JimPinto.com - Connections for Growth & Success™
No. 230 : 24 May 2007

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

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11 mins.

MTL enters wireless arena with Elpro acquisition

UK-based MTL Instruments Group has announced the acquisition of Australia-based Elpro International for A$28.5m (about US$20m). Elpro is profitable and growing, and the acquisition price represents about 2.5 times annual sales, a sweet deal all round. MTL is a $175M public company and paid cash, funded with available bank debt.

Elpro already had VC involvement looking for an exit so the sale was no surprise. A small crowd of companies were interested (industrial wireless is hot these days) including some of the big gorillas in our market. The fact that Elpro management were significant shareholders swung the deal.

Complementary Cultures
    Graham Moss, CEO of Elpro comments, "The MTL acquisition is a friendly take-over. Elpro was too small and too remotely based to stand alone once wireless was accepted as a mainstream technology in America and Europe. MTL was at the top of our list of potential buyers and we see a close fit with their corporate style and philosophy. We take some pride in the fact that MTL sees similar characteristics in Elpro. All Elpro's senior managers are continuing with the company and are very enthusiastic about the growth potential as part of MTL."

    Says Graeme Philp, MTL Group CEO, "The cultural fit of is excellent and the chemistry was good from first meeting. We are like minded engineers who run companies. We were very impressed by the Elpro team - they have some very good people in Brisbane and around the world. We are very confident that our group structure and our management style allows us to operate successfully with geographically distributed businesses.

Good Strategic Fit
    Wireless is becoming increasingly important in industrial markets for signal and data transmission within plants and between remote facilities. Elpro brings solid and reliable radio technology to MTL to fuel future growth in this arena. This is a superb strategic fit for MTL which is a world leader for products in hazardous environments in the petrochemical, chemicals and oil & gas industries.

    Elpro will extend its international customer base by leveraging MTL's existing sales channels and OEM relationships. Plus it will complement MTL's Open Control Components portfolio, adding wireless capability as end-users seek to add more I/O points without hard-wiring.

    Elpro will continue to be run as a separate legal entity with its own management, P&L and strategy. This works well with other MTL Group business units, with optimum mix of central co-ordination and local autonomy.

    Graham Moss of Elpro will continue to be the CEO of Elpro, and Frank Williams (previously with Action Instruments) will continue to run Elpro in the Americas.

    Elpro will work with other MTL Industrial Networking companies under an Industrial Network business unit (headed by Ian Verhappen) which will cover Foundation Fieldbus, Industrial Ethernet, Data security, Optical data transmission and Wireless.

    Jon Malins is Chief Technical Officer (CTO) at MTL, responsible for several major MTL product developments which have contributed to growth & success. Jon will continue to be responsible for ensuring that technologies are shared around the MTL Group and that key engineering resources are available to all business units. He will continue to have the same overseeing role for Elpro as for all other MTL group operations.

    For Elpro manufacturing, final assembly will be kept within the Elpro facility in Brisbane, Australia. Local sub-contract suppliers will be benchmarked against MTLs own global assembly operations.

    There's a lot of hype surrounding industrial wireless - some of it fueled by your truly (smile). It's clear to me that MTL has a practical and realistic view which will bring results.
Stay tuned as this baby-gorilla begins to wrest winnings away from the big-boys.

And watch for other wireless startups to be acquired - Gene Yon should be planning to cash in his chips from Accutech soon...

Click Press Release: MTL Instruments Group acquires Elpro

Click Automation.com Corporate Culture Series - MTL Has Crossed $100M

Click Wireless Growth Paradigms

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Beckhoff keeps growing & growing

I used to attend the Hannover Fair in Germany each April during the 80's and 90's. Each year I watched as Hans Beckhoff build his small German company with an amazing array of industrial computers and I/O products.

Hans is the scion of a business family which owned local Appliance and TV stores in Verl, in Northern Germany. Hans went off to college, and came back a technocrat. He starting his own company, Beckhoff Automation, which kept growing and growing, fueled with his prolific ideas and product implementations.

Each year, I'd have a drink and a chat on the Beckhoff booth, discussing with Hans the perils of "scaling up" past the entrepreneurial stages. By now Hans was my friend, and I saw his factory in Verl, visited his home and met his family. As the years passed, I've watched with respect and admiration as he continued steadily to build the talent and the team to fuel growth.

Now, a decade later, Beckhoff Automation has grown well past that magical $100M barrier and continues to grow steadily. In 2006, the company grew by 26%, to $250M (Euro 190M). And here is the growth record for recent years: 17% (2005), 31% (2004), 27% (2003). The company continues a very healthy progression. At the end of 2006, Beckhoff had 800 employees worldwide, 20% increase over the previous year.

Hans Beckhoff attributes the continued strong growth to emphasis on new, innovative automation technology, continuous introduction of new products, combined with consistent expansion of the company's international distribution network.

In 2006, Beckhoff Automation established five new subsidiaries in Spain, Belgium, Brazil, South Africa and Australia. Says Hans Beckhoff, "We were already well represented through distributors in these countries, however, we intend to further strengthen our position in these markets by moving toward direct sales." The sales increases confirm the success of this strategy: Exports were 43% of total revenues in 2006.

Beckhoff is now represented in more than 60 countries worldwide through 18 subsidiaries, agencies or distribution partners. Hans Beckhoff is relentless in the pursuit of growth. He says: "In 2007 we will continue to intensify the expansion of our global distribution network by establishing branches in Turkey, India and Dubai."

Hans Beckhoff attributes growth to above-average development in the company's specialty areas of PC-based Control (IPCs), distributed I/O, software PLC/NC and Drive Technology. Further exciting new technological developments are coming soon in the Drive Technology, Safety and EtherCAT-based control.

Europe's most successful PC pioneer, Hans Beckhoff, has a simple two-part formula for success: 1. Put everything in software, on one platform, and 2. Give the customer everything he needs so he doesn't have to buy anything else.

Click Beckhoff website

Click Bill Gates & Hans Beckhoff Usher in E-home Technology

Click Beckhoff Automation sales increase 26% in 2006

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Guru advice for startup companies

Many new companies are started by unemployed or dissatisfied people. Being an owner in an enterprise is perhaps the biggest satisfaction that any job can provide. If you're considering a startup, or have already launched your own company, here's some guru advice which may help.

I'm an engineer, and some 35 years ago when I started Action Instruments, I went to the top engineering gurus - engineers themselves, who were surprisingly accessible. Here's their advice that inspired me:

  • John Fluke, Founder of Fluke Manufacturing (now part of Danaher): "Good people make good products, which make a good profit."
  • Two engineers, Bill Hewlett and Dave Packard, started the ultimate engineering company, Hewlett-Packard, in the proverbial garage. Bill Hewlett's advice: "Understand the numbers. Engineers forget things like margins and profit. What you measure, you can control."
  • Dave Packard said: "People are the keys. Without good people, you have nothing."
  • Andy Grove, former Intel chief wrote: "Only the paranoid survive." Read his book and keep it around when you're running your own company.
Here's my own advice: Hire intelligent, passionate people and make them owners to keep them motivated.

Read my article in the latest (May 2007) issue of Automation world.

Click Guru Advice For Start-Up Companies

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Employee compensation styles

In the age of knowledge work, outsourcing and global competition, many companies still have employee compensation systems rooted in the past. In today's business environments, pay must be performance based.

Most of today's employee compensation systems were originally developed in the old, factory environment, stemming from how hourly workers were paid and advanced in the labor-orientated hierarchy. Having a job meant a fixed hourly wage (usually including paid-overtime for working beyond normal hours) with annual pay increases based on years of service with the company, the occasional bonus and an expectation of lifetime employment.

The best knowledge-workers can't just be paid for the hours they work - they may always be "working". They should be stimulated by the freedom to innovate and contribute to the business. That's the wave of the future.

This is what's revolutionizing human-resource attitudes in this new century. In the era of knowledge-work, employee compensation styles should adapt to achieve maximum benefits for those who generate results.

Read my latest article (May 2007) on Automation.com.

Click Employee compensation styles

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My life on a memory stick

The other day I bought a 1GB memory stick off Amazon.com at $4.95. I had bought a $100MB stick just about a year ago for $75. Already 5 and 10-gig sticks are available, and I expect to buy those soon - dirt cheap.

Now the terabyte - 1,000 GB - hard disk is getting down to the level where we can afford to buy one - or two, or three. How will this affect the way we work?

No one would have bought a $10,000 iPod 2-3 years ago. As flash-memory and tiny hard disk prices came down, MP3 players started taking root. Launched in 2001, Apple has sold over 100 million iPods since then. So, what are the new products that will become practical with cheap memory?

Business models will continue to change as memory becomes cheaper. Overwhelming cheapness of storage will cause anything and everything to be saved. But that is useful only when a specific saved item can be found, quickly and easily. This will continue to drive the importance of search-engines. It is already much easier and faster to look up a phone number on Google, than to look it up in the yellow pages. The phone books keep piling up on my front door, and often go straight to recycling. Why do I need a bulky phone "book"?

Over the next decade, cheap memory will be available to anyone and everyone, and its impact will continue to increase. There will be space to store whatever you wish to recall - pictures of people, words you hear, whatever you thought worth recording. Your life will be archived, and your archive will be your life.

Of course, new problems will surface. What if I lose my 10-gig memory stick? And what if it falls into the wrong hands?

Click The First Terabyte Hard Drive

Click Life Without Hard Disk Drives

Click Kryder's Law - disk memory doubling

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Joanne Harris [punkinmark@mindspring.com] writes about the wasted efforts on Fieldbus standards:
    "How funny about the Fieldbus wars. It just seems like yesterday (1996/1997) that I was working in the UK and hearing all about them for the first time.

    "Back then, I used to tell laymen that the types of fieldbusses were like swimming pool contractors. They were all building pools, but some might go the route of cement or liners, in-ground or above-ground, each with its own features. End users simply chose the one that met their needs the best.

    "The claims to open architecture were a joke, because it didn't exist. A company might partner with another fieldbus protocol, but only if their proprietary equipment was used.

    "So it is sad, but really no surprise that they have come no further along. Such a large expenditure of time and effort and funds, only to decide that no one is going to let go.

    "And now, the war over wireless standards will go the same route. (sigh)"

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Ron Bengtson [Ron@AmericanEnergyIndependence.com] discusses solutions for the Water Wars:

    "I see a similarity between the concerns about water and peak oil. And I see a similar solution --> alternatives. The problem in both cases is a political refusal to commit to the alternatives.

    "Oil can be replaced with many alternatives, including a combination of improved efficiency, conservation, biofuels, synthetic petroleum from coal and shale oil, and electric vehicles, etc.

    "Water is easier. Two-thirds of the earth's surface is covered in water two miles deep. Global warming threatens to heat the ocean. Ocean thermal energy conversion (OTEC) is a viable alternative energy source that can be used to desalinate all the water the world would ever need. The hotter the planet gets, the more OTEC energy we can extract to desalinate more water. Huge solar powered electric or steam motors can drive aqueduct pumps to move desalinated water from the ocean over the continents to anywhere on the planet.

    "Private companies may never find a profit in this, but countries that can spend 500+ billion dollars per year for their military could easily do it."

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Robert Unseld [Robert.Unseld@elektronikjournal.de] from Germany comments on the problem of high CEO salaries:

    "The Infosys-CEO with his $75,000 salary is remarkable, because such things are only known by founders/owners of little small companies that want to grow.

    "For sure, the big bucks of American CEOs are not OK. Question: How much money is earned by the, say, 50 leading men and women of a big company, where the CEO is allocated at around $50M? Is that $150 to 200M? Not easy to earn in operations, I think, in addition to the revenue any company must have to make let's say a profit margin of 10%.

    "I must say, that this kind of thing reflects on the actual state of the country. This is not just the US with those really huge CEO-Salaries, but also for European companies that are going the same way.

    "It's not my intent to criticize these people as if I'm a Socalist. But I'd bet, that nobody's management capabilities are worth those amounts. Surely the worth and/or revenues of the companies those guys are leading are not multiplying at the same rate as their salaries did during past years."

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