What Types of Companies are Involved in Industrial Automation?

When I finished my engineering degree and went looking for my first job, I realized that I had no idea how the industrial automation and manufacturing eco-system was structured.

After working in the field for 10 years, I can confidently say that I understand what types of companies are involved in industrial automation and what each type of company does.

I’ve put together this post to help you understand the ecosystem without having to spend 10 years figuring it out like me.

End User

An End User is an organization that uses machines to produce products for sale.

A factory that assembles phones is an end user as is a plant where beer is brewed.

Original Equipment Manufacturer (OEM)

The machines used by End Users to produce products are usually made by a third-party company.

A company that builds machines for End Users is called an Original Equipment Manufacturer, commonly abbreviated to OEM.

An OEM employs a diverse team of people that work together to design and build machines for End Users.

An OEM may specialize in building a specific type of machine such as assembly machines that assembles components into a phone or packing machines that pack phones into cases.

Other OEMs are “special-purpose” machine builders that will build any type of machine requested by a customer.

OEMs earn money by selling machines to end-users and by providing after-market services to their customers. Some examples of after-market services include service agreements to maintain their machines and selling consumables, like cardboard cases, that their machines use.

For some OEMs, these after-market services can be more profitable than selling the machines themselves and provide a consistent income to the business over time.

Systems Integrator (SI)

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End Users buy different machines from different OEMs.

For example, a factory might buy a machine from one OEM to assemble components into a product, a second machine from a second OEM to pack the finished products into cases, and a third machine from a third OEM to palletize the cases on pallets.

To get all of these machines to work together, the End User will hire a Systems Integrator, often abbreviated to SI.

Usually, an SI does not build machines. Instead, they provide value-added services to End Users related to getting all of the End User’s machines to work together.

SIs may be involved in a project from the beginning and help the End User to pick and install the right machines or they may be called in after the machines have been delivered to help the End User to get them to work together.

Panel Builder

Machines and Production Lines have special enclosures called Control Panels where the electrical components are installed. You can usually find controllers, power supplies, circuit breakers, and electrical disconnect switches in or on a Control Panel.

Some OEMs and SIs build their own control panels, but many choose to outsource the building of their panels to a Panel Builder.

Most of the time, a Panel Builder provides the specialized labour to build a Control Panel to the exact specification of the OEM or SI. In other words, most Panel Builders don’t design the Control Panels, they only build them.

It might seem strange that an OEM or SI would outsource this work, but in many cases, OEMs and SIs want to focus on designing machines, not on assembling and wiring the components.

Engineering, Procurement, and Construction (EPC) Firm

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An EPC firm is a consulting firm that is hired by End Users to provide a turn-key service. This means that an End User would hire an EPC to build a new factory and at the end of the project, the End User can turn the key and start producing goods at the factory.

To provide this service, an EPC firm takes responsibility for all aspects of building a new manufacturing facility. The EPC firm manages the design, procurement, construction, commissioning, and handover of the facility.

Generally, an EPC firm does not do all of this work themselves. Instead, they hire subcontractors who specialize in certain parts of the process and manage all of these subcontractors for the End User.

The use of EPC firms is common in certain industries including Water and Waste Water, Power Generation, and Process Industries like Oil and Gase.

Wrap Up

In this post, I introduced you to the different types of companies that are involved in the industrial automation ecosystem and provided a brief description of what each type of company does.

Specifically, we talked about End Users, OEMs, SIs, Panel Builders, and EPC firms.