The shrinking ranks of the automation leaders

The problem with industrial automation is that it is NOT one market, but rather a loose conglomeration of specialized applications and vertical market segments. The big companies are all broadly spread. Growth in industrial automation takes time, money and marketing, which few really have, or can afford

At mid-size, there are the German "mittelstand" companies like Weidmuller and Phoenix, which are approaching $1bn in revenue. They primarily sell connectors and are trying to expand into electronics, but have not succeeding in growing beyond $20-50m in this arena. And there are young technology leaders like Beckhoff, still around $ 100m and growing. You'll find others, but they are all smaller players, looking for growth in a deceptively big market.

There are lots of systems integrators who look like they are serving big markets and can grow. But, visit the Control System Integrators website to find out how many systems integrators have revenue beyond just $10m. Not too many.

Most automation companies seem to get acquired when they approach $100 million revenue. Rosemount and Modicon are good examples, and there are many more. Measurex and Moore Products got a little larger before they were inevitably acquired. National Instruments is an interesting exception. It is public and has grown independently to $400m, with market-cap of over $2b. It'll be interesting to see how it grows over the next few years, beyond the control of original founder, Jim Truchard.

I once asked a venture capitalist (VC) why he never got involved in industrial automation. His response: no growth potential, too much investment, for too long, and too little reward. Growth in industrial markets is steady, but slow, and very few founders stay for the long haul. It takes a different mindset to get to the next level.

The number of larger automation companies will shrink in this decade. With stalled growth and profit, the ailing companies will get merged and acquired, and fragmented divisions divested. I continue to predict that the Automation Top-10 will inevitably become the Top-5. This year (2004), you'll see this happen. If it doesn't happen, remind me; if it does, I won't need to remind you.

Happily, there are some second tier mavericks and visionaries who recognize the possibilities - and they will become the new leaders of tomorrow.

This discussion is summarized from the chapter "Tomorrows Leaders" in my new book "Automation Unplugged".

Invensys' Haythornthwaite waits

Now, hard to believe, Invensys is seeking to raise another £500m through new stock. Stockbroker Morgan Stanley has been asked to prepare for a rights issue to help tackle the debt of £816m and the £700m hole in the pension fund.

With a current market-cap of just £700m, the new money will peg the value of existing ownership far below expected valuations. The cash injection would give Invensys more time. Ah, but will Haythornthwaite wait? Or, will the Invensys board wait for Haythornthwaite?

CONTROL magazine -
bold and expressive Dec. 2003 cover story

The ever watchful Rich Merritt, [merritt@cedar-rapids.net], a star columnist for CONTROL, objected:

10 emerging technologies that will change your world

• Universal Translation
  Universal language translation software enable people from different cultures to communicate.
• Synthetic Biology
  Sets of biological components, DNA cassettes, that are as easy to snap together like Lego building blocks. Assembling genes which direct cells to perform almost any task. Entire organs may be built for transplants.
• Nanowires
  The Nanotechnology revolution is on the horizon. Nanoscale wires could be key elements in many working nanodevices.
• Bayesian Machine Learning
  Programs that find causal relationships, and make predictions based on incomplete knowledge. Applications such as foreign-language translation, microchip manufacturing, and drug discovery.
• T-Rays
  A new part of the spectrum - terahertz radiation, or t-rays - will be used beyond the limits of visible light, without the medical risks of x-rays. Will transform airport security and medical imaging.
• Distributed Storage
  Transforming data storage for individuals and companies, making digital files easier to maintain and access, while eliminating the threat of catastrophes.
• RNA Interference
  Tiny double-stranded molecules of RNA designed to target specific genes to block harmful effects.
• Power Grid Control
  Wide area control systems to track electric flows across continental power grids several times a second, identify disturbances, and take immediate action, making power outages 100 times less likely.
• Microfluidic Optical Fibers
  Tiny droplets of fluid inside fiber-optic channels could improve the flow of data-carrying photons, speeding Internet transmission and improving reliability.
• Personal Genomics
  There are 3 billion DNA "letters" in each person's genome, and examining the personal genetic material just isn't practical. By focusing on only the differences between people's genomes, the dream of personalized genetic medicine is getting closer.

The impact of e-voting machines & voter rolls in 2004

Why is this important issue not being covered more by the media? Why is this not front page news? Well, the NY Times has been writing about it for months, as have the Washington Post and many other newspapers. And CBS Evening News recently covered the story as well. But where is the rest of the mainstream media on this critical issue?

Here is a summary of the facts (summarized from verifiedvoting.org):

• Computer experts say today’s voting machines are prone to errors and vulnerable to fraud.
• Defective hardware and bugs in software could decide who wins an election.
• Even thorough testing can not reveal malicious programs that could subvert an election.
• Many election officials don't realize the risks inherent in using electronic voting machines.
• Courts have ruled that secret software can be used to record and count our votes.
• Manual recounts will be impossible in districts that don't allow voters to inspect a paper record of their votes.

• Americans will vote using computers with secret software that has not been sufficiently scrutinized.
• They will have to trust computers to record and count their votes correctly - computers that are not advanced enough to ensure the security and accuracy that could justify their trust.
• If something odd occurs, manual recounts of the original ballots will be impossible, because the only record of the votes will be in electronic form, which will match the questionable tally.

The Solution

This needs to be brought into action immediately. Working together with others across the nation, we must convince our Congress to pass HR 2239. Visit VerifiedVoting.org to see what YOU can do.

eFeedback

"We had three electoral events in 3 months here in Houston: a Texas Constitutional amendment (turnout 7%) in September, City elections (Mayor and City Council) in November (turnout <20%) and a runoff of the same, December (turnout 15%).

"As a reminder, in the 2000 Presidentials 50% of the US electorate did not vote. In the 2002 Congressionals 62% did not vote (70% in Texas).

"Some observations:

1. The present parties have been reduced to their core constituents of about 15% each and shrinking. Elections are increasingly decided by turning out party hacks, not by convincing voters.
2. The vast majority of people in this country do NOT feel represented by the current parties. The "electoral battleground" is not this or that minority or special interest, but about 2/3 of the population that have been driven out of the electoral process. Anyone that can mobilize even a part of this huge crowd will wipe out any opposition, as did Ventura in Minnesota.
3. In my district, one candidate won by 29 votes out of about 40,000. A recount is expected. Further proof that every vote DOES count, even if it is a "vote against".
4. Following very numerous voter enquiries about the possibility of election fraud with the e-slates, I as presiding judge of my precinct wrote to the County and both main parties requesting that they issue a joint statement. The response was a non-response.
"The above problems and a host of others are interrelated. The common thread is people's ignorance and indifference."

"Folks like Drucker and Alan Greenspan have been blindsided by what's really happening in the US economy. They are optimistic and are poo-poohing really horrible US problems. Traditionally, optimism has worked - except for several significant periods in US history.

There are a lot of significant people with views that are diametrically opposed to Drucker's: There are dangerous imbalances in the US economy that did not previously exist. We're making them worse. The result will be very bad for all of us.

"I personally believe these other experts are NOT wrong. What happens remains to be seen; do we have 15 years of stagnation (like Japan), a huge break (like the 1929 depression) or what? Goldman Sachs, a financial company NOT in the business of marketing pessimism, recently predicted that average U.S. annual real GDP growth over the next 25-years (2005-2030) will be just 1.5%.

"With great respect for Drucker, I suggest that he is not just wrong, but horribly wrong."

Petr Baum [petr@baum.com.au] from Australia responded:

"Both claims are wrong about totalitarian systems and with starving. The underlying ideology of Soviet system (it was never truly communism) was not altruism. Altruism was replaced by state terrorism during early days of revolution. It failed because over years state terror become less aggressive and people lost their fear, partly because Gorbachov believed in altruism and attempted to transplant it to totalitarian system. But no totalitarian system can survive without state terrorism. What a pity that some people still do not understand basic rules of totalitarian states.

"By-the-way, Altruism is the MOST relevant concept specifically IF you are starving. That is the situation when individuals - and therefore society - can survive only through altruism. Humans are biologically programmed to stick together and even die for their mates if going gets tough. There are plenty of examples of this from most tragic situations."