JimPinto.com - Connections for Growth & Success
No. 191 : 11 September 2005
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
Automation & Process industries affected by Katrina hurricane
While it pales in comparison to the human toll of the storm, the
manufacturing infrastructure in the Gulf Coast region continues
to suffer from the impact of Hurricane Katrina. Many automation
suppliers may find themselves working overtime to provide the
products and services needed to mount the reconstruction effort.
This massive storm was significant because it affected all
upstream, midstream, and downstream oil and gas, as well as the
supporting infrastructure of utilities, including communications
and power. Not only does industry have to deal with the potential
damage and repairs to physical plants and facilities, but also
the supply issue of human resources that are themselves suffering
the effects of massive destruction of personal assets.
Production was hit hard in the Gulf region. Total production has
ramped up from what was almost a total shutdown, and it is now at
around 50% of total capacity. Natural gas production has resumed
to almost 60% of total capacity.
The electric power generation, transmission, and distribution
infrastructure will require substantial reconstruction. Many
water treatment facilities also remain out of commission and must
be rebuilt. The freight distribution and material handling sectors
will require significant investment. The spike in natural gas
prices is affecting the production of things like glass, plastics,
and fertilizer. The impact will be felt through every conceivable
element of the manufacturing infrastructure in the Gulf.
The impact will also be felt by manufacturers that must provide
goods and services to aid in the reconstruction effort. Wood
products companies and the cement industry, for example, will
benefit from increased demand for construction materials. Many
plant sites that were flooded also received extensive damage
to their electrical substations and power infrastructure.
The effects of Katrina go beyond the regional impact on the Gulf
coast oil and gas physical assets. The ripple effect on futures,
regional inventories, and wholesale pricing are still in flux
for all regions of the US as we enter the peak heating season.
For automation suppliers, the phone calls are already coming in
from customers that have lost critical manufacturing infrastructure
and need to rebuild as soon as possible. Control systems on offshore
platforms need to be replaced. Instrumentation and valves need
replacement and repair, and plants need to be restarted. The discrete
side of manufacturing will need to rebuild also, as countless local
businesses have been affected from small machine shops to larger
plants. Automation suppliers will be faced with a short term spike
in demand, while they also must continue to support their existing
customers. Systems integrators and engineering firms will also be
faced with a strain on resources in the region.
This summary was extracted from a special report from ARC Advisory Group
(web link below). The ARC report says the hurricane will
have a direct impact on the automation market place as rebuilding
efforts will require considerable capital investment in replacement
products and related services. This investment will clearly extend
beyond the oil and gas industries as manufacturing and critical
infrastructure is rebuilt.
ARC: Impact of Hurricane Katrina on US Oil & Gas Industry
AIN: Automation companies offer support
Automation World - Editor Gary Mintchell's weblog
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Pinto Editorial - 9/11, Iraq and Katrina
I write this on the anniversary of 9/11, a cataclysmic event that
forever changed America's view of the world, and the world's view
Today, 4 years later, the arch villains have not been brought
to justice. Instead, Afghanistan was subjugated as a sign of
America's retaliation against the injustice. And then Iraq
was subjected to 'shock and awe' in a move motivated by the
neo-conservative imperative that the US should have a secure
foothold in the Middle East.
Former Secretary of State Colin Powell admitted publicly on
ABC's 20/20 that his sham at the UN was forever a stain on his
reputation - WMD was a trumped-up excuse. He also acknowledged
publicly that there was no direct link between Iraq and Al Qaeda.
Our allies warned, "Iraq will breed hundreds of new bin Ladens".
With almost a trillion dollars and the lives of 2,000 American
soldiers invested in their democracy, Iraq will inevitably emerge
as a secular state dominated by religious factions. But still,
the US has no viable way to withdraw.
And then, as if to magnify the mistakes, just about four years
after the terrorist disaster, the horrible hurricane hit
a concentration of ports, rail lines, barge traffic and major
highways which are one of the nation's major trade hubs.
Again, as in 9/11, the President hesitated. He was not attending
a kindergarten class, but was on vacation. This time, the delay
was not 7 minutes, but 5 days. The Federal Government's reprehensible
response has been recognized by the world, but not by the President.
The FEMA chief has not been fired - but re-called to Washington,
probably to be given a medal for his services, like the one received
by George Tenet, the CIA chief who admittedly misled in the Iraq
When GW Bush was re-elected, I closed my coverage of the process
with the statement that "America deserved the future it had chosen".
I had not intended that this terrible vengeance should be meted out
to our country.
Now our disregard of the poor is powerfully portrayed by media that
cannot be censored. It will take many months for the country to show
some semblance of recovery from this Katrina disaster. But the
psychological marks on the character of our country cannot so easily
God bless America!
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Positive corporate re-structure at ABB
Last week, ABB outlined a new company structure that will take
effect Jan. 2006. The 2 major divisions, Power Technologies and
Automation Technologies, will be replaced by their five operating
divisions, eliminating a layer of management.
A new function at the group level, Global Markets and Technology,
is formed to help to drive execution of the strategy across national
and regional borders. Says Fred Kindle (who became ABB CEO in
Jan. 2005): "This is an evolution of our strategy, not a revolution.
We remain focused on our core power and automation businesses."
ABB also announced new targets - a compound annual growth rate (CAGR)
of over 5%, with an EBIT margin of over 10% for the 2006-09 period.
The 2005 outlook for EBIT is 6-7%.
ABB outlined sales and margin targets for each of the new divisions
for the 2006-09 period:
The new ABB divisions, 2004/2003 revenue, with 2005-2009 sales and
||Revenue US $B
|Total ABB (adjusted)
ABB's rising share price and the analyst response to the mid-term
targets and corporate restructuring indicate industry support for
CEO Kindle and his management team. ABB may even pay dividends
this year, for the first time since 2000, a strong indicator the
company is back on track for continued profitability and growth.
Dinesh Paliwal is widely acknowledged as having brought the North
American operations to profitability for the first time this year.
He has been appointed President of newly created Global Markets
& Technologies, responsible for driving the execution of the new
corporate strategy across national and regional borders. Among his
many roles: Member of the ABB group executive committee, chairman
of ABB India, Chairman and CEO of ABB (US) and regional manager
for North America.
As of January 1, 2006, the Power Products, Power Systems and
Automation Products divisions will be headquartered in Zurich,
Switzerland. The Process Automation division will be based in
Norwalk, Connecticut in the US, while the Robotics division will
be based in Shanghai, China.
ABB announces mid-term targets to 2009
Dinesh Paliwal to head ABB Global Markets & Technologies
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Acceleration Change Conference 2005
Tell me, how would you like to meet Vernor Vinge, Ray Kurzweil,
Esther Dyson, Steve Jurvetson, David Fogel, George Gilder -
all in the same place at the same time?
I'm seeing them all next week, along with 40 other world-class
speakers, at the Accelerating Change Conference 2005, in Palo Alto,
California. AC2005 is organized by John Smart (yes, that's really
his name) whose Singularity-com and futures-related ideas website
I've discussed in past JimPinto.com eNews issues.
The theme of AC2005 is AIIA - Artificial Intelligence and
Intelligence Amplification. The speakers will emphasize a mix
of analysis, forecasting, and action plans and examples, using
multidisciplinary inquiry and a synthesis of technical,
entrepreneurial, and social development dialogs. What I like
most about the program is there are in-between times when
everyone gets to meet everyone else and talk. This year, there
are more interactive networking opportunities than ever.
I've discussed internationally-renowned futurist Ray Kurzweil many
times in eNews. Well, Ray is Keynote speaker and will present free
signed advance copies of his upcoming book, "The Singularity is Near",
which will be released nationally 4 days after the conference. One
of 2005's most anticipated new books, this book makes the provocative
case for accelerating and increasingly human-surpassing technological
and computer advances in coming decades, and proposes a global
"phase transition" circa 2040 where many forms of higher human
thinking may be exceeded by global computing systems.
Robotics pioneer iRobot has donated five Roomba robot home-vacuum cleaners
to Accelerating Change 2005. These will be given away for the best 100-word
(or less) answers to the question "What's Next in Commercial or Consumer
Robotics?" Of course, I already have a Roomba, and I'm pleased
to report (after almost a year) that we're still happy with it.
There's still time to register for AC2005
Ray Kurzweil - The Singularity Is Near
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Book: Pinto's Points - management, marketing tips, tech-trends
My new book, Pinto's Points, has arrived and was shipped this past
week to all those who ordered autographed copies. They went via US
Priority Mail, or Global Priority Mail for all overseas shipments.
You'll be receiving your copy this week.
"Pinto's Points: How to win in the automation business" covers
management topics, globalization, sales and marketing, technology
trends and futures, and far-out technology visions - and, of course,
some of my poetry. There are 174 "points" in 6 different parts,
each introduced by an industry guru.
The book is available on the ISA website, Amazon.com and other
bookstores. Websites such as Automation.com and The Readout
Instrumentation Signpost in Ireland will soon be carrying it too.
You can order your own autographed copy NOW (web link below).
You know, it's likely that you won't read this 270-page book
at once - it's not a thriller. But it does have lots of points
that take up a page, or less. So after you've had your initial
read you might consider using it as a "bathroom reader".
When you've had a chance to read at least some of it,
I'll appreciate your comments and feedback. Thanks!
Buy an autographed copy of "Pinto's Points":
"Pinto's Points" - Read the complete Table of Contents
Buy "Pinto's Points" from Amazon.com
Buy "Pinto's Points" directly from ISA Online
Buy a "Pinto book bundle" (Points & Unplugged) from Automation.com
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David Rapley [email@example.com] was stimulated by Tom Friedman's book:
"We just returned from a 4-week vacation in Canada. While driving
back, we listened to "Harry Potter and the half-breed Prince".
It was gripping. Then we listened to an audio version of
'The World is Flat'; it was scarier.
Look at Tom Friedman's "The World is Flat" on Amazon.com
"The topic is globalization and what we need to be doing - and
the scary part is what we are NOT doing. Friedman lays out the
events of the last 15 years or so from a technology and commerce
view and it focused my view and changed my thinking. Even though
one may not agree with everything advocated, it's worth the time
to read it. It's one of the most significant books I've read
in the past few years.
"This has a feel of inevitability, but there some things we can
or must do. Unfortunately we're not doing them: probably because
it would require leadership from Washington and that's something
that there appears to be a lack of from either party.
"Of course knowledge of the problem is required to lead us in
these challenging times. It would help if we had more folks in
Washington who had some background in the sciences or engineering
rather than law.
"Incidentally, one of the things advocated in the book is
a federal initiative for Energy Independence. Hallelujah!"
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Jim Hetzer [Rezteh@aol.com] discusses ways for US companies
to utilize local resources and complement with minimal cost
and long-term benefits:
"Very few companies are even thinking about their future
resources. They just send work overseas to wherever it can
be done cheaper. If companies used interns or entry level
positions to do these tasks, we'd be developing new skills,
and keeping these jobs locally.
"I work with a company that supplies software solutions to clients.
They now have a category of engineering that gets sent off shore
to subdivisions in other countries with programming skills and low
wages. This work is not the most demanding, and is typically able
to be done with less interaction with the end customers.
"Within this same company, there is an engineering manager that
provides a different approach to lowering engineering costs.
He uses co-ops in an internship program that develops their skills
in areas related to their studies. This enables lowering the costs
to provide solutions, and he has reaped the benefit of hiring
several of the co-ops into permanent jobs when they finish their
"When new graduates can't get jobs in their fields because they
are 'unskilled', we need to set a priority on this type of
internship approach to maintain our technical resources, and
to develop new resources for the future. In the long term,
the US is not going to remain an economic force if we don't
have the intellectual skills resident in this country."
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Richard Walls [firstname.lastname@example.org] provides a Westerner's insights
on the competitive spirit in India, and developing countries:
"Shreesha Chandra's points (eNews 2 Sept. 2005) make a lot of
sense and reflect a lot of what I have experienced and observed.
For the last four years I've been working in the Middle East and
interacting, mainly with Indians, both here and in India. In the
last two years I have visited Mumbai on a number of occasions
to visit companies with which I have been doing business.
"I've experienced and observed the downside of the rosy picture;
there are a lot of negatives points that come along with this
ultra-competitive situation. In these last two years I have
experienced more lies, more exploitation, more fear, and more
corruption than in my previous 28 years of working life.
In talking with many other Westerners, I know I'm not alone.
"The negative side seems to arise from a "dog eat dog" competitive
spirit. It starts with the education system and is carried on into
industry. I've observed this from little incidents such as people
not sharing information (because it increases their own little power
base), to signatures being forged on documents (not a one-time
experience). I've seen day-to-day endemic lying, exploitation and
general abuse of power. This I have personally experienced, not
only at an individual level but also at an inter-company level.
"When I've taken several people to task over their actions they
don't think that they are doing anything wrong, and that I'm stupid
not to be doing the same.
"Perhaps these newly advancing countries have not had time to
develop the business ethics to balance their aggressive, competitive
spirit. Frankly, I would rather live in a poor, backward, honest
society than in one that is rich and based on unethical business
practices. This appears to be happening in many newly competitive,
upwardly-mobile societies. They think that this is the way business
is done. There is definitely a 'hidden cost' to India's burgeoning
"Please don't take my comments as a criticism of Indians - indeed,
I've enjoyed worked with many intelligent, hard working, upright
and honest people in India."
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