JimPinto.com - Connections for Growth & Success™
No. 325 : 25 April 2014

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

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Top-50 Automation companies 2012

Once again, CONTROL magazine published its list of the top-50 Automation companies in N. America and the world. It is creditable that ARC, the premier industrial automation advisory group, is involved.

The list was published in December 2013. It is for 2012 because it is tabulated from published results for the most recent fiscal year.

CONTROL discloses clearly what's included and what's not in their definition of revenues. There's a good discussion of almost all players in the automation industry.

There are 4 lists: Top-50 N. America; Top-50 Global; Honorable Mention Global; and Honorable Mention N. America. Here is my tabulation for 2011 and 2012, Top Global and N. America. The large companies move up and down a couple of places every year.

Summary of the 2012 Global and North America Top-10 rankings

North America
Rank 2012 Rank 2011 $M 2012 Rank 2012 Rank 2011 $M 2012
Siemens 1 1 14,313 4 4 1,541
ABB 2 2 11,591 3 3 1,810
Emerson 3 3 9,167 1 1 4,405
Rockwell 4 5 6,072 2 2 2,975
Schneider 5 4 5,753 5 6 1,427
Yokogawa 6 6 4,360 19 19 344
Mitsubishi 7 7 3,611 32 32 188
GE 8 8 3,556 7 7 1,227
Danaher 9 10 3,307 6 5 1,412
Honeywell 10 9 3,195 9 8 963
Omron 11 11 2,494 22 20 299
Invensys 14 16 1,759 11 12 795

Here is my view of my favorite growth companies on the global list:

  1. In North America, Emerson, Rockwell and ABB are at the top. The largest global automation company Siemens at #4, followed by Schneider at #5. Danaher achieves the 6th position, followed by GE at #6, Honeywell is at #9 and Invensys (now acquired by Schneider) is #14.
  2. The acquirers and mini-conglomerates are advancing rapidly in the lists. Danaher is at #9, Cameron at #8, Ametek #10, Spectris (which acquired Omega) is #12, followed by Roper at #14.
  3. Phoenix Contact is # 16 on the global list, with over $ 2B revenues, far outpacing its old rival Weidmuller which ranks # 31 with about $ 870M. Wago is falling behind #42 with less than $600M.
  4. Other closely held 'mittelstand' Europeans are flat: B&R # 44 $ 550M; Turck # 45 $ 551M; Pepperl+Fuchs #41 $ 621M; Pilz got an honorable mention at $339M.
  5. The Japanese: Yokogawa is #6 on the global list with $ 4.3B; Omron is #11 at $ 2.5B.
  6. My favorite standouts continue to grow: National Instruments with Dr. Jim Truchard still at the helm is now #24 with $ 1.14B in revenues; Germany-based Beckhoff, still run by Hans Beckhoff is #47 at $ 523M; still run by founder Dr. Pat Kennedy, OSIsoft got honorable mention with $ 263M; Advantech, the industrial PC-maker continues to advance at #28 with $ 929M global and #25 $268M in N. America.
  7. The private, family-run company Opto-22 is still independent and got honorable mentions with global sales of $60m and N. American sales of $ 39M.
Take a look for yourself at the CONTROL Top-50 commentary and lists (weblinks below).

Click Top 50 Automation Suppliers: Changing Latitudes, Changing Attitudes

Click Top 50 Global Automation Vendors

Click Top 50 N. America Automation Vendors

Click Jim Pinto tabulation of 2010/2011 Top-50

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Automation Acquisitions Hotting Up

Reviewing results during the 2011/2012 timeframe, it seems that the automation majors did not grow very much. But, hidden behind the numbers are good financial results which generated lots of cash.

The stock market measures success by both growth and profit. With not much real growth on their horizons, the majors will all start to acquire smaller and medium sized companies. And then, when new growth occurs it will lead to an acquisition binge. Major companies will try to gobble up new technology leaders to gain new ground.

In a recent review, Credit Suisse analysts point out that manufacturing automation technology companies are an attractive long-term investment target. They claim that the $152 billion global industrial automation market has grown 6% per year on average, since 2003, which is nearly twice as fast as overall industrial growth.

The traditionally separate silos - Process Controls and Discrete Factory Automation - are breaking down with acquisitions across the boundaries. For example, Schneider, which was focussed on discrete manufacturing, with programmable controllers and related acquisitions, recently acquired Invensys a leader in process automation systems.

Siemens and Rockwell Automation, two other big players in automation for discrete manufacturing, are also looking to expand into process arenas. And ABB, the power and automation company, traditionally strong in process, is moving to strengthen its discrete manufacturing capabilities.

There are a couple of other traditionally separate areas that are also starting to merge into the manufacturing automation arena. Assembly robots are moving into higher-level automation systems in factories and plants - creating machines and software for assembly lines and machinery.

Companies that already make plant-level automation systems are also seeking to expand by targeting enterprise level systems, which share data among many areas of the business, including customer relationships, sales, maintenance and manufacturing. The objective is to allow better coordination of design and manufacturing, bring products to market faster, cheaper, better.

The future seems likely to bring more growth in this arena. In China, automation is starting to become competitive with human labor, resulting in significant growth for robots and industrial automation technologies.

Look for automation to become a hotbed of mergers and acquisitions over the next few years.

Click Automation Technology Futures

Click Automation: A Trend That's Sticking

Click Manufacturing Automation Futures

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Demise of the traditional IT department

Information technology (IT) has been a dominating influence in many large manufacturing and process automation companies dating back to the 1970s, the age of mainframes in control rooms.

Many of today's IT departments are legacies of the old mainframe days when IT was the domain of specialists. They became large and powerful and usually grabbed control of most of the computers installed in the factory and on the plant floor.

Change is here. Computer expertise is no longer just the domain of a select few. During the workday, everyone wants to use the same technology devices they are familiar with on a personal level. The old command and control rules don't apply in the new "bring your own device" (BYOD) world.

Most IT managers feel that they are continuing to lose control of their usual bread-and-butter business. According to several IT services researchers, there is a continuing battle for the soul of IT and the beginning of the end of the traditional IT manager role.

Many managers across all departments now believe that they can make better and faster decisions without involving IT. Already, more than a third of all technology spending now happens without any IT department involvement. And 90% of companies say they now have non-IT business departments that are partially or wholly responsible for technology decisions.

In the security arena, the fortress mentality in which all IT was architected for security to be foolproof is giving way to systems that respond to multiple threats when and where they happen. As a result, the role of people in data security will decline, replaced by distributed capabilities that detect, assess and respond rapidly and effectively.

Today, business process design is driven by the need for optimization and cost reduction. Tomorrow, it will be driven by the need to create superior user experiences that help to boost customer satisfaction. And that's the name of the game.

Click Predicting the future of the IT department

Click The Death of Traditional IT: And the Rise of the New Partnership Model

Click Jim Pinto - Automation Infotech Futures

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Amazon warehouse automation

I hate shopping and I'm an Amazon nut - I buy everything via Amazon, the world's largest online retailer. My selection arrives on my doorstep within just a couple of days.

Do you wonder how Amazon manages to deliver any of the huge variety of products to your doorstep so cheaply and so quickly? What does it cost them to put all those items on the shelf, select them unerringly, and deliver them so quickly?

Amazon delivers from 80 giant warehouses, strategically located near key shipping hubs around the world. The warehouses themselves are massive, with some over 1.2 million square feet in size.

At the heart of this global operation are people (over 65,000 of them), and a logistics system known as "chaotic storage" which is like organized confusion. It's an organic shelving system without permanent areas or sections. There is no areas just for books, or any specific products, as you might expect in a retail store layout. The product's characteristics and attributes are irrelevant. What's important is the unique barcode associated with every product that enters the warehouse.

Every single shelf space inside an Amazon warehouse has a barcode. Every incoming product that requires storage is assigned a specific barcode that matches the shelf space in which it will be stored, allowing free space to be filled quickly and efficiently.

A sophisticated database tracks and monitors every single product that enters/leaves the warehouse and keeps a tally on every single shelf space.

There are several key advantages to the chaotic storage system. The first is flexibility - freed-up space can be refilled immediately. Next is simplicity - new employees don't need to learn where products are located; they simply need to find the storage shelf within the warehouse. They don't need to know what the product is, just where it is.

Lastly is optimization. Amazon must handle many millions of orders, which means that at any given moment there is a long list of products that need to be picked from the shelves and prepared for shipment. Since the database knows every product required for shipment and the location of each product inside the warehouse, an optimized route can be provided.

Since Amazon deals with such a wide variety of products there are a few exceptions to the rule. Really fast-moving articles do not adhere to the same storage system since they enter and leave the warehouse so quickly. Really bulky and heavy products still require separate storage areas and perishable goods are not ideal for obvious reasons.

With this storage system a wide variety of products can be found located next to each other - a necklace could be located beside a DVD and underneath a set of power tools. The arbitrary placement can even help with accuracy as it makes mix-ups less likely when picking orders for shipment.

It's a fascinating system - Chaotic Storage. That's the best way to describe it.

Click Amazon Ramps Up $13.9 Billion Warehouse Building Spree

Click The Amazon Warehouses

Click MUST SEE video of the Amazon warehouse system working

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Makeover of UK Automation Insider

Walt Boyes, known industry-wide for his keen insights and outspoken attitudes, has now left his position as Editor-in-chief of CONTROL magazine after a decade. Walt is now publishing Automation Insider, acquired from Nick Denbow in the UK who remains as European Editor.

Automation Insider is a subscription publication that has been published for 18 years, serving the automation and process control industry. The staff has extensive experience in the automation industry as vendors, end-users and journalists; they know what you want to know, and they give it to you.

Because they do not accept advertising, Insider can publish “without fear or favor” and can cover many things no one else covers. Cyber security is well covered with discussions about issues and vulnerabilities which may not be found elsewhere.

All major automation user group meetings are covered from a disinterested third party editorial position, with deep analysis of new product offerings, press releases, financial and other data, giving a different viewpoint which can't be found anywhere else.

Just last month (March 2014), Insider included an interesting interview with ARC President Andy Chatha by Joy Ward, the Insider Qualitative Research Team Lead. The latest Insider (April 2014) features Peter Zornio, of Emerson Process Management. It includes the first position paper: “The Internet of Things in Manufacturing.”

Individual subscriptions are $500 per year. Sign up to get the inside scoop on what’s going on in the automation industry.

Click Subscribe to Automation Insider

Click Read Walt Boyes' prolific Live Journal

Click Contact Walt Boyes

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My comments on the corruption of capitalism stuck a chord with several Americans. Dan Trudeau [dtrudeau@prausa.com] was stimulated to comment:
    "I think there's a difference between people who follow capitalism not as a human system but like a religion. There is no system on this Earth without flaws and above criticism. I happen to believe Capitalism is the best economic model we have. People are too emotionally tied to it and get personally upset at any questioning of it.

    "I don't think selfishness has to be at the core of capitalism. Our whole manufacturing boom of the 20th Century was built on Henry Ford’s idea of paying people more money for less time on the job. The man is lauded in business schools all over the globe. His chief lesson: more free time + more money to spend = growing economy.

    "The thinking now is you pay people as little as you can get away with to maximize profitability. This is especially true in the service sector, which has absorbed all the unskilled employees from manufacturing. That has led to less money being spent, which leads to a stumbling economy.

    "Instead of circling the wagons and trying to squeeze money out of everything and everyone so profits can go up, share the rewards, with higher standards attached. Ford did this and re-invented the economy. Everyone now is being taught the opposite.

    "We can't make more jobs where increases in productivity have eliminated them. The answer is to use the money that productivity has created to up the income level of people still working, which will create more economic activity, and probably new jobs in places we haven't even considered.

    "It comes down to this: capitalism works best when we are working not toward wealth, but greatness. Do great things and the money will come. We're circling the wagons when we should be climbing mountains."

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Michael A. Marullo [mam@infonetrix.com] also had some interesting insights about Selfish Capitalism. Says Mike:

    "Chances are that many, if not most, of those who asked to be 'removed' from your eNews list are the very people who think they'll become rich by being selfish.

    "You hit the nail on the head - Selfish Capitalism is killing our country! Sure, it's easy to say that anyone who isn't doing well is simply lazy or stupid (or both). But executives with 7-figure compensation continue to reward themselves for mediocre performance on the backs of the workers who were laid off in the name of cost-cutting and efficiency. It's a simple matter of greed.

    "Workers are putting in more hours for less pay and with fewer benefits than any other time in history, causing huge increases in productivity even as their bosses remain focused on further increasing their own compensation to the highest multiples of average worker salaries ever recorded! This is not just an opinion - it's an absolute fact!

    "As the buying power of a shrinking Middle Class continues its decline - further exacerbated by Baby Boomers exiting the mainstream of consumer purchasing power - there will literally be no one left to buy goods and services at anything resembling a decent margin for the suppliers. Is that really a difficult concept to grasp?"

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Gary Wilkinson [wilkinsong@yahoo.com] does not agree with my praise for Edward Snowden. Gary wrote:

    "I can't go there on Snowden. On the matter of privacy I believe that if you want to protect your privacy, don't go on the Internet. I also believe that freedom isn't free.

    "What Snowden did was wrong, and he knew it. If he believes he is right, then he should take responsibility and face the consequences of his actions.

    "There are many soldiers, both in uniform and civilians, who fought to keep those secrets. Indeed, many of those secrets have kept us Americans safe and our soil free.

    "Snowden may be a fine fellow, but if he thinks the US security apparatus has flaws, and it has many, he may not be pleased when he learns the secret history of his new home in Russia."

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