JimPinto.com - Connections for Growth & Success™
No. 271 : 15 September 2009

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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GE Fanuc joint-venture dissolves - expect acquisitions

General Electric's Automation Division in Charlottesville, VA has always been one of the leading automation suppliers. As a part of GE, it's independent financials were never disclosed. However, it was clear that it did not meet the business rule set by former CEO Jack Welch: "Any business in which GE participates must be either No. 1 or No. 2 in its category". If it didn't meet this criterion, it was divested.

Evidently to meet this rule, the GE joint venture with Fanuc was announced. Fanuc Automation, a Japanese CNC and robotics pioneer, was headed up by Dr. Seiuemon Inaba, compared at the time to Dr. No in the James Bond film because of the flashy trappings that surrounded him. Dr. Inaba (in his early 60's at the time) was much admired by Jack Welch, a sucker for ostentation.

To my recollection, the joint-venture was oddly structured: GE owned 55% of GE-Fanuc-N. America, Fanuc owned 55% in the Far East (including Japan), and in Europe it was 50/50.

In my opinion, the linkup was a strategic mistake, caused by Jack Welch's lack of understanding of the fragmented automation business. Fanuc was primarily in machine tool CNC (Computer Numerical Control) and robotics, while GE was focused on factory and process automation.

Well, the strategy was flawed and the marriage never quite melded. Dr. Inaba is now in his eighties and Jack Welch has departed.

GE and Fanuc announced (mid-August '09) that they will dissolve their partnership by the end of this year. This reflects the reality that automation and CNC/robotics technologies and markets have continued to diverge.

Under the terms of the breakup, Fanuc retains the global CNC business, while GE retains the software, services, embedded and control systems businesses worldwide. On the automation side, Fanuc is dropped from the name and the company becomes "GE Intelligent Platforms".

GE shares fell some 58% over the past year, largely because of GE Capital which generated 50% of GE profits before the downturn. CEO Jeffrey Immelt publicly admits the mistakes; he recently stated that the US should now aim for manufacturing jobs to be at least 20% of total employment, about twice what it is now. That gives some indication of change in direction. In my view, the GE de-linking from Fanuc will fuel new growth through automation acquisitions.

The candidates are Invensys and Rockwell, both struggling to stay afloat. Also, ruthless Honeywell CEO Dave Cote may be ready to sell Honeywell Process Solutions, which remains disorganized and unfocused. GE came close to acquiring all of Honeywell almost a decade ago, but "welched" on the deal - long story, see weblink below.

Aside from GE, only ABB, Siemens, Emerson and Schneider are big enough to make acquisitions of this size. Clearly they are all examining alternatives and getting down to the short-strokes.

GE is well-organized, with huge resources and expertise in making acquisitions work. In the automation business, it has been constrained through its Fanuc link. Now, the giant is ready to pounce.

Stay tuned for BIG re-shuffles of the automation majors. It's long overdue.

Click GE and Fanuc Announce Agreement to Dissolve Joint Venture

Click GE joins up with the Fanuc (1987)

Click Honeywell for Sale - GE buys, then abandons

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Bucket-list visit to The Barn - New Morley book, Techshock

After my recent vacation in Greece, I made another 'bucket-list' trip: a visit my old friend Dick Morley at his hideout in Mason, New Hampshire - "The Barn".

Dick lives with his wife Shirley in a house a stone's throw away, on an enormous country estate in the middle of nowhere. It was indeed a challenge to find around midnight when we arrived. No cellphone signal; pitch dark, with no lights to read the road signs; no one around to ask... I began to suspect that this was a maze, with my friend grinning at the center as the prize.

We found the famous techno-guru ensconced at his large desk in the Barn, perched behind his Fat-Mac with a couple of screens, and surrounded by great gobs of geeky gear. Dick has had a couple of knee operations and wheels himself around, napping now and then, and sleeping only occasionally.

Rather than stay at a nearby hotel, we decided that it was part of my bucket-list to actually sleep at the Barn. So we stayed for a couple of days in the rather nice studio apartment upstairs that Dick reserves for good friends. The special benefit is that you can come down at any time of the day or night and catch the uber-geek in his lair, ready to pontificate on any techno-topic.

We spent a couple of delightful days discussing technology futures, viewing Morley's magic which brings a T-1 Internet connection via a remote wireless tower to the middle of nowhere, sampling the secrets of Dick's special chocolate, having tea with Shirley in her gazebo, visiting with some of Morley's many children who popped in now and then. All in all, a truly bucket-list experience for me.

Hey, I'm happy to announce Dick Morley's new book, to be published mid-September 09. It features 64 articles covering a wide range of industrial and techno-topics. In typical Dick Morley fashion, the "Father of the PLC" doesn't hold back expressing his views on a world that is undergoing major technological change.

Segmented into nine general parts, this book is an easy read and will provide you with valuable exposure to the unique views, interpretations, and philosophies that have made Dick Morley such an influential force in past, present and future technology ideas.

In this, his second collection of articles, Dick Morley lends his unique views and insights on various technologies, manufacturing and business practices, and life in general. You can't help but learn from his informative, yet entertaining, approach.

Buy the book! Order by 17 September and SAVE 15%! Direct ISA telephone: (919) 549-8411.

Click Online orders - use coupon code 091009 for 15% discount

Click Amazon.com - Techshock - Caution: Future Under Repair

Click "The Barn" - website

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RIFs, layoffs, cutbacks - Do's and Don'ts

Just this past week I saw the HBO documentary: "The Last Truck - closing of a GM plant". GM employees who had been with the company for 20 to 30 years sadly followed the last truck as it rolled down the assembly line. Reactions ranged from philosophical to sentimental; many could not speak as they became overwhelmed by tears.

The late-1950's bestseller, William H. Whyte's "Organization Man" described General Motors. People not only worked for the organization, but sold their psyches as well. They willingly subordinated their personal goals and desires to conform to the demands of the corporation. Half-century later, here was the demise of GM, the model company Whyte's book was describing.

During these recessionary times, big layoffs seem to be the only solution to our economic woes. Already many states have unemployment rates of more than 10%, and the national average is nearly that.

There are several expressions used to make the nasty job of layoffs more palatable - cutbacks, downsizing, reduction-in-force (RIF). Consider this: When your colleague is RIFd, it's a Recession; when YOU are RIFd it's a Depression!

Most employees who are let-go are given "the standard company severance package". In the US, it is usually a week per year of service. In Europe it is much more difficult (and expensive) to layoff anyone who has been employed for a few years.

There are strict laws involved, usually covered by making exiting employees sign a document waiving any further claims before they receive their final check. Under these difficult circumstances, few have the knowledge or the fortitude to really read the document; many simply sign away their rights in order to accept immediate payment. Most companies tread the fine line between decency and legality in the layoff process.

Rockwell had some layoffs during the past few months at their plant in Cambridge, Ontario, Canada. It's insightful to read employee comments on the weblogs. The company handled it as well as could be expected. But still, it's heartbreaking for many long-term employees who are told suddenly that they are no longer needed. It's tough for everyone: the company, the exiting employees and the ones remaining.

Here's my own list of Do's and Don'ts for laid off employees:

  1. Don't take it personally.
  2. Don't blame anyone.
  3. Don't simply look for another similar job, at a similar pay.

  4. Do your best to stay positive.
  5. Do use this opportunity to re-educate and modernize yourself.
  6. Do find something you enjoy; hey, maybe start your own business.
You know what? Being laid off could be the step that pushed you into something you'll enjoy much more. Develop a NEW YOU - Version 2.0. You might end up with an occupation that is much better than anything you thought possible.

My mother told me long ago: "People like to do what they're good at, and are good at what they like to do." Find something you're good at, and you'll like doing it.

Click RIF or Layoff: What Difference Does it Make?

Click How Is Severance Pay Determined?

Click The Days the Plant Died - Closing of a GM Plant

Click 10 steps to finding the right job

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Bigger is not better - Profit is a myth

Capitalism is based on two objectives: Growth and Profit. This thinking is embedded in our culture: bigger is better; you cannot be too big, or have too much money; the more you pay the more you get; higher-priced products are better. Several fallacies have crept in.

For example, higher pay is equated with better performance. In America, the hotbed of Capitalism, CEOs get paid 25 times as much as their counterparts in Europe and other advanced countries, as if this confirms that American leadership is superior. The recent business debacles exposed the lie.

Business magazines like Fortune, Business Week and Forbes list the biggest and the best companies, the highest-paid CEOs, the biggest bonuses. They do little to expose transgressors, and usually report failures AFTER they occur.

But clearly, bigger is NOT better. Growth brings bureaucracy and inefficiency. Innovation and individual motivation cannot be scaled up.

What about Profit? Famed management guru Peter Drucker wrote, "Profit is a myth - it's cash flow that counts." Some of the biggest businesses became dysfunctional, and could only recover through huge cash stimulus. But this merely masked the intrinsic problems. Viability for a flawed business cannot be bought.

Let me proclaim clearly that I am an avid, passionate Capitalist. I am NOT advocating some new socialistic agenda, but rather am pointing out new global economic realities. The promised benefits of Keynesian economics are fizzling. Sadly, no 21st century John Maynard Keynes has emerged to prepare the intellectual ground for such a change in thinking.

Nearly a century old, Keynesian concepts are nearing the end of their useful life. The strategies that are being adopted seldom get at the real issues. The old thinking is running out of steam. It cannot be sustained. It is broken.

Once you recognize the flaws that are causing current problems, you begin to see "the system" differently. The fallacies and inconsistencies in current business thinking start to become more obvious.

Our American constitution prescribes the pursuit of happiness through "enlightened self-interest". But current business thinking seems to have forgotten the "enlightened" part. After the Enrons and the Tycos of almost a decade ago, how many more AIGs and Lehman Brothers do we need to reset reality?

My eFriend Robert 'Doc' Hall writes, established power does not treat criticism lightly. Perhaps real change can come about, not through early warnings, but only after complete breakdown. Social and economic systems do not usually fail through outside attack; they implode from within.

Click Size is Not a Strategy

Click Bigger Isn't Better

Click Socialism has failed; Capitalism is bankrupt; What comes next?

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Operational Excellence in Manufacturing

The future manufacturing operation will not be just a "factory", but rather a completely integrated business enterprise using the methods of Operational Excellence (OE). This is a discipline of leadership, teamwork and problem solving that achieves continuous improvement through empowering all employees and optimizing all activities in the business process.

OE is a holistic approach to realizing efficiencies in all parts of a business, adding value at every step - from innovation, to design and development, to testing, manufacturing, logistics and services.

Toyota has turned OE into a strategic weapon, based on quality improvement methods made famous in the manufacturing world - just-in-time, kaizen, one-piece flow and similar disciplines. OE also changes management for every part of the enterprise.

To succeed, top management must have an intimate understanding of the human side of change management - alignment of the company's culture, values, people and behaviors that bring desired results on a continuing basis. Planning does not capture value; value is realized only through the sustained, collective actions of all employees who are responsible for designing, executing and working within the changed environment.

Change may appear externally to be about changing jobs, places, products. But actually, it occurs first inside people's heads. Excellence can only be achieved by understanding and shaping this invisible element. The goal of Operational Excellence is to make manufacturing the vital heart of a high-value enterprise.

Click Automation World, July 2009 - Future Factories

Click Manufacturing: Factories of the Future

Click Defining Operational Excellence

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David Bell [dbell.greyskies@shaw.ca] expounds on the decline of large companies:
    "I continue to believe that a core dynamic in the failure of large companies is a horrific failure to process information effectively because they are addicted to power-based cultural, decisional protocols. Small companies in contrast use radically different mechanisms which are much more effective.

    "I have friends that worked for IBM, HP, GE etc. 40-50 years ago. Based on their narratives, it appears that very large companies, at that time, were distinguished by their informational capacity. They created the most sophisticated informational cultures and models on the planet.

    "I can imagine this coming around again. We might see very large and successful organizations once again, known for their capacity to create and stage informational weather patterns that exercise leadership and create dialogue in the market. I hope so.

    "I believe the fundamental value of organization (large or small) today is informational capacity and that any failure in that regard will prove fatal."

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Jim Johnson [JamesRoss.Johnson@swagelok.com] discusses the future of education and research:

    "Reading your article caused me to think about how educational progress is paid for. My first thoughts: if universities become irrelevant, where would research leading to advancements in our knowledge base come from? What percentage of knowledge advancements comes from university-funded educators?

    "If traditional universities go away (change from how we know them today) how will this affect basic research? Is there a mechanism in place, or one growing, where research in all areas will come from? The growth of free online courses is great, as long as it does not kill the creation of new learning.

    "Even as I write this, I am certain University administrators are sitting in some resort, attending a seminar on managing free courseware in the 21st century. The last 15+ years of a strong economy have seen a deluge of money going to universities. An explosion of offerings has resulted, with some of them valid and some just a way to spend money before the budget is cut.

    "If universities become irrelevant, will that money go into research for wheat-growing in Kansas, tertiary oil recovery in Texas, and makeup-artistry research in California? Do we live in the era of disintermediation of universities?"

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Ron Davis [ron.davis@sunapsys.com] follows up on John Blaesi's comments (eNews 25 Aug. 09) about multi-discipline education:

    "When I was looking to go to graduate school, I felt the same way - I did not need to learn more detailed knowledge of electrical engineering. I needed other skills to do my job and to understand the jobs of those I worked with. I envisioned this like the letter T - I needed to broaden the top of the T, not lengthen the bottom.

    "I was fortunate that I was able to find a multidisciplinary engineering program at NCSU. While still engineering oriented, it did give me a broader education than what I would have received in another graduate program.

    "One unintended consequence of taking such a course of study is that employers are unfamiliar with such programs. I added a short paragraph to my resume describing my degree program. Once employers understood the program, most appreciated interviewing a better rounded applicant.

    "Since these kinds of programs are not mainstream, you have to do some digging to find them. The program I took at NCSU is 25 years old; yet I had to dig to find it near the bottom of a list of graduate engineering programs."

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