JimPinto.com - Connections for Growth & Success™
No. 252 : 28 July 2008

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

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ABB growth roars - new acquisition-orientated CEO

ABB reported record orders, revenues and earnings for Q2 2008. Revenues increased to $9B, up 27%. EBIT jumped to $1.4B up 42%, and net income was $975M or 16.1%. Cash flow from operations more than doubled to $978B.

While others in the industrial automation business complain about weak markets, ABB reported bookings increase in all divisions, up 31% to a single-quarter record of $11.3B. This was the first quarter in which orders from emerging markets (51% of the total) exceeded orders from mature economies. That's the key to ABB success.

ABB continues its revenue growth through global operations; just plain good management brought operational improvements and increased profits.

A comparison of ABB and Rockwell stocks shows that conditions are VERY favorable for ABB to buy Rockwell. A year ago Rockwell was in the 70's and it's now at about 43 (about 45% down). ABB has increased from about 20 to 30, now at around 26, but with strong ratios and plenty of cash to buy an ailing Rockwell if it chooses.

Two weeks ago, ABB named Joseph Hogan, the head of GE Healthcare, as CEO. This is just 5 months after Fred Kindle was exited (March 08) reportedly for being too cautious about acquisitions. With more than $5 billion in cash on its balance sheet, ABB has not made any large deals in the past few years.

During his tenure at GE, Joseph Hogan spearheaded a number of large acquisitions including GE's biggest-ever acquisition, the $10B purchase of Amersham. Now expect Joe Hogan to bring out ABB's big guns. Rockwell will roll.

Click ABB 2Q Net, Profit Margin Rise

Click Forbes - ABB Will Be Careful With Its Cash

Click Why Rockwell is a primary acquisition target

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Tipping Point in the Peak Oil Crisis

The depletion of the world's petroleum resources was first forecast in the 1950s by Dr. M. King Hubbert. The point of maximum production (known as the Hubbert Peak) coincides with the midpoint of depletion - when half of all resources have been used. It is generally accepted that US oil reserves passed the Hubbert peak in the '70s.

Ignoring the warnings, America and the world continues to gorge itself on oil, turning isolated strips of desert into crudely conspicuous concentrations of egregious opulence. Oilman T. Boone Pickens calls this the largest transfer of wealth in human history - about $ 700B a year, four times the cost of the Iraqi war.

Those who forecast oil at $100 a barrel were ignored as pessimists, until it happened. Then the speculators got involved, pushing it to almost $150 a barrel. Now it has backed down to about $125, and the pain is 'forgotten' - till it inevitably jumps again. Expect $200-a-barrel or more within the next year, and then sighs of relief when it falls to $180. Will we never learn?

In Europe and most parts of the world, gasoline has been selling at $7-8 a gallon. But it had to top $4 in the US before Americans took notice. Suddenly, the media and the financial markets understood the notion of peak oil.

In his new video and nationwide TV advertising, billionaire oilman T. Boone Pickens explains the problem and provides a rational explanation how our oil dependency can indeed be eliminated, or at least significantly reduced. Watch the video (link below).

Here's the geopolitical conundrum that grips the US: We're now borrowing money from China to buy oil from the Middle East to consume in ways that are destroying the planet.

Al Gore made a speech in Washington last week that laid it on the line for American spirit and enterprise. He calls for America to embark upon a moon-shot style program to switch to clean, cheap, and renewable sources for 100% of the nation's electricity, within 10 years.

Of course, there was the predictable cacophony of nay-sayers - America could not possibly transform itself so quickly. Al Gore points out that America responded to President John F. Kennedy's challenge in 1961 to put a man on the moon in less than a decade.

America CAN meet the challenge!

Click Gore's possible dream

Click Watch the T. Boone Pickens TV commercial

Click The Tipping Point in the Peak Oil Debate

Click American Energy Independence

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New workplace paradigms

Traditional manufacturing dates back to the industrial age with the growth of large-scale production in hierarchically structured organizations. Most factories had full-time workers, and most people remained with the same company till they exited with a pension.

This kind of employment has little place in today's workplace. Rising health costs are making company-sponsored long-term health plans unaffordable. Further, long-term pension funds are becoming an unacceptable financial burden.

Today's factories have geographically dispersed knowledge-workers operating round-the-clock. At the end of an individual's workday, activities are transferred to team-members in other parts of the world - US, India, China, Europe - who are working during the daytime in that country.

This use of sequential workers is similar to the shift-style workforce that evolved during the industrial revolution, which had a profound impact on manufacturing. This same concept is relevant for semi-structured work in many professional arenas such as finance, product development, marketing comm. and IT.

For what is left of traditional workplaces, walls and square offices should be turned into open environments with common work areas and quiet spaces. The old, prestigious personal spaces should be replaced with team space.

New office tools - computers, PDAs, wireless connectivity - should be readily available for all employees, facilitating effective communications and productivity. Offices should provide quick and easy file transfer and e-mail connectivity, whether the worker is in the office or at a remote location. Follow-me telephone numbers should be assigned to individuals rather than tied to physical locations. The concept of the "personal secretary" anchored to the office location is obsolete.

In the new paradigm, old-style HR departments disappear. New "facebook" style networking should link employees (local as well as international) to develop camaraderie and a close-knit family atmosphere.

Factories and manufacturing work places should, like offices, make strong efforts to be warm, welcoming places; they should look good - small, efficient, clean and happy places to work. Productivity and efficiency will follow.

Click Automation World - New Workplace Paradigms

Click Mass Career Customization - A new paradigm for the workplace

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If the world were a village of 1,000 people

Dona Meadows writes a thought-provoking bi-weekly column called "The Global Citizen". Here is something she published recently which is an extension of some of the things I have written about regarding globalization, eclecticism and inclusivity.

If the world were a village of 1,000 people, it would include:

  • 584 Asians
  • 124 Africans
  • 95 East and West Europeans
  • 84 Latin Americans
  • 55 Soviets
  • 52 North Americans
  • 6 Australians and New Zealanders
In this village of 1,000 there are:
  • 329 Christians (187 Catholics, 84 Protestants, 31 Orthodox)
  • 178 Moslems
  • 167 "non-religious"
  • l32 Hindus
  • 60 Buddhists
  • 45 atheists
  • 3 Jews
  • 86 all other religions
Communication is difficult in this village:
  • 165 people speak Mandarin
  • 86 English
  • 83 Hindi/Urdu
  • 64 Spanish
  • 58 Russian
  • 37 Arabic
This accounts for only half the population. The other half speak Bengali, Portuguese, Indonesian, Japanese, German, French and 200 other languages.

Consider these numbers:

  • One-third (330) of the 1,000 people in the world village are children and only 60 are over the age of 65.
  • Just under half of the married women in the village have access to and use modern contraceptives.
  • This year 28 babies will be born. Ten people will die, 3 of them for lack of food, 1 from cancer, 2 of the deaths are of babies born within the year. One person is infected with the HIV virus.
  • With the 28 births and 10 deaths, the population of the village next year will be 1,018.
  • In this 1,000-person community, 200 people receive 75% of the income; another 200 receive only 2% of the income.
  • Only 70 people of the 1,000 own an automobile; some of the 70 own more than one automobile.
  • About one-third have access to clean, safe drinking water.
  • Of the 670 adults in the village, half are illiterate.
If the village has a total annual budget of $1 million ($1,000 per person) it is clearly not distributed evenly. Of the total million:
  • $60,000 goes to weapons and warfare
  • $53,000 for education
  • $44,000 for health care
The village has buried beneath it enough explosive power in nuclear weapons to blow itself to smithereens many times over. These weapons are under the control of just 100 of the people. The other 900 people are watching them with deep anxiety, wondering whether they can learn to get along together; and if they do, whether they might set off the weapons anyway through inattention or technical bungling; and, if they ever decide to dismantle the weapons, where in the world village they would dispose of the radioactive materials of which the weapons are made?

Click If the world were a village of 1,000 people

Click Take a look at this Video - Shift Happens

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Book: Vision for 2012

For hundreds of years, prophets and priests have forecast the coming decade. Today, most scholars and futurists foresee major upheaval on the horizon which few can deny.

John L. Petersen is head of The Arlington Institute, and a noted futurist. His perspectives on what lies ahead come from having worked in the military, for the National Security Council at the White House, in business, real estate development, advertising, marketing, and the nonprofit world.

In his book, "A Vision for 2012, Planning for Extraordinary Change" John Petersen explains how the world is on the verge of several crises, some of which may occur concurrently to force major changes on society and even civilization as we know it today.

Here are the key shifts, which no one can doubt could happen at any time:

  • Rapid climate change
  • Global financial system breakdown
  • Serious oil shortages
  • A bird-flu pandemic
  • New levels of sophisticated terrorism
Not just an alarmist, John Petersen highlights the coming scientific and technological breakthroughs which may help humankind not just to cope, but to evolve through the immense challenges that lie ahead. Things can be different if we work together to think, plan, and push for change.

Click Review and buy this book at Amazon.com

Click Read Reviews & Commentary

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Bryan Menard, Sr. [bmenard@menardelectronics.com] wrote regarding our recent discussion on religion becoming more inclusive:
    "My sons grew up in Lake Jackson, TX, a bedroom community to the massive Dow Chemical complex at Freeport, TX. Although our community is small, we have many residents from all over the world. Our children grew up in a neighborhood with an Indian (Hindu) family across the street, a Vietnamese (Buddhist) family next door, an Iranian/Canadian (Muslim) family down the street and a couple of Texans (Catholic/Protestant) thrown in the mix.

    "One of my great pleasures as a father was watching all of our children grow up together. They simply never cared about their differences, only about what they shared in common. I remember well their High School Graduations and the multi-cultural celebrations up and down the street. They have all stayed close friends through University years, marriage and a number of them now have their own children.

    "One of the many characters in our neighborhood was the Grandfather of the Indian family, a wise and loving man, he was knowledgeable about all faiths and served as a Grandfather to all the children in our neighborhood, no matter what color, creed or background. So many times, I looked out the front window of our home to see 6-8 of the neighborhood children sitting on the front lawn with 'BaBa' holding court and trying his best to teach them respect and love for one another and to respect their differences.

    "These years later, I see a little bit of 'BaBa' in all these young adults, good responsible husbands and wives, fathers and mothers, trying very hard to pass on to their children the same messages and examples taught them. At the end of the day, this is what gives me hope for the future, for people of all faiths, for our children and their desire to make this a better world, regardless of faith."

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Gary Costello [garycost@rcn.com] is pessimistic about US corruption:

    "I've been watching the machinations of the federal government and business with intensifying alarm for many years. Corruption is so pervasive in the country that, sadly and disgustingly, we've grown to accept it as a 'natural' part of our democracy.

    "Given the collectively massive negative impact on this nation, corruption is literally a form of treason. As with any treasonable act, the perpetrators should be prosecuted as such. During time of war, treason is punishable by death. I think if any of those corrupt business or government officials knew they could die for their deeds, it would drastically reduce corruption.

    "Unfortunately, what I've suggested will never happen because many of those empowered to put this in place are also tainted by corruption. The end result translates to an endless decline of what once was a great nation.

    "My belief is that the glory days of the USA have passed. Decisions by federal government leaders has been heavily influenced in the wrong directions by big business. Furthermore, the general method of doing business by corporations during the past 40 years is so ingrained that it can't be reversed in time to matter. History will reveal the greatest contributor to the fall of the US was corporate (investor) greed.

    "Simply stated, as a nation we've been focused on rearranging the deck chairs and now, with the water level approaching the gunnels, all that is happening is the speed of rearrangement has increased.

    "The wealthy can live pretty much anywhere in the world; the remainder of us will drown."

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Chris Schene [schene@mindspring.com] agrees with Rick Lamb that engineering jobs are simply not rewarding enough:

    "I left the controls industry because I did not feel that the rewards matched the responsibility. I switched to the medical software industry from working on controls systems because:

    1. The control system software I was working on was very difficult, much harder in fact than the medical software I now work on.
    2. The controls software entailed much more responsibility and it actually paid less than the medical industry software.
    3. I had to work in geographically undesirable areas to do controls work and the working environment is dangerous. The hospitals where I work now are usually in fairly nice areas and they are all over the country: Almost any place I move will hospitals and medical facilities are 'higher class' than controls jobs. By comparison, I did not get the sense that controls companies held the position of Engineer in high regard.
    4. My current employer allows us to telecommute. That's worth about $10,000 a year to me."

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