JimPinto.com - Connections for Growth & Success™
No. 167 : 8 November 2004

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

Click on any item to jump directly to that item
Well, for you automation mavens who have been demanding more automation news, here is a plethora of Pinto prognostications in that vein. But, you must allow me at least one final political editorial, to share my feelings about the recent US political results. And there are some significant eFeedback responses.

Invensys - Ulf is CEO, Haythornthwaite waits

As predicted, Invensys CEO Rick Haythornthwaite finally stepped down, to give the reins to the newly hired hired-gun, COO Ulf Henriksson. Invensys employees on a broad front have reported that Ulf has visited, looked and listened, and is now making strong, corrective moves. The problem is that these new moves come after too many other changes which have resulted in a seemingly endless game of musical chairs.

Haythornthwaite became Invensys' CEO some 3 years ago. He didn't really know too much about industrial automation and strategized the company into a worsening situation. Endless hordes of consultants and new VPs wreaked havoc with long-standing products, employees and customers.

With a quirky twist of strategic logic, Haythornthwaite sold off the best-performing businesses (presumably because he couldn't get a good price for the bad ones) to pay down the humongous debt burden which was the legacy of the old Allen Yurko and Lord Marshall regime. Then, when things got worse, he added to Invensys' woes by re-financing with expensive debt - squeezed by the banks, who evidently made a quick profit with their re-financing fees.

With all these machinations in the background Haythornthwaite waited in vain for revenues and profits to emerge. But, with an endless stream of new managers and consultants, Invensys continued to decline. And then, Ulf Hendricksson was hired from Eaton, with big bucks to match big expectations regarding what he would and could do. Everyone expected Ulf to take over, after a respectable period. Now he has.

Haythornthwiate has "stepped down". An un-named company mouthpiece told the press that Haythornthwaite is not leaving quite yet. "He will leave the company when it has turned the corner. And that job is not yet done." Hmmmm... I suppose he has not found another job yet and needs time to look while still employed, to promote the perception that he saved Invensys from the jaws of death. Look for his exit as soon as he finds a new position. When he does leave, note the size of his exit package; in May 2003, the board agreed to a request for his exit notice period to be reduced from one year to one month.

Of course, there are plenty of boards that will buy Haythornwthaites's story of strategic brilliance and tactical experience, to hire him as their new turnaround CEO. Or, perhaps he can join Allen Yurko as a venture capitalist, to buy some of the Invensys pieces that remain.

All this, while struggling employees suffer under the endless waves of change, hoping and praying that Siemens, or someone else, will buy the company and stop the spiral of decline.

Click UK Sunday Times - Haythornthwaite to quit Invensys

Click Invensys' Haythornthwaite waits

Click Read the complete Invensys saga

Click Invensys weblog - latest news & views

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Rockwell moves ahead under Nosbusch

Rockwell was once an aerospace conglomerate (rockets, chips, auto parts) with $13 billion in sales. Then in 1985 it outbid Siemens and others, paying $ 1.6 billion to buy privately held Allen-Bradley, the US leader in programmable controls. Don Davis, a long-term A-B employee, rose to corporate leadership and helped Rockwell to spin off, or sell off, all the other businesses. Rockwell Automation emerged, a pure-play automation business leader, with only about $4 billion annual revenue.

When the industry recession came some years ago, Rockwell Automation stagnated, cutting back to achieve profit objectives. Programmable controllers were now commodities, and Rockwell moved into software and industrial networks. Global Manufacturing Solutions (GMS) was formed to offer systems integration, competing with the company's own systems integrator sales channels.

Don Davis, now 64, has handed over the CEO reins to Keith Nosbusch, while still remaining Chairman. Keith Nosbusch, 52, began his career at Allen-Bradley as an electrical engineer and rose to become President of the Controls Division. He's a decent manager, but doesn't seem to be able to re-motivate his troops, many demoralized by continuous cutbacks.

At the recent RA Automation Fair, things seemed upbeat. A knowledgeable industry analyst reported that RA technologies are really coming together - perhaps the best (outside of Emerson Process) for integrating all platforms, and broader by far than Emerson. It seems like the Distributors are on board for the new ways of selling. The key thing missing was Keith Nosbusch; no keynote speech, no mingling; he wasn't anywhere to be seen (someone said he was there for just one day out of the three). The Rockwell weblog reports a key perception problem - Keith Nosbusch is a detail-driven workaholic, while Don Davis seems to spend all his time with Wall Street analysts. Neither has the charisma of say a John Berra of Emerson.

Interesting new people shift: Kevin Roach, VP at GE Fanuc has joined RA to take over Rockwell Software. Kevin is a smart guy, who sold his tiny company Sensor-Pulse to Total Control Products, which itself was bought by GE Fanuc. Kevin was given responsibility for Cimplicity software and was instrumental in the purchase of Intellution by GE-Fanuc from Emerson. Now it will be interesting to see how the demotivated Rockwell Software group fares under Kevin Roach's leadership.

Rockwell Automation has grown about 5% this year, with revenues of $4.3 billion - mostly hardware, software and systems/maintenance contracts, with some electric motors and drives. All the tough cost-cutting has resulted in profits of about $300 million and 36% increase in earnings per share. Market-cap is a respectable $8 billion.

There are too few strategic buyers who can afford a friendly acquisition of this size. Siemens and Schneider are direct competitors and would likely be blocked by anti-trust rules. GE, Emerson and ABB continue to feign interest, but don't seem to like the strategic misfit. Honeywell (Industrial Process Solutions) was once a strong strategic partner, using RA network software and hardware developments to strengthen its own solutions portfolio; but then that Division of Honeywell itself got into trouble and interest fizzled.

Rockwell's current healthy $ 8 billion market cap makes it difficult for a peer company like Eaton (sales $ 9 billion, market cap $ 10 billion) to acquire at a premium. But, Danaher (sales $6.5 billion, market-cap $ 18 billion) may have a better shot, if it chooses. In the meantime, Rockwell Automation remains "independent".

Don Davis' pay is still more than double that of CEO Nosbusch, plus healthy stock options. But, Don's efforts with the analysts seem to be paying off - ROK stock has climbed steadily to $43 (Nov. 2004), a healthy 25 times trailing earnings and well above the level at which he was supposed to be exiting. But he hasn't departed - yet. So, what's he waiting for? A Nosbusch nudge? Or retirement age?

Stay tuned...

Click Forbes (Nov. 15, 04) - Choreographer of the Assembly Line

Click Some of the history - Whither Rockwell Automation?

Click Provide your own comments on the Rockwell Automation weblog

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ABB has recovered - growth strategy in China

ABB is basically a well-managed company. But, with a flurry of unwise acquisitions and a weak global economy, the automation major stood on the brink of bankruptcy two years ago. With $ 1.2 billion asbestos claims in the US against acquired Combustion Engineering, ABB posted a record net loss of $783 million in 2002. In response, broad cost cutting programs were launched, several thousand jobs were slashed and multifarious divisions were divested.

Chairman Juergen Dormann took over the reins and has lived up to his reputation as a superb manager, putting ABB back on an even keel. The company posted a Q3 2004 net profit of $98 million, improved from a loss of $283 million compared to last year. Sales rose to $4.8 billion, from $4.6 billion in the 2003 July-September period. Orders were $4.8 billion, up from $4.4 billion. Net profit for the first 3 quarters was $188 million, compared with a loss of $388 million in 2003. Sales rose to $14.1 billion, up from $13.7 billion.

Juergen Dormann will now relinquish the roles of president and CEO in January 2005 and revert to his role as Chairman. He is being replaced as CEO by Fred Kindle, who joined ABB in September 2004 from Swiss-based Sulzer AG. It remains to be seen how Kindle will fill Juergen Dormann's big shoes.

Now, with expansionist moves in China, ABB plans to hire 5,000 new employees and double its orders and revenues to $4 billion by 2008. China is currently ABB's third largest market, after the US and Germany. With $18 billion worldwide sales, $ 2 billion now (2004) comes from China. ABB has 105,000 employees, and 7,000 already live and work in China. This will grow to 12,000 by 2008. China will be ABB's number one market in 5 years.

Here is ABB's 5-point strategy for China:

  1. 20% growth per year for the next 3-5 years.
  2. $600 million new investments.
  3. Buying materials locally to build complete product lines.
  4. New R&D center in Beijing, to meet Chinese customer needs.
  5. Develop local talent.
When the going gets tough, the tough get going!

Click ABB Reports Higher Third-Quarter Profit

Click ABB chairman outlines China strategy

Click Read ABB's troubled history - The ABB Blahs

Click Provide your own feedback on the ABB weblog

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ISA InTech - weekly Pinto's Points

InTech, the ISA magazine, publishes a regular (weekly) eNews, which includes a link to a brief Pinto Point. Each point is an item which I think will stimulate your thinking - technical trends, market musings, sales solutions, business briefs.

Here are some of the recent topics that may interest you:

  • Hard truths about globalization
  • Exporting jobs to stay competitive
  • Focus on the benefits-outsource the tools
  • Robot "swarms" can solve problems
  • Robots without ethics
  • Nanotechnology provides energy solutions
  • The problems of scarcity and abundance
  • Enterprise decision-making
  • The art of leadership
  • Investing in engineering start-ups
  • Leadership and the engineer
  • The roots of American innovation

    Click Index of ISA InTech Pinto's Points

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    Pinto's Post-election editorial

    Well, the country has spoken, and GW Bush was elected president for four more years. Like almost half of this great country, I am disappointed with America's choice.

    After one of the most polarized elections in recent history, many Americans, including me, are still reeling from the emotional fallout. People willing and able to sustain any real thinking about the implications are now confronted with a sizable emotional challenge.

    I have had many, many, long email discussions with eNews readers and friends, which I appreciate very much. I must admit that I was often bowled over with the passion and intensity of the opposing arguments and lengthy rebuttals. But, it was well worth it for me, and I hope for you too. Thank you!

    I don't want to be a sore loser, but I must point out some of the post-election backlash which is causing me, and many others, to recoil in great dismay.

    Gov. Arnold Schwarznegger of California stupidly sneered at Democrats as "girlie men" and "losers". When the re-elected President was encouraged to reach out and heal the wounds, some vengeful Republicans exclaimed, "Why reach out? We won! Let the Democrats reach out to understand our thinking!" This only prolongs polarization.

    After all the angst about the dangers of electronic voting, there have been only minor disclosures of miscounts. The people at Verified Voting are working diligently to investigate reported problems. If it does turn out that there was widespread voting machine manipulation, the repercussions for American Democracy will certainly be disastrous.

    Now I will retreat into a philosophical mode, to reset to reality. Americans have the President they voted for. Perhaps things will get worse before they get better. Somehow, we always seem to overcome adversity and I believe America will be stronger for the experience.

    I love America, and I will do my best to support its goals and ideals!

    Click Singing the Post-Election Blues

    Click For the "intellectual elite" - IQ and Politics

    Click Verified Voting website

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    Bob Cowan [bcowan@GSsystems.com] wrote about the problems of political polarization:
      "I have come to the conclusion that it isn't really about Bush. Yes, Bush does magnify some smoldering emotions, but the reality is that roughly half the population was vehemently against him BEFORE the 2000 election and PRIOR to all the things that anti-Bush citizens point to over the last 4 years. It is true that we are a polarized country, and clearly Bush is a lighting rod for this. There are unresolved questions, that may get to the real underlying problem........

      1. Why is there such polarization?
      2. Why are the emotions completely overriding objectivity? Would it really have mattered that much if in 2000 if it was Bush or John Doe? My opinion, probably not; because many of the emotions/forces were already there.
      3. Bush has won. So, what will it be like in 4 years? I think there will still be problems and a high level of emotions.

      "I don't know the answers, but I am willing to bet that the problems don't not go away. Where do I think some of the issues are?

      1. Some very basic feelings that aren't really being discussed. An example: maybe there is just a very large part of the population that feels "can't we all just get along?" So therefore they believe in, and buy into, appeasement.
      2. A media (newsprint and TV) that just aren't as objective as they used to be. I would be ok with them not being objective, if they would make clear what their alliances are. I consider this a fundamental difference between this group and Al Franken or Rush Limbaugh (I listen to both). Unfortunately, a fair amount of our population doesn't understand this, and takes this news as gospel.
      3. It is hard to find one source that knows the facts, and doesn't have a partisan ax to grind. Most people won't search as much as you and I do, so they are under informed.
      4. Both sides really are misleading and in some cases flat-out lying. It is easy to look at the advertising, and see this. This REALLY has to change. Maybe ads should be vetted by some type of panel, PRIOR to being provided air time

      "These are just thoughts. I don't know pretend to know the solutions. I do feel that all of this goes beyond Bush, and that we shouldn't fool ourselves into thinking that it's just a Bush problem."

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    Paul Cook [paulcook@marcusknightley.co.uk] gives a British viewpoint:
      "The last line of your recent election sales pitch really resonated. 'Americans will elect the President they deserve. We deserve better.'

      "Here in the UK there is the same feeling of having been led into Iraq for the wrong reasons, of having been lied to by our leader and feeling ever increasing pressure of higher taxes, incompetent government, failing services, higher unemployment and all the issues with regard to where our country fits in the global picture.

      "When we watched 9/11, when we watch the uncontrolled descent into war, I had only my personal experience of meeting American people when traveling to fall back on. Of course they were patriotic. Of course they believed their country capable of great things.

      "But what struck me most was a feeling that they could help the world. That as human beings they could improve the global situation. They had a natural 'citizenship', where they felt a responsibility for improving how the world worked. And I can't shake the feeling that Bush has exploited this natural goodness to his own ends, rather than the needs of his country.

      "This is why I agree with your statement. I really pray you will get a leader who can harness this natural citizenship, look after his own people and find a place for America in the world."

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    Ronald Riba [rfriba@yahoo.com] discusses the forces of change:
      "Your recent eNews (15 October 2004) outlined many of the dynamic forces of change and advancement at play in our world. But the contributors just skimmed the varied social realities and the potential profound impact.

      "Certainly many of the bio-tech advances, among other technical new promises, are inspiring in their vision for the future of mankind. However, they also carry many intellectual concerns as to what their impact may realize. For instance, the exercise prescribed for coping and living with technological change was founded on intellectual capacity and nimbleness to endeavor to stay at the cutting edge of the evolutionary process.

      "If one analyzes this theory, one must accept that only those who are the most intellectually agile will be the ones who will be able to adapt and flourish. Thus the chasm between this group and the underclass, as it has been called, will widen. They will be left to compete on a world scale with the least common denominators. It will take years, if not decades. Look around, the beginning of it is already in play.

      "Now, just remember, in a democracy, one man or woman, one vote. Think of the ramifications. Did not some sage observe long ago that democracy is inherently designed to eventually fail? Then too, succinctly, bio-tech with all of its promise could eventually lead to the dehumanization of humans, if nothing else, in just recognizing that some day they will be able to deliver humans to order.

      "On another field, there are those who believe that they will be able to bring the human life span to hundreds of years. Won't that be fun? It really is not, if you note the mouse experiments on which this thesis is based.

      "Just think - some people blame it all on outsourcing...."

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