Too Many Vendors, Not Enough Customers

By : Jim Pinto,
San Diego, CA.

The original versions of this article was published in
Industrial Controls Intelligence, Nov. '98

After '97 in Anaheim, CA., when we shifted to the format that emphasized technical sessions, ISA moved back to the "pure" exhibition format this year at the Houston Astrohall. At the TechExpo in California, everybody had to have a uni-size booth (so the bigger companies took several booths). Houston meant a return to the Texas-sized big-budget-booths. It was déjà vu - with much ado about nothing. Because, try what we may, we don't seem to be able to bring out the Customers. My estimate of the Vendor:Customer ratio is still 80:20. Of course, in an incestuous business, lots of vendors are other people's customers so it's not all a waste of time.

Maze of confusion

The first thing that hits you at the Houston Astrohall is confusion. There are lots of little nooks and crannies, with hordes of hungry hangers-on all trying to look important. Of course, there is no correlation between booth-size and company-size. Depending on how you enter, you suddenly come up on the central triangle - confusing, because you never know quite where you are, or where you're going. Indeed, perhaps that was the hidden theme…..

7 big guys

The seven industry-giants were all there, clustered together and trying hard to dwarf each other. They'd all gotten beyond showing good HMI graphics (now part of a separate software arena) and one wondered what they had left to show. There were brave, new links to enterprise management (MES and SAP and the like) which all were touting and few understood. Everyone had something "modern" to show that they were with-it. Honeywell had a baseball pitching net and someone else had golfers teeing off - though one wonders how this attracted industrial automation customers. Hey, perhaps that guy practicing his golf-swing was just a lowly technician from the instrument shop at Dow Chemical, Freeport. One wonders if his boss was simply spirited away in the meantime, to some inner-sanctum to sign a big purchase order…..

And, speaking of the big-guys - there are only 7 now : Siebe, Fisher/Rosemount (Emerson), Honeywell, Rockwell, Siemens, Yokogawa and ABB. Elsag-Bailey was just bought by ABB, (announced 14 October '98) making that combination the largest automation business today. One wonders if there was some element of pre-cognition here, because the big Elsag-Bailey booth was right next to their new parent ABB, with the Bailey guys looking somewhat docile next to their proud, new colleagues. ABB had previously bought Taylor (a once proud participant in the ISA big-guy extravaganza) through their then-parent Combustion Engineering - I had called them ABB-CE - so, will they now be called ABB-CE-EB?

While everyone knew that Elsag-Bailey was for sale, no one knew who would buy it - though, of course, everyone knew it would be one of the seven big-guys mentioned. Well, six - because the Japanese don't know how to make acquisitions. I'm told that Yokogawa did look at the prospectus in great detail, but then no one expected them to make a serious bid - heck, they will continue for years to pore over the marketing information they got for nothing. Everyone thought it would be Siemens, because of the natural tie-in with Hartman & Braun in Europe and the Siemens drive for market-share. The news came in time for ISA - no one knew until the previous Wednesday - and then suddenly everyone knew. The ABB news release mentioned a price of $39.30 per share and all the would-be buyers quickly justified how unreasonably high that was and why they had only offered less than half. Of course, the natural question arises from these big-guy mergers - will there be further consolidation? Next year will there be a new, larger HoneyRock?

The budding big

Around the central Las Vegas triangle, there were the booths of the budding-big-guys - Action Instruments among them, albeit now a part of Siebe. Right there was Moore Products, the last of the mid-size players, focused on a systems approach which simply makes them more of a merger candidate. Total Control Products made a respectable showing, trying hard to show that all their debt-financed acquisitions play well together; for comparison, I couldn't even find Nematron and Xycom. Hewlett-Packard was there, bringing their expertise in enterprise networking to the industrial markets, which they evidently see as a new playing field. And Sun Microsystems was there, preaching the advantages of Java to a willing and receptive audience. Right next door was the new startup, Object Automation, flush with venture-capital and trying hard to grab the success that Wonderware gained a decade ago.

Software, software, everywhere

You turn a corner and the puny panorama continues to unfold - suddenly you see the big booths of the software vendors, all trying to give the impression that software has taken over the industry. Even Microsoft was there, spiking rumors that Bill Gates would make a cameo appearance and wishful-thinking that Seattle was getting involved with Fieldbus. Wonderware and Intellution led the pack, but there were lots of others too in giant-size booths, perhaps trying to look big enough to entice a big-guy to buy them. Siebe (Wonderware) and Emerson (Intellution) have already made their picks and Rockwell already has it's own software group (spiced by a different kind of acquisition). Honeywell might become part of Rockwell and the Japanese don't know how to acquire. So that just leaves the Europeans - ABB and Siemens - as software-acquisition candidates.

One must suppose that there is a lot of money in software, because Wonderware Studios is reported to have spent a budget of more $ 1m to put on an extravaganza which rivaled anything hitherto heard of in the instrumentation business. I'm told that nearly 5,000 people were shuttled by special charter buses to a party at the Houston Space Center for laser-light shows and lavish entertainment by Tanya Tucker and the Marshall Tucker Band. Happily, (as part of Siebe) the Eurotherm and Action Instruments logos were printed on the invitations and the colorful Action logo was prominent in the laser-light show. I can only hope that there is a direct correlation between the budget, the attendance and the continued growth of our Siebe companies.

Whither industrial automation?

As we approach a new millennium (just about 400 days away) we cannot help but ask - where is the Automation business going?

The last decade of this century started with Foxboro, a floundering follower, being bought and turned into a new leader by the financial discipline of Siebe - an unknown maker of under-water diving suits and now, arguably, the largest automation supplier in the world. Emerson, the well-managed manufacturer of hardware hodge-podge, bought Rosemount and then Fisher Controls to vie for leadership in a global but fragmented business. Rockwell, the aerospace giant, suddenly sold off much of its military businesses and turned towards industrial automation through acquisition of privately-held Allen-Bradley. Several once mighty mavens melted into a miscellaneous mix - Taylor and George Kent and then Elsag-Bailey and Hartmann & Braun all became ABB. Parts of Leeds & Northrup were pieced off to Honeywell. Yokogawa, anxious for acquisitive growth like the others, started and then predictably unwound its joint-venture with Johnson, proving my prognostications that the Japanese don't know how to acquire. Once proud PLC-leaders like Texas Instruments and Modicon were sold off as adjunct-businesses: Siemens, anxious to expand its European leadership to the US, bought TI and is still a prime candidate for more US market-share; Modicon was bought by German AEG who fiddled with it for a while and then brought in partnership with French Groupe Schneider (already the owner of multiple French PLC-makers - Telemechanique, April, Merlin-Gerin) and then, in frustration, finally sold it all off to the French (proving the point that the only thing worse than being owned by the Germans or the French is being owned simultaneously by both).

One wonders if anyone really knows where anyone is going….

In Europe (Hannover Fair in Germany, Mesucora in France, HET Exhibition in the Netherlands, C&I in the UK) they somehow seem to have a better Customer:Vendor ratio and one actually does business in the booth. In the US, the primary motivation to be there is negative - the shame of NOT being there. So, ISA/98 in Houston was just that - another vendor-comparison data-point in the unfolding panorama of the industrial automation business.

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