Companies in trouble

J

Thread Starter

Jim Pinto

Automation Listers :

A lotttt of dust was stirred up by my recent article "Automation in Decline". It's still on the web at :
http://www.jimpinto.com/writings/iadecline.html

We have had a significant amount to discussion on the Automation List, with the questions: Is automation really declining? Why? Aren't there pockets of growth? Is the decline worldwide? Why is the market stagnant? Is the decline temporary?

It is evident today (Oct. 2000) that several of the major industrial automation companies are in trouble. During the past couple of weeks, Invensys stock, already depressed, dropped by about 40% to a level where its market cap was
below the price of BTR alone when the Siebe/BTR merger occurred two years ago - conjectures are rife about an Invensys buyout. Rockwell stock has dipped to its lowest ever, because Allen-Bradley is stagnant. Honeywell continues to struggle, and it is my opinion that the Industrial
Automation Division will inevitably be sold off. What is happening here?

My new article : "Companies in Trouble" has been published in Controls Intelligence & Plant Systems Report, October 2000. When he first saw it, Jack Grenard, Publisher Emeritus, wrote : "I thought to myself : ' It's Jim Pinto again, simply stirring the pot!' But, then I realized that it was not just another critical commentary. It traces the decline of some past industry leaders and points out the patterns that are developing. Thank you for providing this valuable insight!"

My article was written after our Automation List
discussions. I felt that more people (and especially us Engineers) needed to understand the present decline. This article describes the specific situations at Rockwell, Invensys and Honeywell. And it brings up the specter of the
late-stage sale of troubled ICS(UK) (Max Controls,
Transmitton, Triplex) at a rock-bottom price to a vulture. Finally, it offers predictions, warnings and advice.

You can review it on the web at :
http://www.jimpinto.com/writings/trouble.html

Cheers:
jim
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Jim Pinto
email : [email protected]
web: www.JimPinto.com
San Diego, CA., USA
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A

Anthony Kerstens

I read Jim's article. In the end, excepting
personal investments, I don't care. (Although I'm sure it felt good for Jim to write that acid-flavoured closing.:)

Why? At the end of the day, I'm still an "end-user".
- OS/2 fell flat, and I used Windows.
- I went from tape to ZIP to CD's.
- I used to read newspapers, now I read Jim's
articles without getting ink on my fingers.

I don't care if any major falls flat because
when they do, there will be a competitor whose product I can implement regardless of whether its a PLC, PC, or some custom controller.

However, that said, I wonder is it _possible_
that all the majors could fall flat within a
close time-frame? Build systems from used/spare parts? :)

Anthony Kerstens P.Eng.
 
B
Jim,

After a review of "Companies in Trouble". Large automation companies are working towards a system that requires one to purchase equipment only from them. They design their hardware so that it only functions seamlessly (occasionally) with their software.

People are beginning to not want this and their sales are lagging as people use smaller equipment manufactures hardware that can be incorporated into a system that functions and is maintainable by their own technical staff.

We are also at a point in time where anyone who has looked at some of the systems that are being installed in the field are not, what
is required. They are showcases for equipment manufactures. These systems do not work correctly, require support from OEM staff and even
they do not correct problems in a timely fashion. These OEM Tec's are not cheap. The field commissioning of some of these systems require as
much manpower to commission as went into the cost of the entire system in the beginning.

People are sitting back and reviewing just what they need and how to best implement, what they require, to be cost effective in their
own business. My two cents worth.

Regards

Don
 
J

John F. Vales

My 2c worth on this issue:
Rockwell sets a very good example of how to destroy a business:

1) Ignore what your customers want and ask for. Do this repeatedly. When confronted, deny the problem exists, and point to the balance sheet displaying the amounts spent on R&D.

2) Provide lousy customer service. Better still, make the customer PAY through the nose for the lousy service. Better even more, is to sign them
up for annual "Service Contracts", which cost a lot, then provide them with the Same Old S**t.

3) Chop up your products into smaller and smaller bits, making certain that each little bit requires a different software driver, incompatible with all the other software that the customer already has, so that the customer has to AGAIN pay through the nose each time a new product is offered.

Our customers, which encompass a broad spectrum of industries, are starting to get wise to Rockwell's game, (as well as others of this ilk)
and are updating their specifications--- the new specs often do not include Rockwell (read AB) products.

Opinions expressed here are my own, and
do not reflect any official position of my firm.

jfv

John F. Vales
j[email protected]
 
Howdy folks,

I come from the perspective of a parallel industry, the Heating, Ventilating, and Air-Conditioning controls industry. It's like process control, but it's a single type of process though it runs in every building of any size. The major difference is that it must be inexpensive. The process control industry got away with letting the engineers gold-plate the control system for a couple of reasons: the effect on production was substantial and easily quantifiable, and the industry got going when only a few people knew how to use a minicomputer. 16 bit A/D converters, millisecond scan times and the old reliable "deterministic LAN" are only required in the most stringent applications. The vast majority of applications are like HVAC: 10 bit A/D, 10 second scan times, and communications that will run over barbed wire.

Basically technology, driven by office automation, caught up with the process control world. Places like Automation Direct take advantage of Moore's Law and economies of scale to provide high-performance PLCs for low prices. There's a PC, or two, on every desktop and everybody under the age of 50 is perfectly comfortable using and applying them. The last shibboleth standing is "deterministic LAN" and with full duplex, 100BaseT Ethernet switches becoming dirt cheap, even this concern is on its last legs. OPC can be used for backward compatibility--awkward but required. Soon you won't be able to get a PLC without a micro-webserver, TCP/IP stack and Ethernet interface. Then the smart guys can really bring to bear the entire information systems industry on the process application.

With the big companies unable to apply special hardware design expertise, computer system expertise or network engineering expertise, the rapidly contracting systems integration opportunities aren't enough to maintain the business. The process control industry will still have niches where highly engineered, custom solutions are required. But the vast majority of their customers have the requisite process knowledge, and anymore, it doesn't take much to put together a system. I'm just glad the majority of my customers only want their occupants comfortable and to save energy costs.

Best,
B.O. Oct. 13, 2000

Siemens Building Technologies, Inc.
 
Bob Peterson wrote about small integrators:

>The biggest advantage is being smaller and presumably more nimble.

Jim Pinto comments:

Since revenue is declining for all the large suppliers, they are migrating to Systems Integration. In my opinion, this is a mistake for 2 reasons :

1/ They compete with their best customers - the systems integrators.
2/ They cannot match the "nimble" abilities of the independents.

Bob continues :
>One problem we have is the difficulty in doing field support.

Jim Pinto suggests :

In this age of easy web-communications, the answer is alliances. Use the Control Systems Integrators Association to find matching
geographies and capabilities and submit joint proposals - offering everything the majors can provide, plus more.

The more you do it, the better you'll do!

Cheers:
jim
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Jim Pinto
email : [email protected]
web: www.JimPinto.com
San Diego, CA., USA
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