If It Ain't Broke, Fix It Anyway !

Updated from article originally published in
Managing Automation - September 1991

By : Jim Pinto,
San Diego, CA.

There is just too much conservatism in American Industry today. Most people seem to expect that success will be generated by waiting to extrapolate past experiences. I like an article written some time ago in Managing Automation by Bob Collins, President of GE-Fanuc Automation, with the theme If It Ain't Broke, Break it! and I'd like to dwell awhile on the same subject.

Future Shock

The confusion that has proliferated during the past couple of decades was predicted by Alvin Toffler in his '70 Future Shock, signalling the end of conventional strategic planning and lock-step management as described in Hyde Whyte's The Organization Man a decade earlier. Toffler came out with a more optimistic Third Wave another decade later and summarized eloquently in his next in the series Power Shift. There is confusion, because things are confusing; conventional Muscle and Money is bowing to the dominance of Mind in the Information age, as an old century declines and a new one emerges, heralding the start of a third millenium.

Technology is causing ever faster movement, with cost variations and fluctuations that defy even contemporary financial tracking. Example: the Intel 486 micro-computer was introduced during late '90, and techhies (including IBM) came out with 486-based products just a few months later. Less than a year after introduction, the chip that cost $900 kept sliding down to $600 and then $300. Yesterdays inventory was instantly overpriced and obsolete. To delay the "instant commodity" status caused by the inevitable killer-clones that follow success, INTEL circumvented their own numbering system and named their next chip the Pentium. Of course, this didn't stop the flood of copy-cats - it just gave them another hurdle to jump.

Price or Market-share?

To get ahead in the marketing race, some smart-alecs (often led by offshore kami-kaze pilots) start selling below cost, with the anticipation of gaining market-share while prices plummet. So then, what is the "true" cost of these products? And, how do we price the products which use those components? And how about the amortization of the not-insignificant R&D investments? In this situation, the whole thing starts out "broke"...

Figure this one out : The typical US electronic instrument manufacturer starts out with a 20% component-cost disadvantage, compared with offshore competition; this has nothing to do with labor and overhead. Components sold by US manufacturers (say from Intel or Motorola) are typically manufactured in the Far East and local (Far East) companies can buy these components at a lower price locally, than US companies can in the US, even "direct" from the US manufacturer. The problem is that "direct" is not really direct, but from the offshore location which involves additional "costs". Again, it starts out "broke". Those who are looking to "fix" US labor productivity are simply looking in the wrong place.

Whither IBM and Microsoft?

IBM was not immune to this confusion and indeed was wallowing in it till it started to lose continually and seriously. Remember how many people jumped on the "Big Blue" PS/2 and OS/2 bandwagon, only to find out a year later that Microsoft had abandoned OS/2 in favor of their own Windows which still ran on DOS? By now, it's an old story, which led to the spectacle of the Windows/95 introduction and the inexorable ascent of Windows NT. IBM's MCA battled EISA, but nobody won, because the old PC/AT architecture supposedly "broke" but still survives today, while MCA simply fizzled. OS/2 started out "broke" and IBM is still bravely trying to fix it, while the other divorced "parent", Microsoft, has now become the seemingly invincible enemy. And then, suddenly, IBM announced an affiliation with its arch-rival Apple, the same upstart that had previously portrayed IBM as an Orwellian menace and then itself got "broke" in the process. The unlikely bedfellows tried bravely for a while to combat Microsoft, with Motorola architectures to rival Intel. Of course this did not stop the momentum of WINTEL - the fortuitous alliance that was bred originally by clutzy IBM, which finally got "broke" in the process and ditched its leaders to take on a whole new cadre of "barbarians" for leadership. Could a million babboons with a million typewriters ever come up with such a scenario?

Industrial Automation Scenarios

There are similar scenarios in the industrial automation business. Foxboro, for a long time a respected US leader in process controls, was bought by the then non-entity - British Siebe; Taylor was sold to US-based Combustion Engineering, which in turn was sold to the European combination of ASEA and Brown-Boveri (ABB). Bailey, under a US parent, seemed to be making good headway, but was suddenly bought by Italian Finmechannica, which then bought Hartmann & Braun in Germany. MODICON, the source of the PLC revolution, was acquired by Gould, which then sold it off to AEG while Gould itself was sold to Japanese Nippon Mining - Nippon Who? MODICON bumped along for a while under German control, which successfully damaged its early leadership with MODBUS - one of the very first successful device networks. After a couple of frustrating years under German ownership, MODICON then fell into the only thing that could possibly be worse - joint German and French leadership, between AEG and Groupe Schneider and then finally and predictably fell into Schneider's lap. Were these excellent US companies "broke" and have they now been "fixed"?

On the discrete-automation side of the industry, Texas Instruments suddenly gave up its leadership in the controls business by selling off its PLC Division to Siemens; Square D, after fighting for a while, fell prey to the same French Groupe Schneider, already owners of Telemechanique, April and Merlin Gerin, which then later bought MODICON into the fold. What was "broken" here on the US side, and how is it being fixed?

There is a cause and effect relationship at work here. A lot of the merger activity was supposedly caused by low American productivity, but in reality were the result of a low US$-exchange-rate. Most of the deals were made by Europeans with a currency advantage. (The Japanese, of course, don't know how to buy anything but real-estate and banks).The exception was Emerson, which first bought Rosemount and then bought Fisher Controls, probably saving it from the jaws of Siemens. An inevitable American resurgence will somehow turn the tide on the $. So, will there then suddenly be a glut of Americans buying Europeans?

If it ain't broke - break it....

One would think that, in order to fix something, it should first be broken. Or, to put it differently, how could you fix anything before it is broken? The point here is that just about everything around is broken, or being broken as we speak, and so needs fixing. This is the birthing process of a new century and a new millenium - with the midwives of technological advance, global economics and political restructuring pushing everything to breaking point. And, starting on the fix before something is broken might just give you the headstart you need to be competitive tomorrow.

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