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A CEO's lessons learned from the 'Refinery of the Future'

Texmark Chemicals CEO Doug Smith says when he began to look at how emerging IoT technologies could change the way his company does business, he made sure the operators and other employees were deeply involved in the transformation initiative.

When companies think about digital transformation, one thing that sometimes gets overlooked is the impact on the people working for the organization. With discussions centered on sexy new technologies that will lead to incredible new efficiencies, the unspoken assumption is employees will have vastly easier jobs—or be made redundant.

I see things differently.

At Texmark Chemicals, we recently embarked on a digital transformation journey called the Refinery of the Future. We have devised a plan to modernize operations at the plant and have begun trials to test out sensor-enabled pumps, edge compute infrastructure, and sophisticated applications to manage the plant systems. But the most important aspect of this journey is the involvement of the people who actually do the work in the plant.

We take this approach not only because it’s the right thing to do to achieve greater efficiency and improve the bottom line. I also believe that such close involvement of all Texmark staff in the Refinery of the Future project will enable and empower our workforce in dynamic new ways and further increase the likelihood that the transformation initiative will be a success.

The wake-up calls: High deductibles and an aging control system

Texmark’s journey of transformation began with a series of wake-up calls and eureka moments. Over many decades of operation, Texmark has made significant capital expenditures in plant equipment, including pumps, boilers, tanks, and safety systems at its facility in Galena Park, Texas. Our main product is dicyclopentadiene (DCPD), a chemical used in the manufacture of consumer products like adhesives, paints, and molded countertops. We also operate as a toll manufacturer, taking raw materials from clients, processing them according to their “recipe,” and distributing the finished products on their behalf.

When I came on board in 2014 to take up the role of CEO, one of the first things we did was perform a deep review of the entire business. That included an assessment of plant and process equipment. Our analysis revealed that, in spite of Texmark’s superior physical infrastructure and commitment to safety, the company was lacking in two areas:

  • Mechanical integrity (MI): While MI assessments of plant equipment were ongoing on different process areas, they were not done in a standardized manner to the liking of our insurance company. That resulted in the doubling of our deductible.
  • Control systems: Texmark uses a distributed control system (DCS) to control certain equipment and processes in the plant. This DCS system was built piecemeal over the years. This made it difficult to maintain and support. Our analysis indicated a new DCS was needed.

Once we defined the needs for our MI and DCS, and a baseline of the costs and risks associated with them, I shared the information with the Texmark team. Together we then set out to plan how we would address these needs. The core foundation of our plan centered on involving the right people with the right knowledge to use the right tools to help us achieve the right outcomes. And thus, our journey began.

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The eureka moment: Smart pumps

Everyone who works at Texmark is well aware of the rapid pace of technological change taking place inside the petrochemicals industry. What we wanted to do was to get a better handle on specific technologies and their potential for transforming our business. This led us to initial discussions with Hewlett Packard Enterprise and then a field trip to its Innovations Lab with 14 people from Texmark’s operations, maintenance, lab, logistics, accounting, and safety and compliance departments. 

At the lab, one demonstration in which everyone from Texmark saw value was the sensored pump. This demonstration showed how operational data from pump sensors that measure temperature, pressure, vibrations, flow, and power could be used to predict failures before they happened. This was vastly different from the physical inspection of pumps dictated by a calendar schedule or responding to a problem instead of predicting a problem.

Sensor-enabled pumps are a game-changer for our millwrights, the people responsible for maintaining pumps and other rotating equipment. If George, one of our millwrights, doesn’t have to physically inspect pumps that are sensored and provide real-time operating conditions, he can focus his skills and knowledge on pumps that have real problems. And that adds to the bottom line.

When we took the Texmark team on the Innovations Lab field trip and they saw the sensor-enabled pump demonstration for themselves, they understood the technology intricacies and, most important, they understood how this technology could positively impact their jobs. On the bus ride back to Galena Park, employees started having conversations about how the technology could be applied to various processes and equipment at the plant. They were just as excited as I was about the possibilities.

Again, the most important aspect of this IoT journey is the involvement of the people who actually do the work in the plant. Without their buy-in, it would have been impossible to introduce the sensor-enabled pump and other IoT technologies into Texmark.

The field trip was the first step. Through further discussion between Texmark and partners—including HPE, OSIsoft, PTC, Flowserve, National Instruments, CB Technologies, and Deloitte—we developed five use cases for our vision of the Refinery of the Future. Work has already begun on gathering data for the first use case: sensor-enabled pumps that allow for condition monitoring and predictive analytics. In addition, we have started work on:

  • Streaming video analytics: video as a sensor
  • Worker safety and emergency-directed response
  • Connected workers
  • Total asset management

Cutting-edge technologies on the industrial edge

One reason that others from the petrochemical industry regard Texmark as a leader is the fact that we're not just talking about digital transformation. We are actually implementing cutting-edge technologies right on the industrial edge, where our people and equipment do the hard work of chemical processing.

Even executives from other fields are interested in what we’re doing. Frankly, it doesn't matter whether you're making widgets in Connecticut or mining ore in Colorado—IoT can be applied in operations across industries, enabling new insights and creating real value from data.

Two types of questions generally come up when I meet with CEOs from other firms. The first is, “That's a really cool project. Tell me more!” That’s an easy one to answer; when it comes to IoT, it’s not hard to talk about the cool factor. It’s truly amazing what these connected systems can do.

The second question relates to money: How can Texmark economically justify investments in IoT? How are you going to make or save money with this? It’s a natural concern. Like other CEOs, I sit right next door to our company's CFO, who carefully manages our cash and asks when Texmark will see a return.

My answer has several dimensions, although in the end, it is always about the people.

First is safety. Every project we pursue at Texmark has to make a positive contribution to our employee’s safety in the workplace. That positive contribution includes the Texmark team, our neighbors in Galena Park, and beyond.

Once we have ensured our safety, finance comes next. Within our industry and within Texmark, we have to watch every penny. Therefore, a healthy and positive return on investment in the form of additional revenue or cost efficiencies is essential. Of course, if the project accomplishes both, my CFO will be extremely happy and our workers productive.

The implementation of these IoT solutions is also transforming our company, turning it into a digitally driven refinery, implicitly affecting our employees’ work. The IoT solutions serve as another tool in the toolbox for motivated workers to do their jobs better, enable them to do more, and grow their careers.

Think again about our millwright George. His job is going to evolve from manually monitoring individual pumps into a data analyst once he starts using the information—the data—from sensor-enabled pumps on a regular basis. That represents a fundamental evolution for our OT personnel and how they approach their work.

Another area where we will see a return on investment relates to our toll processing business. Having sensor-enabled equipment not only helps Texmark monitor its assets and processes, but it opens the possibility to new business models and becomes an additional selling point. Clients are beginning to realize the value of having access to data coming off the pumps, and tell us, “We have a budget; we'd like for you to sensor these pumps and give us the data.”

This new data-as-a-service offering sets us apart from competitors and creates a stronger bond with our customers. Moreover, having an additional high-margin revenue source partially paid for by our clients helps justify the investment.

Finally—and this is critically important—our industry needs to solve the problem of employee turnover due to a retiring workforce. The IoT solutions we are implementing will allow us to do two things to help us mitigate this challenge:

  • We can capture the “tribal knowledge” that is disappearing with the retiring workforce and make it available to incoming employees.
  • We can entice and attract new, tech-savvy talent into our industry. 

I am really enjoying the continued development of the Refinery of the Future use cases with our people, our partners, and our customers. It will be transformative within Texmark’s petrochemical facility and within the industry as a whole.

Refinery of the Future: Leadership lessons

  • Staff buy-in is critical to realizing the Refinery of the Future vision. Texmark was transparent with the reasons for the digital transformation initiative and brought its employees to see demonstrations and discuss how new technologies could improve operations.
  • Industrial IoT is not a means to replace people. It can truly enable them to do their work better, take on higher-level responsibilities, and provide real value to the organization.
  • The ROI of industrial IoT also extends to creating new sources of revenue, such as data as a service for clients. 

Related links:

A Perspective on Top Four Trends in IoT for Smart Manufacturing with Matthew Quirk

Texmark Chemicals deploys IIoT at the edge in showcase Refinery of the Future

This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.