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The Urge to Merge
Apr 3, 2000 5:33 pm, by Jim Pinto
Subject : Information
 from the Automation List dept.
Text :
Automation List :
The original version of my much quoted "Urge to Merge" article was published in Industrial Controls Intelligence, September '99 and InTech Oct. '99.
It included the "famous list" of automation company rankings, based on size and market-cap.
Some of you have pointed out companies that needed to be included (thanks for the input), plus there have been a couple of recent mergers and acqusitions, which have prompted an update.
The updated version of this article is now available on the web at :
http://www.jimpinto.com/writings/mergeurge.html
Cheers:
jim
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Jim Pinto
email: jim@jimpinto.com
Tel : (858)279-8836 (direct)
Web: www.jimpinto.com
San Diego, CA. USA
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Reply
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The Urge to Merge
Apr 7, 2000 6:06 pm, by Jim Pinto
Having started this thread with the update of my Urge to Merge article, I am pleased to see the interesting discussion develop from :
"Walt Boyes"
"Kelly, Rick"
"Diana Bouchard" :
"Anthony Kerstens"
With all this discussion about the "process information" being lost, let me make a key point here - the root cause of the problems :
Business for all the Process Control companies is poor - growth and profit shrinking badly. Their products have become commodities, which yield no growth and shrinking margins. (Dinosaur symptoms) Hence the "Urge to Merge":
The end users are also under strong global competitive pressures, and they are seeking to cut costs and reduce overhead to generate more profit.
Out of these mutual needs, unholy alliances are being made. The suppliers are taking on systems integration and installation services, hopefully to gain more business and longer term "alliance contracts": The users are gladly giving up the
maintenance and installation services, which has always been a headache. Both sides are looking for growth and profit, and neither is getting either.
The suppliers are getting lower margins and poor growth - with no loyalty, since clearly the users can switch if the want to. The users are losing their "proprietary process knowledge" to
third-parties and losing real economic advantage.
Much of this is discussed in my recent article :
The Changing Face of Automation - published in Industrial Controls Intelligence (February 2000) and on the web at :
http://www.jimpinto.com/writings/changingface.html
I'm sure we'd welcome hearing from suppliers (Honeywell, Foxboro, Bailey, Fisher/Rosemount) and from more end-users on this subject.
Cheers;
jim
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Jim Pinto
email: jim@jimpinto.com
Tel : (858)279-8836 (direct)
Web: www.jimpinto.com
San Diego, CA. USA
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The Urge to Merge
Apr 6, 2000 5:29 pm, by Rick Kelly
Hello Diana...
I agree with you in general and yet on several points our opinions differ...
DB> * Process control expertise will likely reside less in the individual plant or
DB> process industry company than with suppliers and consultants.
Given the current trends in the industry, this statement is true. However, I feel that this situation is about to change. Those companies that use large scale process control as a prime manufacturing strategy are rapidly loosing the ability to manage their own business processes.
These companies, through the lack of internal resources capable of owning these processes, have devolved ownership of these control structures to
third parties. These third parties, whether they be systems integrators are programming houses, have for the most part formed strategic alliances with the process industries. In essence however, these same process industries are now slaved to the third party integrator. Recent experiences with the Y2K effort have shown me the truth behind these statements.
I think that the process industries are now starting to realize the dangerous position many of them are in and are now starting to develop
strategies that would allow them to regain their independence.
DB> * What may be lost is knowledge of the peculiarities of a specific plant that is
DB> obtained from experience over time.
Again this is true... or more correctly this knowledge will be held by the third party. However you will find that as companies begin to regain ownership of their core business processes, this information will become the
property of a core group of technical people that are employees of the industry.
As the level of technical complexity climbs, the skill sets required to support the technology climbs along with it. I believe that many of the
process industries will acquire or require tradesmen who fit the "SuperTech" label. These tech resources will work along with the regular technical resources of the company. They will be tasked with many of the duties that have devolved to the third party. This will help ensure that proprietary and process specific knowledge stays inside an organization.
DB> * Long-term relationships between suppliers/consultants and a specific plant may
DB> be one way to preserve this knowledge as well as the commitment to making the
DB> control system work.
This condition will always be true. I do, however, think that the captive nature of this relationship has to and will change.
DB> * Emphasis will shift from "controlling the process" to controlling the overall
DB> manufacturing environment and supply chain, including economics, quality, and
DB> marketing.
In our rush to supply data to the MES, MRP, MRO, JIT (and any other letter flavor of the month) we must not forget that the ONLY reason we need this
data is to record the RESULTS generated by a production process. Controlling the process and hence the viability of any organization will
always, or should be, of paramount importance.
Interesting thread by the way...
Best Regards... Rick Kelly
Chief Technician
Natural Cuts
Cheese Operations
Kraft Canada
(613) 537-8069 V
(613) 537-8057 F
rkelly@kraft.com
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The Urge to Merge
Apr 6, 2000 9:18 am, by Diana Bouchard
> How the actual knowledge of how to control the process will be transmitted
> is an open question.
My own impressions:
* Process control expertise will likely reside less in the individual plant or process industry company than with suppliers and consultants.
* What may be lost is knowledge of the peculiarities of a specific plant that is
obtained from experience over time.
* Long-term relationships between suppliers/consultants and a specific plant may
be one way to preserve this knowledge as well as the commitment to making the control system work.
* Emphasis will shift from "controlling the process" to controlling the overall manufacturing environment and supply chain, including economics, quality, and marketing.
In short, knowledge of the process and of control engineering will still be needed, but it is likely to reside in different places than now and be applied in closer integration with data communications, ERP, and the business environment.
Diana Bouchard
*******************************************************************************************************
Diana C. Bouchard
Paprican, Process Control Group
570 St Johns Boulevard
Pointe Claire Quebec H9R 3J9 Canada
phone: (514) 630 4100 x2376 fax: (514) 630 4120
email: dbouchard@paprican.ca
*******************************************************************************************************
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The Urge to Merge
Apr 4, 2000 5:57 pm, by Walt Boyes
RE: INFO: The Urge to Merge
Jim and I are having a discussion of this on another list.
There are some interesting points he's raised, but there are some "bigger picture" things that need to be pointed out.
Many of the so-called M&A companies he mentions are now turning to "telecommunications" acquisitions instead of the process control business.
Why? Because "process control" as a discipline is essentially disappearing.
There are going to be sensors, on the plant floor. These will be smart, internet/ethernet/bus capable devices. They will be serviced primarily by technicians NOT engineers. There will be integrated company data networks, serviced by MIS professionals. There will be no "process control industry" per se.
The functions are the same, but the people will be doing "data networking and plant automation" instead of process control.
How the actual knowledge of how to control the process will be transmitted is an open question.
Walt Boyes
Director of New Business Development
Branom Instrument Co.-- P. O. Box 80307-- 5500 4th Ave. So.
Seattle, WA 98108-0307
Phone: 1-206-762-6050 ext. 310
Fax: 1-206-767-5669
http://www.branom.com -- http://www.branomstore.com
wboyes@ix.netcom.com
-----Original Message-----
From: "Jim Pinto"
Subject: INFO: The Urge to Merge
Automation List :
The original version of my much quoted "Urge to Merge" article was published in Industrial Controls Intelligence, September '99 and InTech Oct. '99.......
The updated version of this article is now available on the web at :
http://www.jimpinto.com/writings/mergeurge.html
Reply
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Re: The Urge to Merge
Apr 7, 2000 11:45 am, by Bruce
Among all the recent trends towards computerisation of this, that, and the next, it must not be forgotten that the old GIGO rule still holds. A massive MIS system fed with poor data will produce a massive heap of data in a
short time. Even highly-qualified process engineers have trouble accepting that a reading from an RTD installed in a thermowell is "good" if it is within 5 deg of the correct temperature - and that it cannot reflect rapid changes in the process temperature.
Even the smartest of instruments cannot deliver the correct results unles it is fit for the
purpose, installed in the correct spot, and installed correctly. The "art" of making measurements is still an art, and one that is rapidly disappearing.
A recent comment on one of the newsgroups that I browse is that it is becoming more and more difficult to get things assembled with good workmanship. I fear that the world of technical expertise is becoming one where those who know which end of a screwdriver is which are members of a fast-vanishing species. Yet even the Fieldbus
and other exalted technologies need wires to connect them together, and cannot make measurements on a process without direct physical connections.
So wait long enough, and all us screwdriver jockeys will be able to name our own price....??
Bruce
Bruce Durdle
bmdurdle@taranaki.ac.nz
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