. The much larger and mature European market for these products is forecast to increase from $403 million at a more modest 3.4% to $475 million.

The study cites a number of reasons for higher growth rate expectations in North America than in Europe. One of the most significant is the much wider acceptance already of intrinsic safety methods in Europe. In contrast, in North America explosion proof protection methods are still more preferred; with explosion proofing heavy enclosures and sealing the equipment contains any explosion to the interior of the enclosure. The study finds a trend to displacement of explosion proof protection methods in North America by intrinsic safety methods, which are regarded as safer, and with lower operating costs.

Expected to aid this trend are large European users adding facilities in North America who will prefer to have the same hazardous environment protection methods they utilize in Europe. Also, many larger North American firms that have facilities in Europe where intrinsic safety solutions are used are likely to adopt this protection method into their North American operations.

None-the-less, tempering shipment growth expectations for these products in both Europe and North American is the mature nature of the consuming industries for hazardous environment equipment. In both regions much of the market consists of existing plants, where there are significant costs associated with equipment and personnel training in switching to new methods and technologies. These factors will continue to drive the majority of the market to select equipment and methods that are similar or compatible with existing equipment.

In Asia and the Middle East
As part of the study VDC also investigated shipment growth expectations among European and North American vendors to markets in Asia and the Middle East. In general the study found higher growth rate expectations for shipments to these regions than to either European or North American markets, with particularly strong growth expectations for Asia. Asian markets appear to be accepting use of intrinsic safety faster than those in North America. Most of the vendors see the strongest potential in the region being in China and South East Asia.

Some vendors see good potential for new oil & gas and petrochemical industry facilities in the Middle East. However, enthusiasm for the market there is somewhat less, as demand in the region is expected to fluctuate over time and by countries.

Product Markets
As part of the research analysis, VDC investigated the plans of users (consulting engineering/construction firms, end users, OEMs, systems integrators, et al.) for the implementation of I/O in intrinsically safe applications. Currently the majority of the I/O of users for these applications is implemented with external intrinsically safety barriers connected to local I/O or distributed/remote I/O located in non-hazardous regions. The external safety barriers then connect to the field devices in the hazardous regions.

Two major implementation shifts are expected among these users:

First VDC found expectations of greater purchase shares of intrinsic safety barriers integrated into both the local I/O at the controllers, and into distributed/remote I/O. This reduces growth rate expectations for external safety barrier shipments.

Secondly, greater shares of the I/O implementations are expected to be via the use of intrinsically safe networks/buses that interface directly to field devices or distributed/remote I/O located in the hazardous regions. The networks/buses used in these applications must limit energy levels to insure safety, and network/bus isolators are incorporated for this purpose.

The latter trend parallels the overall industrial shift away from hard wiring to use of distributed/remote I/O systems, and an increasing acceptance of networking/busing connections inside industrial facilities. Within both the North American and European markets for intrinsically safe applications, the fastest product growth rates are forecast for field instruments, and distributed/remote I/O located in the hazardous regions that interface to intrinsically safe network/buses.

VDC's research indicates that currently Highway Addressable Remote Transmitter (HART) accounts for the dominant shipment of field instruments with intrinsically safe network/bus connectivity. It is expected that over the next five years the demand for HART will diminish, with increasing acceptance of several other intrinsically safe buses/networks.

Likewise certain intrinsically safe network protocols will gain prominence for use with distributed/remote I/O that will be located in hazardous areas. Success in supplying both intrinsically safe distributed/remote I/O and field instruments for use in intrinsically safe applications will require a very active awareness of the demand for these protocols.

Vendors that can map out plans to satisfy demand for existing equipment, while developing and offering products for these more rapid growth areas, should be able to strategically strengthen their overall positions in the markets for intrinsically safe equipment.

About the Study
The VDC study "European and North American Markets For Intrinsically Safe Equipment" provides market size, segmentation, and forecasts for intrinsically safe distributed/remote I/O, intrinsic safety barriers, and field instruments used in intrinsically safe applications. Market segmentation and forecasts are provided for Europe and North America, by consuming industries, and by intrinsically safe networks/buses. Market segmentations for the base year are provided for the hazardous environment classifications where the equipment is used, and channels of distribution for the products.

The study includes results of an extensive investigation throughout North America and Europe into user needs and perspectives regarding intrinsically safe products. Included are findings relative to usage of various alternative means of hazardous environment protection, expected trends in hazardous region classifications, in methods of I/O implementation for intrinsic safety applications, and in methods of purchase of these products (as components or as part of intrinsically safe systems). Key product and vendor selection criteria are identified.

Discussion is provided on certification standards, approval procedures and categorization systems for the application of intrinsic safety methods in Europe and North America. An assessment is made of the efforts to harmonize the various standards, approval procedures and marking systems that exist inside Europe, and North America. The impact of these efforts on product designs and future competition is discussed.

An analysis was conducted on competitors currently in the market and the likelihood of new entrants. Partnerships and alliances are examined, along with the impact of new technologies. Vendor market shares are provided for the products, with rankings of the leading suppliers in the major consuming industries, separately for Europe and North America.

The study provides strategies and recommendations on how vendors in each product category can enhance their market positions on a global scale. These cover product offerings, product characteristics and features, targeting consuming industries and regional markets, meeting safety classification needs, channels of distribution, promotion, pricing, buyer education, service, alliances, mergers and acquisitions, and other success factors.

The study results are available in two volumes, one for Europe and one for North America. These may be purchased separately for $5,950, or both for $7,450.

About VDC
Venture Development Corporation is a technology research and management consulting firm serving the worldwide electronics industry. It was founded in 1971 by graduates of the Harvard Business School and MIT. VDC offers in-depth market research as well as custom strategic planning and consulting services in the areas of industrial automation, instrumentation, electronic components, computers and peripherals, communications, office equipment, and consumer electronics.

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