JimPinto.com - Connections for Growth & Success™
No. 280 : 22 April 2010

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

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Innovation without Manufacturing won't produce prosperity

Many, including me, have preached that America's ability to innovate will be our economic salvation against low-wages in other countries. We presume that bright Americans can do the design and the innovative programming, leaving the boring "grunt work" of manufacturing, and the tedious low-level coding to "low-wage" countries.

Ralph Gomory, former IBM Science Tech, now Research Prof. NYU, points out the flaws in this thinking. He insists that this will lead only to the US sliding into third-rate status. Here's an outline of his arguments.

The premise that high wages precludes US manufacturing is simply wrong. With improved automation, labor is only a small fraction of total cost. Recognizing this, China and other countries are investing much more in automation than the US.

There's a BIG Problem. We are not considering the cost of not competing in manufacturing. The choices: Either manufacture in your own country; or trade something you produce for goods manufactured elsewhere; or import goods and pay now, or borrow to pay later.

America is moving steadily away from producing the goods we need. And we are moving away from manufacturing on a scale that allows trade. We are importing more and more, with increasing debt.

This cannot go on. When trading partners, especially China, decide that they no longer want to loan America billions of dollars a year, there will be minimal productive capacity left. America will be poor.

The simple flaw is "scale". Trading ideas and innovation simply cannot and will not reduce our mounting debt. It is wrong to think that Innovation can scale up to be big enough to trade for the huge quantity of things we need but don't manufacture.

If the current flow of ideas continues, China will be making all kinds of low-tech and high-tech goods, which the US will have to trade for. Those goods will be cheap in China, but they will be unaffordable in America. Last tag!

Here's another major problem: Many American global corporations, recognizing that innovation and production are closely tied, are rapidly moving not only production but also Research and Design overseas, leaving many American skilled engineers out in the cold.

We need successful industries and we need to innovate within them to keep them thriving. China has subsidies and undervalued currency because they are creating a one-way flow of under-priced goods. They are destroying jobs on a large scale in many of the most productive sectors of the American economy. Why should they stop? It's working well for them.

America must move quickly to balance trade - import dollars should be matched by US export dollars. We cannot continue to borrow while jobs disappear and our productive abilities erode.

This is the Achilles Heel of Capitalism. Our corporations are faithful only to the interests of their shareholders. They engage in a one-way flow of jobs, technology, and innovation OUT of the country. That is causing the inevitable decline in living standards for middle-America. It won't stop till middle-America becomes poor.

Click Ralph Gomory - The Innovation Delusion

Click Future of American Manufacturing

Click High-value Manufacturing

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Safety & Security - new web portal launched

Most of today's automation & control systems use the same PC hardware, operating systems and communications as broadly deployed personal, corporate and administrative networks. The increasing use of wireless to monitor, control and interconnect industrial control systems is introducing additional safety and security vulnerabilities.

Industrial control systems are used to manufacture everything, from automobiles and pharmaceuticals, to controlling electricity, oil and water. Securing these systems is a challenge. They often have time critical performance requirements - standard IT security technology can impact timing and inhibit system performance. It is difficult to balance performance, reliability, safety and security.

Malicious security breaches, and attacks from outside intruders, are rapidly growing threats for automation systems. Employees and ex-employees may be involved in theft and retaliation. And there are "hackers" who may do it just for the thrill, or vandals and opportunistic criminals (including terrorists).

Industrial Automation safety and security has become an urgent issue, perhaps even a critical one. This vital industry segment has never received the focused attention it truly deserves.

This month (April 2010) a new web portal, Industrial Safety and Security Source (isssource.com) has been launched to cover this vital market. This one-stop website caters to safety and security practitioners in industrial automation by offering original content, in addition to aggregated stories from relevant news sources like the Dept. of Homeland Security's Control Systems Security Program.

This important new venture was launched April 12 by industry veteran and award winning Editor Gregory Hale. Greg has over 25 years in the publishing business, covering manufacturing and industrial automation for the past 11 years as the Chief Editor of ISA's InTech magazine.

I have known Gregory Hale for over a decade and respect his judgment, knowledge and abilities. We wish him success in his important new venture!

To get involved with this promising new enterprise, contact Founder & Editor Gregory Hale at 919 656-6018 Email: ghale@isssource.com.

Click Industrial Safety & Security Source

Click Safety and Security: Two Sides of the Same Coin

Click Intelligent Industrial Control System Security

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Post-recession planning

Business is always cyclical. Organizations that look ahead to opportunities that follow a downturn will have a competitive advantage when the upturn arrives.

As much as during a downturn, many businesses fail on the upswing out of recession. Some may have survived by cutting back employment, outsourcing and leaning on suppliers for extended credit. When business improves, the slack in the system tightens up, and there's often no room for growth. The walking wounded will be left behind.

Survival strategies are not success strategies. Companies that keep struggling and hoping to get back to "normal" are going to be surprised that the next "normal" is not like the old "normal". For companies with old products selling to mature markets, the past years may have seemed like a recession. For those with new products developed for global markets, it could be a renaissance.

Downturns are only a small part of the economic cycle, but these are the times when market leadership shifts. Managing intelligently during the next expansion will be much more than a chance to rise in competitive rankings. When the next expansion starts, it's time to make sure not only that you grow and succeed, but also that you position your business to win.

The good news: there will be lots of new business opportunities in the upturn. The bad news: Those competitors who survive will be leaner, meaner and tougher when they fight for market share in new opportunities.

The longer and deeper the recession, the more likely that customers will adjust their attitudes and behaviors permanently, and the competitive landscape will have changed. The winners will require top talent, clear market intelligence, impeccable quality and fast response to the challenges.

Be ready for the upturn when it comes. This will increase your chances to have some fun and make some money. Again.

Click Automation World - Post-recession Planning

Click Strategic Planning for the Post-Recession in the US

Click Planning For A Post-Recession Economy

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Apple iPad - Jim Pinto Review

No, I didn't stand in the rain all night to buy an iPad. I waited 3 days and bought one in my local Apple store; I was in-and-out in 10 minutes.

I like the iPad, a lot. I like the screen; I like the form-factor; the touch-and-feel. The 50 or so apps I had on my iPhone were installed as soon as I activated the iPad via iTunes on my desktop at home; they work with an iPhone-size image in the center of the screen, and almost fill the iPad screen with a x2 button - though resolution is not perfect. Most iPhone apps are being re-done for the iPad's bigger screen.

After the initial pangs of pleasure playing with a larger screen and showing off the photos of my bucket-list trips to Hawaii, Greece and my recent London/Paris trip, I came down from the euphoria. Is this just a larger iPhone, without the phone and camera? It's not practical to carry everywhere, like the iPhone in my pocket.

Apple reports that 600,000 iBooks and 3.5 million iPad applications have been downloaded in the first 2 weeks. I downloaded the iBooks free-App which came with "Winnie the Pooh"; and I downloaded several free book samples. The pages are bright and clear, with the choice of font-size and easy finger-flicks and navigation - no buttons to push, as on Kindle's tiny keyboard.

Now I can read books and news on either my Kindle or the iPad. There's a choice of several books, with similar prices, though not (yet) Amazon's huge selection. Reading National Geographic and other magazines on the free Zinio App is a delight - the Kindle cannot compete with iPads dazzling colors. But, iPad is not quite bright enough to read in bright sunlight, while Kindle's ePaper is still easily readable outdoors. So, one is left wondering which eBook will win. Or will both simply expand the market?

Now I read all my news on iPad - Time, NPR, CNBC, ABC, Weather; I use all these on my iPhone, but they are much nicer indoors on the iPad. I check Facebook, Twitter and Youtube, and I have Google Earth, Dictionary, Wikipedia, World Maps, and a host of games to entertain my friends and myself.

There are aspects of the device that I find really hard to overlook. I didn't want to buy the 3G iPad, with an AT&T monthly connection fee. My iPad connects via Wifi (at home, or elsewhere) so it doesn't quite track location as the iPhone did on Google Maps while traveling. It has no camera, and no microphone, so I cannot talk to Google search - which was a neat feature on iPhone.

It would be really nice to store files and swap data with other devices, and bring photos from digital cameras onto the iPad without having to have a PC or Mac as a go-between. There is no USB support, and so no interoperability with other devices. There's a built-in battery with 10 hours of life (enough for a long plane trip); but I don't quite know what happens when my iPhone and iPad batteries get old.

In the week after introduction, Apple sold 500,000 iPads, and sales continue to Outstrip the iPhone when it first arrived. But, you know, I can't do without my iPhone in my pocket; and I can't find any compelling reasons to lug around my iPad.

Click The iPad: Pros and Cons

Click Apple iPad: A Look from the Inside Out

Click 8 Apps that Make the iPad a Business Machine

Click Going Out of Print - e-books will transform
book, magazine, and newspaper industries

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Jim Pinto Speaking Engagements - New Video

During the past decade since my "retirement", I have taken up many avocations: futurist, speaker, author, writer, web-columnist, angel-investor, industry-commentator, mergers and acquisitions consultant.

What I enjoy most of all are my speaking engagements. All my knowledge, background, experience and insights are focused on delivering a valuable message to an attentive audience. It stimulates the juices! Some of my best thinking comes while I'm delivering a speech, and in the Q&A and personal interactions that follow.

During the past couple of years, I have spoken at events all over the country and the world. I've visited Australia, England, France, South Africa, India and, of course, several major cities in the US and Canada.

In January of this year, I was the keynote speaker at the Greater Baton Rouge Industry Alliance conference in Baton Rouge, Louisiana. My topic: "The Future of industrial automation, technology and global trends".

In March I spoke, along with my guru and friend Dick Morley, at Winnipeg in Canada, at the Technology Acceleration, Innovation & Manufacturing Conference. My subjects were, "Manufacturing in the Global Age" and "High Value Manufacturing in Manitoba".

Later in March, I gave two speeches at the AIMCAL management meeting in San Diego. My subjects, "Technology Futures in the Global Village" and "Manufacturing Technology in a Changing World".

In May, I'll be going to Greenville, SC, as the keynote speaker at the Sealed Air/Cryovac Technology and Innovation Symposium.

The more I travel and speak, the more insights it gives me into the wonderful variety of ideas and experiences that relate to the places I visit, the people I meet, and the variety of topics we discuss. It stimulates my eclecticism.

Hey, if you're organizing a conference, sales meeting or industry gathering, I'd like to be considered as your keynote speaker. I'll help you pick a topic to suit your meeting theme. Here are the popular favorites:

  • The global future of industrial automation
  • Global manufacturing - Benefits and Problems of Offshoring
  • Futures - new century predictions & prognostications
Do me a favor: Watch my latest video - this is a 3-minute version of my earlier "1-minute sales pitch". I welcome your feedback.

Click Jim Pinto - Speech Cameo clips (3 minutes)

Click Jim Pinto - 1 minute sales pitch (video)

Click Topics, Testimonials and recent speaking events

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David Kinnaman [dave_kinnaman@yahoo.com] thinks that US labor rates are not the only issue with competitiveness:
    "In many studies, comparing US labor rates to other developed nations, the US is comparable even for low skilled jobs such as flipping burgers. Non-developed nations, however, the rates are different but this is only one reason the US has difficulty competing.

    "In my experience several examples come to mind:

    • To lower labor costs a DC motor/fan manufacturer moved to San Diego and set up a Maquiladora plant. Although they lowered hourly rates they incurred additional unexpected costs which brought the rates close to parity.
    • More recently an automated US facility was not able to compete with a sister non-automated facility in the Philippines. Labor rates had nothing to do with this; but taxes did.
    "None of the above addresses the vacuum effect of China.

    "In general, I agree with your premise that higher skilled factory jobs are better for the US worker/economy; but labor rates are not the only issue. Taxes, cost of rent/land, OSHA requirements make manufacturing in the US a challenging proposition. US vs. overseas manufacturing is not a level playing field."

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Darin Jensen [darin.jensen@xenuclear.com] was stimulated to think how business can be controlled by feedback:

    "This quote (from Invensys) that you shared got me thinking: 'The whole business world is out of control and business itself has become a real-time control problem, which needs real-time control systems and control engineers to run it.'

    "My first thought was of simple amusement. My second thought is that if we accept the analogy, the real 'fix' lies in the feedback loop. Every control engineer knows that feedback is EVERYTHING.

    "Our business world is out of control because it doesn't have good feedback. If we want to 'fix' the machine we need to model the system and develop the proper feedback loops. The key to this is not control engineers, but economic engineers who will develop the science of mechanism design so that we can apply it better in our corporations and societies."

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John Cochrane [JCochrane@commtest.co.nz] is an American expat who is a part owner and senior manager of a small rapid-growth ICT company in New Zealand. He wonders how a no-layoff policy affects under-performing employees:

    "I read with particular interest your comments about Southwest Airlines in the context of layoffs. I wonder in comparison how many performance related terminations Southwest has carried out in the past 5 or 10 years. The reason I ask is that I believe far too many American companies become bloated with under-performing employees who are disinterested and/or disengaged. Since terminating these under-performers is perceived to be such a legal mine field, perhaps the company simply hires more staff and absorbs the rot.

    "I believe rigorous performance evaluations combined with an effective process to root out underperformers while elevating 'stars', is the key to never having to lay off staff. However, in overly litigious societies this may never happen, as occasional 'culling' via mass layoffs is perceived to be the safer bet."

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