JimPinto.com - Connections for Growth & Success™
No. 83 : April 26, 2002

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

  • Industrial Automation players - the Japanese
  • Nanotech - a new world is coming
  • Newsweek : Business moves into the future
  • USA 100 years ago
  • Weekly ISA Pinto Points
  • eFeedback:
    • Siemens has no DCS - could do more with Moore and ORSI
    • Lure of the Lifestyle
    • Layoffs and offshore labor - shortsighted dis-service

Industrial Automation Players - the Japanese

With $3b in annual revenue and 20,000 employees worldwide, Yokogawa is certainly one of the top-10 industrial automation companies in the world. Omron has worldwide revenues of $4.5b (includes components and other businesses) with 25,000 employees. Other major Japanese industrial automation companies are Toshiba and Mitsubishi though they are second-tier automation players in the US and Europe.

The primary goal of Japanese companies in international markets is to increase market share (profit is secondary). Their time frame is very long, compared to US investment goals. The Japanese know that Americans have no stomach for long-term investment and so their primary sales tactic is price-cutting - sacrificing margins to generate revenue. Also, they invest heavily in product development, producing excellent products with low-cost, high-quality manufacturing.

In my view and experience, the Japanese and Germans have similar cultural barriers that have inhibited growth through acquisition. (See JimPinto.com eNews, 18 March 2002). The Japanese cultural problem is exacerbated by their view of the acquirer as "conqueror" and the acquired as "defeated". They do not seem to be able to avoid this perception, internally and externally. This is why they have not made ANY acquisitions in the US. This view has been confirmed by my Japanese friends, in Japan.

Many people have observed that there is much more affinity between the Germans and the Japanese, than between either group and Americans. This shows up in a broad number of ways, ranging from where Japan favors investment, to where they favor development, to what development philosophy the products follow, relative hardware versus software strengths and weaknesses, "not invented here" attitudes, business philosophies, and more.

To generate growth in international markets, the Japanese develop partnerships and joint ventures (50/50 ownership). Japanese markets are notoriously hard to penetrate and so many US and European companies have also tried strategic alliances and joint-ventures in Japan. With a deep cultural divide - totally dissimilar investment timeframes and long-term goals - there are no successful Japanese JVs, either in the US or in Japan. The only exception is GE-Fanuc: GE and Fanuc own 45/55 in Japan, 55/45 in the US, and 50/50 in Europe.

Johnson Controls and Yokogawa started US and Japan joint ventures which inevitably fizzled out. More recently, Rockwell started a strategic alliance with Omron, which many thought would lead to a merger or acquisition. In my opinion, this cannot happen for the reasons I have mentioned. Similarly, Rockwell recently started a partnership with Korean Samsung - but this is only a systems integration alliance to help Rockwell develop SE Asia markets.

A long-time, senior US employee of a major Japanese company confirms that all Japanese automation suppliers seem to have characteristics that are similar to the ones I mentioned about Siemens - rigid long term planning that adapts slowly to changes in business climate and perceived opportunity in local markets. Also, there is extensive central control from the home market (where they are first tier suppliers), that doesn't apply favorably in foreign markets where the regional affiliates operate in the second tier.

There are NO Japanese companies in the US, or anywhere else for that matter, which have local or foreign top-executives. A Japanese company senior US employee complained that there seems to be a "collective subconscious inferiority complex" of sorts, which leads to (an also subconscious) need to perceive domination. It ends up becoming very limiting when dealing with their companies outside the "homeland".

Other problems relate to the business processes favored in Japan, which are very culturally tied and do not translate well outside. For instance, all subsidiaries are really run by the VP of Corporate Planning, not the President/CEO. This is how they retire presidents upon embarrassment, yet keep the business integrity. The president is a "figurative" leader, as opposed to the "Jack Welch" model that is prevalent in US. They believe that only a high level Japanese person can have the trust, integrity, and accountability to run the show.

Another issue is the fact that international "outposts" are used as training ground for future high-level managers. A typical tour of duty may be 3 years, and then they go back. Continuity of strategy, connection to the homeland, and inconsistent quality of top managers takes a huge toll. The need to position for a successful return to Japan influences motivation to act in the export company's best interest, or sometimes not to act at all. US executives complain that "just about the time we have them trained to the point that they can help us, they are gone, and we start over again".

Japanese companies like Sony are the exception - because they are truly international.

Click Financial information on Yokogawa website

Click OMRON - Financial Summary

Nanotech - a new world is coming!

The stock market makes it look like the tech-stock bubble has burst. But don't be fooled - the technology revolution is just getting started.

Looming just ahead is what may well be the most exciting revolution - nanotechnology. Many people (including me) believe that this will be bigger than the Internet and more far-reaching. It will destroy a lot of business-dinosaurs and create vast new wealth. It will shake up just about everything on the planet.

Nanotechnology gets its name from the measurement called a nanometer, or one-billionth of a meter, the width of about four individual atoms. When we get down to this size, the classical laws of physics change. Once atoms can be manipulated, it will be possible to produce new materials with desired properties: smaller, stronger, tougher, lighter and more resilient than anything that has ever been made.

Nanotechnology will lead to incredible advances. On the most mundane level, an example is scratchproof glass and tiles that shed dirt and never need cleaning. More sophisticated applications include precision drug-delivery systems that can be swallowed like pills, or computers the size of a sugar cube that could hold the entire Library of Congress.

These are the early days in nanotechnology. But there are already exciting businesses out there, in Japan, Europe and the US, developing commercial products.

This report provides a way for you to stay up to speed on changes that will be significant within the next decade.

Click Nanotechnology: A New World Is Born

Engines of Creation - The coming era of Nanotechnology. By: K. Eric Drexler. This book (1986) started the revolution and Drexler is now considered to be the father of Nanotechnology. The book is easy to read - read it!

Click Eric Drexler's Engines of Creation

Business moves into the future

People seem to look just over the horizon for the next great innovation. But often the best ideas come from smart use of technology that is already here.

All kinds of different businesses are using technology to push ahead, transforming their industries and changing our lives. Good companies start with a disciplined business plan. And then they bring in high tech to make it better.

Newsweek (April 29, 2002) cover story: Companies of the Future is worth reading. You'll be surprised at the companies featured - a winery in Oregon, a car-seat maker in Detroit, a start-up airline in New York, a men's clothing store in California. These everyday companies are already generating growth and excitement.

Several interesting articles discuss how good companies keep investing during the current downturn and how their productivity gains will help lift the economy. Experts talk about the workplace of the future.

There's a lot of anxiety out there. But that's good - for the people and companies who work diligently to generate true productivity gains.

Click Newsweek : The Next Frontiers

USA 100 years ago

This interesting item came in via the Morley e-bushtelegraph:

Here are some stats for the USA in 1902, a century ago:

  • The average life expectancy was 47.
  • 10% of adults were illiterate; 6% had graduated from high school.
  • 14% of homes had a bathtub, 8% had a telephone.
  • A 3-min coast-to-coast telephone call cost $11.
  • There were 8,000 cars and 144 miles of paved roads.
  • The maximum speed limit in most cities was 10 mph.
  • The average wage was 22 cents an hour.
  • The average worker made about $200 per year.
  • Annual pay: accountant $2,000, mechanical engineer $5,000.
  • More than 95% of births took place at home.
  • 90% of physicians had no college education.
  • Most women only washed their hair once a month and used borax.
  • The leading causes of death in the were Pneumonia and influenza, Tuberculosis and Diarrhea.
  • The population of Las Vegas, Nevada, was 30.

Weekly ISA InTech Pinto-Points

ISA (the Instrumentation Systems & Automation Society) publishes a weekly e-mail edition of InTech magazine, to provide the latest news that affects the industries InTech covers.

This InTech eNews includes a regular Pinto's Point - short & sweet technical & marketing items.

Here are some recent topics you might like:

  • Production mini-plants
  • Computer jewelry
  • Computerless software
  • An odyssey continues: Predictions for the 21st century
  • Antiterrorism technology
  • Complexity science starting to rev up
  • Bio-Bugs: Robots that learn
  • Save your company - save your good people
  • The pervasive Internet
  • The wireless web
  • As robots get smarter, future looks brighter
  • The law of market confusion
  • Pick a role: Product manufacturer, or service provider

Click Complete Index of InTech Pinto's Points

InTech News is an added benefit to InTech's magazine subscribers. If you are not currently subscribed to InTech, and you want to get the magazine, as well as InTech News, you must sign up for a free print subscription.

Click Fill out the online qualification form for InTech


I had a lot of confirmations and feedback on my Siemens commentary. Neil Brown [neil.brown@rtel.com] from the UK wrote:
    "Your comments about Siemens fit in well with my own observations. One interesting thing about Siemens, in the UK at least, is that sites tend to be either all Siemens or virtually none (apart from the odd PLC in packaging plants and OEM machines).

    "Like you, I think it odd that Siemens - who could easily have afforded to give Emerson a run for their money - seem to be ignoring the DCS market for the third generation in a row. My guess is that, culturally at least, Siemens just don't do DCS and can't get out of this mind set.

    "I don't see any signs out there that Siemens are using their recent acquisitions Moore and/or Orsi for an assault on the DCS market."

My recent writings stimulated this from Jerry Van Ee, [jvanee@ppco.com] in Canada:
    "I read your article: "The Lure of the Lifestyle". You have hit the nail on the head! I think many people live life in the fast lane not because they really want to, or need to, but simply because they are able to. Or, worse yet, they think they are able to.

    "It's a problem as old as civilization. People think that money and possessions will make them happy and the more they have of both, the happier they will be. It's not true, but people believe it is. I don't think the constant barrage of lottery advertisements helps the situation. They very blatantly equate happiness with having lots of money."

Mark Bauer [bauer@integrity.com] wrote regarding layoffs and shifts to offshore labor:
    "The executive's job is to return optimum value to shareholders. American corporate executives do a disservice to their companies and their country when they exchange long-term) assets for immediate financial benefits.

    "Over the past two decades many have failed to factor-in the value of employee loyalty and trust. They move entire divisions and operations on the basis of cheap labor. High employee turnover rates are over-shadowed by related short-turn gains. Massive layoff of employees, followed by re-hiring the very same people, as (non-headcount) contract labor, is an example of this poor practice.

    "Treating the work force as expendable is a serious mistake. Company executives may not sense responsibility or commitment to the workforce, the community, the culture, or the country. But in the end, when a company ignores these, it will eventually lose far more than it appears to gain. The executives get their bonuses - but the workers suffer, the community suffers, the culture they represent suffers, the company suffers and the shareholders suffer.

    "It behooves stockholders to do a better job of holding their boards accountable. Likewise, company boards and executives owe it to their stockholders to be more responsible, with a longer-term perspective."

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