JimPinto.com - Connections for Growth & Success™
No. 303 : 27 April 2012

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

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Future Manufacturing is NOW

The April 21 2012 edition of The Economist has an important special report: "The Third Industrial Revolution". Here is a summary.

The first industrial revolution began in Britain in the late 18th century, with the mechanization of textiles, eliminating laborious hand weaving. The second industrial revolution was born in the early 20th century when Henry Ford developed mass production with the moving production line.

Several revolutionary technologies are converging in this decade: new materials, digital and nanoscale manufacturing, advanced robotics, 3D printing, and a wide variety of web-based services. The third industrial revolution is emerging.

Old Manufacturing is assembly of mass-produced parts. Today, digitally designed products can be "printed", creating solid objects by building up successive layers of specified materials. Almost anything can be produced this way. Within the next decade, anyone will be able to simply download a digital design and "print" it. The old concepts of "economies of scale" won't matter any more.

A 3D printer is like a two-dimensional office printer that prints just one page or many, at the same cost-per-page - until the paper and ink cartridge need to be replaced. This will have a disruptive effect as significant as office equipment, telecoms, photography, music, publishing and films.

Materials are changing as well. For example, carbon-fiber composites are replacing steel and aluminum. Product engineering will begin at the nanoscale level. And, sometimes it will not be machines which produce the product, but genetically engineered micro-organisms. (But, that's a whole different story, which will be discussed in a future issue).

Everything in the factories of the future will be run by smart software. As manufacturing goes digital, it will allow things to be made economically in much smaller numbers, with more flexibly and minimal labor. Designs will be "crowd-sourced" - sent out anywhere in the world to the people with requisite skills and interest.

As the number of people directly employed in manufacturing declines, the cost of labor as a proportion of the total cost of production will reduce drastically. This will motivate manufacturers to move work back to advanced countries, not only because offshore wages are increasing, but also because new manufacturing techniques make it cheaper and faster to respond to changing local tastes.

Large manufacturers will lose their dominance because small companies and individual entrepreneurs will be able to compete. Launching novel products will become easier and cheaper. Communities offering 3D printing and other production services are already coming online ? a new phenomenon called social manufacturing.

Now the wheel of industrialization is coming full circle, turning away from mass manufacturing towards much more individualized production. This could bring back many jobs back to the rich countries. But here too, what will happen to manufacturing jobs? Big question.

Click Economist Special report:
Manufacturing and innovation - A third industrial revolution

Click Manufacturing Goes Digital - Business of Making Returns to Wealthy Nations

Click Manufacturers are increasingly working with new materials

Click AW March 2012 - New Manufacturing Paradigms

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Different Innovation Styles

What is innovation? When considering innovation, Apple dominates the lists. The company does not develop far-out new science; it spends less on R&D (as a percentage of revenue) than many other tech-giants. Yet it's Innovations are "powerful and profound", writes Fareed Zakaria in his recent article on Innovation. In fact, the use of technology to "delight" customers is where Apple excels.

The auto companies have generated new spirit by re-focusing on innovation and high-tech manufacturing. But, will the industry that was born with Henry Ford's production lines survive in the coming third-generation era of industrialization?

In a new book, "Reverse Innovation" (published April 10, 2012) authors Vijay Govindarajan and Chris Trimble of the Tuck School of Business point out that the gap between rich nations and emerging economies is closing. No longer will innovation originate only in what was considered the "first world". In the new global environment, significant innovation will flow in the other direction.

In the mature economies of North America and Europe, innovation is mostly linked to big budgets in large R&D facilities, backed by huge marketing programs, largely targeting the most affluent customers with high margins to recoup the development costs before the products become consumer commodities.

Let's look at innovation from the other end. India creates what is needed from whatever is available. In India, "constraint-based innovation" relies more on ingenuity and improvisation to solve problems. In India, colloquially, this "frugal engineering"is called "jugaad". It starts with serving customers at the base of the pyramid - highlighted by CK Prahalad's book, "The Fortune at the Base of the Pyramid". For example, jugaad cars are made from spare parts.

Automobile innovation is an example. While most car manufacturers are focused on high-tech gadgets, better looks and more horsepower, which drives costs up, the tiny Tata Nano is being sold for about $ 2,000. This is the smallest, lowest powered and cheapest production car in the world, made by the company that now owns the luxury British-made Jaguar. At last count, the Nano was backlogged for several years.

Clearly, we need to re-think our old ideas about Innovation.

Click Fareed Zakaria: Innovation Key to Winning the Future

Click Book - Reverse Innovation

Click India's Indigenous Genius: Jugaad

Click Eight Innovation Ideasto Help Drive Automation Companies

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Exceeding the limits of growth

In the 1970's an environmental study, "The Limits to Growth" predicted that the the world is on track for disaster. But no one really took the warning seriously because one of the sad facts about futures is that people are more willing to listen to optimists.

A new study by MIT researchers used computers to model several possible future scenarios. It compared real-world data from 1970 to 2000 with the business-as-usual scenario, and confirmed the prognosis - if humans continue to consume more than nature was capable of providing, global economic collapse and population decline could occur by 2030.

However, the MIT study also noted that unlimited economic growth was possible, IF governments forged policies and invested in technologies to regulate the expansion of humanity?s ecological footprint.

Providing abundance is humanity?s grandest challenge. A new book, (Feb. 2012) "Abundance" by tech entrepreneur turned philanthropist Peter Diamandis and award-winning science writer Steven Kotler describes how the growth challenges can be met. The book shows how 4 forces: Exponential growth technologies; do-it-yourself innovators; techno- philanthropists; and the rising billions - are combining to solve humanities biggest problems.

The book gives plenty of reason for optimism. It establishes hard targets for change and lays out a strategic roadmap for governments, industry and entrepreneurs. It examines human need by category ? water, food, energy, healthcare, education, freedom. And it introduce dozens of innovators who are making great strides in each area: Larry Page, Steven Hawking, Dean Kamen, Elon Musk, Bill Joy, Ray Kurzweil, Ratan Tata, Craig Venter, among many, many others.

Click Smithsonian - Looking Back on the Limits of Growth

Click Book - Abundance: The Future Is Better Than You Think

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Chile Impressions & IMA Anniversary Event

It started with an email from an old colleague, Juan Menchaca in Chile, an Action Instruments Sales Representative over 30 years ago. He sent a picture of me presenting him with an award at an Action sales meeting - two smiling, young go-getters. I remembered.

Juan invited me to come to Chile to be the keynote speaker at an event to celebrate the 30th Anniversary of the founding of his company based in Santiago, Chile. Industrial Measurement & Automation (IMA) was founded by Juan and his partner Aldo Amadori, and has grown to over 1,200 people, with Systems Integration, Sales and Service operations.

After our bucket-list visit to Machu Picchu, Peru in July 2011, we had indeed been considering a visit to Chile. The trip would include a week's Easter vacation and I accepted the speaking engagement with pleasure.

Situated south of Peru and west of Bolivia and Argentina, Chile is the longest country in the world, a narrow ribbon of land 2,700 miles long and on average 109 miles wide, between the Andes and the Pacific. The northern desert contains great mineral wealth, principally copper. The relatively small central area dominates in terms of population and agricultural resources, and is the cultural and political center.

We spent a delightful week before Easter, with excellent weather, fall (autumn) in the southern hemisphere. We landed in Santiago which is the capital and largest city, Latin America's most modern metropolitan area.

Our brief stay was primarily in Santiago, and allowed only day-long visits to Vina del Mar, Valparaiso and Zappalar on the coast, about 75 miles away. Wow! What wonderful sights, restaurants and food! Somehow, the Chilean steaks and seafood are perfect ? must be the marinade and the sauces. In Chile, our favorite Brazilian drink Caipirinha is called Caipiroska (with vodka).

I must tell you a little story about my hosts: They were both ex-Honeywell before they started IMA, and they had some great 3-decades-old stories. One of their customers, a large copper mining operation, was buying a large DCS system, and also specified PLCs. "PL-what?!" - they had never Heard about Programmable Logic Controllers before. They signed on as the Chile representative for Allen-Bradley and won the project.

The IMA 30th Anniversary Event was hosted by AIE - Association of Industrial Electrics & Electronics - and held at a university auditorium in Santiago with about 100 people in attendance - industrial customers as well as sales professionals and university professors. My two talks: "Industrial Automation Technology Trends" and "The Future of Global Industrial Automation" were well received, with simultaneous translation earpieces for those who needed them.

The following day, we met with several leaders of AIE for brain-storm discussions relating to the growth and success of the organization and the industrial automation business in Chile. The attitudes and excitement made this a very rewarding experience for me. I am resolved to return.

Click IMA Chile

Click Asociacion de las Industria Electrica Electronica, Chile

Click Chile: Maps, History, Geography, Culture, Facts, Guide & Travel

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JimPinto.com Automation Weblogs discontinued

The Automation company weblogs were started about 10 years ago, with considerable success. Some weblogs regularly attracted more than 1,000 visits per day. Clearly there was a need.

These weblogs were not "open" blogs, or chat-boards - where people's comments are automatically inserted online (Yahoo and others handle that well). Instead, I tried to calibrate the input, to make sure it was NOT simply disgruntled employees sounding off. I edited and removed overly negative or offensive material.

I invited people to include their names, but most blogs were anonymous. Apparently, many people don't have any other way to communicate within their own company. I invited people, especially executives I know personally, to weblog positive comments. Sometimes (very rarely) that happened. It was very evident that senior management in all the automation companies were reading the weblogs regularly.

My own reasons for continuing to service the weblogs were numerous: It kept me connected to the automation business and abreast of what was going on (finger on the pulse). It gave me regular advance-insights into the goings-on at management level, plus acquisitions/divestitures etc. Some changes were predicted on the weblogs months before they actually occurred.

The "anonymous" weblogs were an experiment - allowing company employees to vent, when management takes no notice. Many complained that inclusion of names would certainly have negative personal repercussions. But sadly, apart from the occasional positive blog, it deteriorated to a mostly negative tone.

In some cases, it was clear that just a couple of individuals were contributing a majority of the negativity. I often eliminated some 10-20% of the blogs due to offensive content. I put in a lot of work to do reasonable editing and post promptly.

But, as someone suggested, "Negativity breeds negativity!". So, with very little in the way of positive results, I have stopped these weblogs.

These are difficult economic times, and all the automation companies are doing about as well as most other industrial companies, some better than most. I wish them and their employees continued success.

Click The Pinto weblogs phenomenon

If you are pleased, disappointed, or just interested, please feel free to send me an email: Click Jim@JimPinto.com

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Greg Hale launched ISSSource almost two years ago. He comments on my recent coverage of industrial security issues:
    "I am amazed at how quickly safety and security environment have become important elements in the manufacturing automation world.

    "Not to be an alarmist or a conspiracy theorist, but Stuxnet, Duqu, Night Dragon and the like are just the tipping point. We did a few stories saying Duqu was on a recon mission and got what it was looking for. Now it is a waiting game for the attack. Scary thought, but all our sources say it is only a matter of time.

    "Meanwhile, there are companies that are doing the right thing and investing in a defense-in-depth strategy. But not enough are moving in that direction. It seems the thought is prevailing that manufacturers don't feel that they themselves will be a victim.

    "It ends up being a bet they make, saying they can save on the lower cost of a total security solution compared to the much higher cost of an attack. That seems like a big gamble to me.

    "The main message to get out is that the technology is out there to help keep manufacturers safe and secure. But technology alone will not solve the problem. The human side needs to remain vigilant to ensure continued safety and security."

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Michael Ding(Junying) from China comments on Bob Schaefer's "Meditations of an American in China":

    "Yes, you have readers, including me, in China. Actually, as an engineer in the field of industrial automation, I have been reading your e-news for almost 10 years (if my memory is correct). Your e-news not only keeps me updated on automation technology progress, but also makes me think about the underlying cultural factors of various nations and companies.

    "I'm not surprised that an American was shocked by the 'Spring Festival Migration' in China, wondering how crazy Chinese could be to get home in this Chinese traditional holiday. In my view, behind the largest mass movement of people on this planet is the cultural factor of Family. It is very important for Chinese to get back home and stay with parents for a couple of days in the Spring Festival.

    "Considering the huge geographical area and the number of people, the transportation is a challenge to every government. For example, the official website booking train tickets was available from June 2011, and it had been running well until this Spring Festival. With reported 1-1.4 million visits per day in those days, it was impossible to log into this website, and the railway authority was blamed all over the country.

    "With the increasing number of off-farm workers in recent years, the situation is getting more challenging. Most Chinese, however, think that the importance of family gathering, or reunion, outweighs the difficulties of traffic; they take whatever way to get home, especially off-farm workers who work hard in big cities far from their hometown during most of the year.

    "With the strong impact of western culture in the past decade, the 'Family Reunion' is one of the few traditions Chinese still hold. People usually stay with parents for a couple of days, cook together, travel leisurely, and visit friends.

    "Parents normally enjoy this period most. I think, generally, this tradition is good, since it makes the family relationship stronger and makes parents happy, most of whom have not seen their children for almost one year or a couple of years.

    "On the other hand, the government should work harder to address the traffic problem. Also realizing this problem, some Chinese are beginning to avoid the rush time of Spring Festival and visit parents at other times.

    "By the way, this is also good exercise for my English."

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Dick Caro , Fieldbus guru and expert on decentralized control wrote regarding my recent "Innovation Paradigms" eNews item:

    "Since 1985, I have been preaching the benefits of decentralized control. That is what led me to Fieldbus. You are 100% correct that the major suppliers have only given lip-service to decentralized control, and Foundation Fieldbus specifically - Emerson has all the cards, but tells users not to go too far. Only ABB and SMAR actually support it, and they do not exploit their advantage.

    "Specifically, Foundation Fieldbus HSE is the key technology, and it is not supported on most vendor systems. It enables direct peer-to-peer communications between any two nodes on the Foundation Fieldbus network. Emerson sees it as a competitive threat that would eliminate controllers, or at least many of them. This is the subject of the tag line for my book, 'Consumer Guide to Foundation Fieldbus Networks for Process Control'. This is proven technology that works at several refineries, because the users have taken the lead.

    "I have discussed distributed logic control with Dick Morley. Many PLC supplier?s remote I/O can already perform logical control functions without a central PLC, but no PLC supplier supports an architecture for distributed logical control.

    "I have spoken with top executives at two of the leading PLC companies about this and offered to lead their development teams to prepare the necessary software, but they are not interested - it was not developed 'in-house'.

    "Our industry not only lacks the leadership to produce killer products, but effectively stonewalls their organizations from external sources of killer ideas."

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