JimPinto.com - Connections for Growth & Success™
No. 101 : October 20, 2002


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

Contents:
  • Chinacosm
  • Honeywell cutbacks, brags about offshore mfg. & engineering
  • Rockwell wave of layoffs
  • Roomba - the room-cleaning robot
  • Perry Marshall interview with Jim Pinto
  • eFeedback:
    • "Soft Solutions" an age old message
    • More on human lifespan
    • Eurotherm - Peter & RePeter; Barnhouse & Yurko

George Gilders' Chinacosm

It's clear to many people today that China is poised to take over the world's manufacturing. In China today, some 18 million people enter the work force each year, with typical wages of 60c. a day. Manufacturing workers outside of China are being displaced on a large scale; even Mexico is losing jobs to China.

The idea that Chinese workers are replacing physical laborers elsewhere has long been a given. But now China is poised to replace the world's knowledge workers as well. China is turning out 700,000 engineers a year, 37% of all college graduates, all trained in a university system that is rapidly growing in size and quality. Engineer pay ranges from $4,000 to $8,000 a year, plus medical costs, housing and pension. As product design becomes more network-centric and less location-dependent, competition against Western engineers will turn fierce.

According to techno-visionary George Gilder, the 80s was the decade of the Microcosm, when rapid advancements in microprocessor technology propelled the US economy; the 90s was the decade of the Telecosm, when high-speed fiber-optic communication channels generated growth markets around the world. Now, says Gilder, a fast-rising China is emerging as a technological powerhouse, with deep and serious implications for the US and world economies.

During a recent visit to China, Gilder was most impressed with the high-pitched level of capitalistic energy he found there. Typically unable to restrain his enthusiasm, Gilder launches into hyperbole when he describes China as "in fact the greatest opportunity in the history of capitalism". As if that weren't enough, he heaps hyperbolic great praise on Communist Party chief Jiang Zemin. "In Washington, Jiang is considered a dangerous Communist," Gilder says. But no. "Jiang is the single greatest capitalist leader of the postwar generation."

Click Get ready for Chinacosm

Honeywell transition to offshore Manufacturing & Engineering

Honeywell has just had a new round of layoffs, caused at least partly by the migration of manufacturing and design services to offshore locations - the Indiacosm and Chinacosm trends.

A knowledgeable Honeywell insider weblogged this report on the recent "town-hall" meeting in Phoenix, attended by David Cote, CEO, Kevin Gilligan, ACS Chief, and Jack Bolick, the new head of Industry Solutions.

    "David Cote's most recent town Hall meeting (17 Oct. 02) was the standard "we must suffer now to make us stronger in the future" type of drivel.

    "Cote emphasized the importance of setting up shop in China (which was perceived by many as to mean "continued outsourcing"). And then he bragged about the "world-class" capabilities of India and that they have ranked on a scale from 1-5 as a strong 5 for the last 4-years in the software arena (again viewed as more outsourcing). In fact, the remaining continuing engineering responsibility is scheduled to complete transition to India by Nov. 02.

    "On the subject of Kevin Gilligan, methinks he doth protest too much. Constant denials about claims of being "for sale"; very much troubled by Pinto's prognostications - to the point of having access to the JimPinto.com web-site terminated and issuing an e-mail which warns that any reproduction/republication of internal company news is now deemed by the "lawyers" as a violation of company policy which may include termination of such offenders.

    "Question: Just how many employees can view internal news articles before it is legally considered as public domain? We might just have to test that theory.

    "During Cote's song and dance session, Jack Bolick chose to sit right in the midst of the "factory worker" section - and they loved him for it! Playing the "I am just like one of you" role and coupled with his good 'ol boy North Carolina accent appears to be sucking in many new supporters. Jack has not been there long enough for anybody to gage his intentions and direction for the business. As they have all done prior to him, he too will soon be off on the Grand World Tour to meet with location heads around the world. One can only hope that he spends as much time listening to customers as he will to those who will tell him exactly what he wants to hear."

Traffic on the Honeywell weblog was higher than ever, yielding significant insights and feedback from several Honeywell insiders. Read some of the latest comments and provide your own feedback.

Click Honeywell weblog

Click Other JimPinto.com weblogs

Honeywell posted a modest third-quarter profit as stringent cost-cutting (including broad employee reductions) offset lower revenues.

Click Honeywell Posts Profit, Warns of Job Cuts

Rockwell - wave of layoffs

About 2 weeks ago (Oct. 03, 02) an ominous message on the JimPinto.com weblog warned:
    "Next week Rockwell Automation will be announcing the largest lay off in the history of the company."
And then this week, another weblog message confirmed:
    "The Axe falls again! In yet another wave of RIF's, Rockwell Automation HR is touring the country with a briefcase full of pink slips and out-placement brochures. Beginning with field offices on the east coast, the Rockwell hit squad travels west. Left in their wake are RA employees, both current and former. Former employees wonder what happened? Current employees wonder what's next? Everywhere there is despair."
Another Rockwell Automation insider reported:
    "At the Mequon,WI plant, Rockwell Automation began layoffs this week. They have moved their drives division to their Richland Center, WI. and Sumner, IA facilities. They will discontinue all manufacturing in Mequon, and when the lease is up on their facility there, move all office personnel to headquarters in Milwaukee. Manufacturing operations will move from urban plants to plants in rural areas. Production costs are significantly lower in these areas. You will be seeing Rockwell leave any facility that is leased, and move all product to company owned facilities. All leased office space in the Milwaukee area will also be abandoned and you will see consolidation in the headquarters building. Rockwell has already begun moving some manufacturing to China, Mexico, and Brazil. I think you can look for this trend to accelerate in the immediate future due to the lower cost of doing business in these countries.

    "Rockwell is taking a close look at all their US plants and will consolidate manufacturing operations in cases of redundancy. They will also take a look at productivity, labor costs, and payroll burden. They will close plants, and initiate layoffs in order to fine-tune their profitability."

To most Rockwell employees, Don Davis represents the Allen-Bradley old guard, simply remembering what it was like when A-B was enjoying itís glory days. The concern is that he's coasting, awaiting retirement, and out of touch with the people and the times. Most people have the opinion that Controls President Keith Nosbusch is a puppet; Davis pulls the strings.

Ron Wichter is Senior VP GMS (Global Manufacturing Solutions Group) reporting to Nosbusch. Wichter comes from Compaq and doesn't understand the nature of the business; his attempts to develop GMS have been unsuccessful. GMS staff reductions of 70% have occurred, and paralysis seems to be creeping in because of inability to convert the GMS vision into action on a global basis.

The RIFs on Tuesday resulted in the loss of more key people, still uncounted. Remember the RIF rules?

  • 1st. cut - Liposuction
  • 2nd. cut - Amputation
  • 3rd. cut - Dismemberment
Most Rockwell insiders feel that the fat has been trimmed long ago; now they're cutting muscle, bone and limbs.

One long-term employee moaned, "Tuesday was the saddest day I've ever spent at RA/A-B next to 9/11/01. Those of us who remain are numb, just waiting our turn to process out. The bean counters run the show; all they care about is the numbers."

Pinto's Prognostications
The question with much of Rockwell's business is not the cost. Cost is very important, but Rockwell is late doing this. The real question is: what good is cost effectiveness with the wrong market, the wrong product and the wrong channel?

The Rockwell distribution channel is much too expensive, they are distant from their customers (the two things being related) and their primary offering is in a vanishing segment of the business. A PLC by itself delivers little value today, since it is not complete in meeting the customersí measurement, data management, automation, optimization, data presentation, communication and control needs.

At one senior management meeting, Don Davis suggested that he's looking for a share price that didn't start with a 2 (he meant over $30). He got his wish; the stock is now down about $16. At this point, acquisition is probably a good thing. It is time for new management and a fresh perspective. Rockwell's future rest in the hands of the next owner.

Click Rockwell revised earnings outlook

Click Rockwell weblog - read the thread, provide your own feedback

Click Other JimPinto.com weblogs

Roomba - the room-cleaning robot

Tracking the arrival of practical robots has long been my hobby. I'm one of those who believe that recent technology advances will result, sooner or later, in practical, everyday robots. I've used the Kreepy Krauly for years - invented in S. Africa, this pool suction sweeper moves around in random patterns to keep most swimming pools pretty clean. Is this a robot?

For a few thousand dollars, anyone could probably build a robot that can clean floors, going around furniture and not getting stuck in corners. But, at that price, the market is limited - few people are interested beyond the novelty.

Just last month, iRobot unveiled an inexpensive robot that cleans most rooms. Called Roomba, the robot is a little battery-powered vacuum cleaner that scurries around the floor, sweeping up dust and dirt as it travels. And instead of costing thousands, Roomba costs just $199.

Detroit has been using robots to build cars for four decades. Roomba is the first device to bring the laborsaving promise of robotics into the home. While Sonyís Aibo and similar toys proved that consumers want robots, Roomba may be the first that they actually need.

Roomba isnít just for show. It does a good job on the daily chore of sweeping or vacuuming the average home. It picks up dust bunnies, dirt tracked in from the street, spilled rice and coffee grounds, loose beads, and most other objects that are smaller than an acorn. It gently avoids furniture, it doesnít fall down stairs, and it runs up to 90 minutes on a single battery charge - enough time for it to clean two 16 by 20 foot rooms. This machine is not a gimmick: it gets floors clean.

To use the Roomba, you put it on the floor, turn it on, and press the button marked S, M or L (depending on your room size) to adjust the parameters of the walk and determine how long the machine runs before it decides that it is finished. The robot plays a little tune and starts sweeping the floor in an ever-widening spiral - essentially, the machine sweeps in crop circles. When it bumps into something, it backs up, turns, and starts off in a new direction. Periodically Roomba alternates this behavior with a wall and furniture-hugging algorithm and straight lines across. It will also randomly turn and drive as far as it can until it hits something.

Being a robot, Roomba doesnít think like a human being, and it doesnít clean like one either. It may drive underneath beds, sweeping up dust that regular housecleaners may ignore. On the other hand, itís easy for Roomba to get tangled in power cords, long shoelaces, or even socks; when it jams up you have to turn the machine over and manually extract whatever is stuck.

Computer scientists call the Roombaís behavior a "random walk". The big advantage of this approach is that the Roomba doesn't need to map out your living room and then keep track of where itís been. Roombaís walk isnít guaranteed to cover an entire floor, but in practice it does a very good job. Just like the Kreepy Krauly in my pool at home.

Click iRobot Roomba

Click RoombaVac website

Perry Marshall interview with Jim Pinto

A lot of people keep asking what I'm up to after my "retirement". What are the reasons for my involvement with the JimPinto.com website? What are my primary interests? Why am I still involved with Industrial Automation? Why do I publish eNews? How many people are signed up for the eNews list? Where do I get all this information?

The talented marketing consultant Perry Marshall asked me all these questions, and more - my 30+ years as founder of Action Instruments, my views on the direction of the industrial controls business, my projections about future technologies that will make our lives better, and where I feel our world is headed in the 21st century.

The resulting "interview" has been published by Contemporary Controls in their Oct. 02 newsletter, and is now on their website. The interview is also on the JimPinto.com website. Go take a look.

Click Perry Marshall interview with Jim Pinto

Click Jim Pinto Interview

eFeedback

Hassan M.Ahmad AL-Kandari [HMAHMAD@kockw.com] from Kuwait Oil Co., Kuwait, wrote :
    "I would like to say that I appreciate your futurist thinking. Why? Because you view the world in a way that motivate others to think about the benefits of the whole. Your "soft solutions" is the message of all the prophets and the remarkable figures of history."
Still on the subject of human lifespan, Dr. Ted Mohns [tedmohns@yahoo.com] wrote:
    "The data I'm aware of regarding the effects of weight suggest no excess mortality for mild degrees of overweight but then rapidly mounting excess mortality for overweight beyond that. On the other hand, significant prolongation of lifespan beyond the norm, in the animal models I've seen reported, seems to require being seriously underweight, i.e. by 15% or more relative to the norm for the species studied. Americans have a long way to go, on average, just to reach the worldwide norm for homo sap.

    "Studies of two reported pockets of extraordinary longevity (hill people in the Andes and an area in the Georgia section of Russia) have acknowledged the problem of inbreeding/genetics as a confounding variable, but seem to point to the following as significant contributors to longevity: (1) daily physical exercise and routine physical work, and (2) aged people in these groups have a revered and active role as sources of knowledge and wisdom for their community. Our culture obviously doesn't do well with either of these."

Several people appreciated the case history of Action Instruments after acquisition by Eurotherm and then Invensys. I got a lot of feedback that my comments on Eurotherm people were "right on".

Several Eurotherm insiders reminded me that Peter Wade and his yes-man Peter Tompkins were referred to as Peter and RePeter. Current Eurotherm people report that, since Peter Wade has departed, RePeter Tompkins doesn't really know what to repeat. So he has simply become RePorter Tompkins.

A long-term Eurotherm insider feels that Allen Yurko and Dan Barnhouse deserved each other:

    "Peter Wade was, as you say, a competent technical manager. He did some good things at Drives and was a great guy to work with. When Claes Hultman came along, it seemed that Peter felt he had to play along and his management effectiveness (and even his personality) went downhill. The move to Eurotherm Controls was the beginning of the end.

    "The acquisition of SAS (Dan Barnhouse's system integration business) by Eurotherm Drives in 1995 was driven mainly by the desire of most of the US management team to move from Reston, VA. to Charlotte, NC. Eurotherm paid too much for SAS and aspects of that business, discovered after the sale, made it an even worse deal.

    "Dan Barnhouse and Allen Yurko seem like two brothers, both using deception and manipulation to further their goals rather than good, honest work. Dan forced out many good people from Eurotherm Drives during his unscrupulous march to the top and so destroyed the culture - the place is now full of lackeys and the corporate motto has become "Dan's way or the highway".

    "What a waste of a once great company!"

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