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Re: Why is the Automation market declining?
Sep 12, 2000 2:00 pm, by Al Pawlowski
Text :
If the Automation market is declining and not being knowledgeable about economics, I wonder if newer IA products are simply too good at enhancing industrial productivity (that holy grail).
Seems reasonable that IA device purchases should decrease if the increase in industrial product demand is less than the increase in productivity provided per new IA device.
Then, to increase profit, IA device manufacturers need to increase margin per device. This could be done by increasing unit prices or decreasing manufacturing costs. Maybe today it is harder to decrease manufacturing costs than gaining price setting ability through increased market share. Could this be a part of the drive behind the increased IA consolidations?
Maybe manufacturers could increase demand by investing in less wealthy populations vs increased R & D (productivity enhancing technology). Say specially low pricing for water treatment plant products in third world countries. Could that be part of the Japanese thinking in regards to apparently high investment in third world infrastructure projects?
Another thought. Could increases in productivity via new technology be part of the drive behind the increasing distrust of tecnology in today's general population, a built-in, unconscious negative feedback mechanism?
Hey, don't blast me too hard if you think this post is wasting your time. Hope I don't do that too often. Maybe the Louisiana heat is affecting my brain today.
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Re: Why is the Automation market declining?
Sep 13, 2000 3:30 pm, by Ralph Mackiewicz
> Another thought. Could increases in productivity via new technology be
> part = of the drive behind the increasing distrust of tecnology in
> today's general = population, a built-in, unconscious negative
> feedback mechanism?
About this I have 2 comments: 1) I don't know that there is in fact a "real" increase in the distrust of technology among the general
population. I think that there is an "appearance" of mistrust based on the generally poor and ignorant coverage that the mass media provides on technology issues. 2) The poor and ignorant mass media coverage will eventually feed some mistrust (self-fulfilling prophecy) but as technology becomes more pervasive and people experience the benefits, the mistrust will be displaced onto the mass media that fed them the bad info (where it belongs).
Regarding the decline in the IA market: It seems inevitable. As mainstream technology advances (Ethernet, PCs, etc.) the price/performance of it will overcome the disadvantages of using
mainstream technology in IA applications (packaging, environmental, etc.). The big guys essentially live off the fact that there are
applications for IA technology not served by the mainstream technology.
And you don't even have to examine globalization issues to see the decline in the IA market (although those factors are very significant). 10 years ago nearly every system we did had a PLC in it bought from a big IA company. Now, hardly any use PLCs. And the stuff going in now is not bought from the big vendor anymore because they
are not competitive with the new equipment that is getting bought. While my company is not large enough to have any macro effects on the market, if you add it up over the thousands of integrators in the market who are in a similar position it makes a difference...a big
difference.
Productivity improvements can negatively affect the IA market in another way. One of the major values that the large control vendors deliver is improved productivity for implementing systems. If
productivity continues to increase substantially, the value of the productivity savings declines proportionally. The counter to this is reduced prices (lower margins) to try and maintain the proportional savings.
I'm not convinced that moving into enterprise integration will successfully stem the decline at these companies. Their existing products give them little or no advantage in this market. One
advantage they currently have is a strong sales force. However, this advantage will fade away quickly as the large companies inevitably abuse their existing sales force as the market declines and margins collapse. They could close off access to the systems/products that they produce so that customers wanting enterprise integration will be
forced to go to them. But I doubt that this strategy will work anymore because it will alienate the customer base.
Is there a winning strategy to survive as a big iron IA vendor with high-growth and large margins? Would any strategy short of
abandonment/liquidation have saved a typewriter supplier? At some point it becomes like beating a dead horse: its not going to move no matter how hard you hit it.
Regards,
Ralph Mackiewicz
SISCO, Inc.
6605 19-1/2 Mile Road
Sterling Heights, MI 48314-1408 USA
T: +810-254-0020 F: +810-254-0053
mailto:ralph@sisconet.com http://www.sisconet.com
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Re: Why is the Automation market declining?
Sep 20, 2000 8:28 am, by Dave Ferguson
The other issue that I predicted that is kind of happening and everyone has forgotten is that there were huge Y2K issues and budgets and resources that were spent. The IT industry is also
experiencing this to some degree.
I don't know about you but we spent ridiculous amounts of money on Y2k and of course everyone climbed on board and bought all kinds of "extras". Now we are in a position of tighter budgets.
We are all paying the price for this "preparedness". Is this having some effect on the IA market......?
Just a thought......
Dave Ferguson
Blandin Paper Company
UPM-Kymmene
DAVCO Automation
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Re: Why is the Automation market declining?
Oct 31, 2000 9:53 am, by David K.
There are many interesting points and replies to this subject. It was disheartening to read the initial report showing my industry heading downhill just as we are entering a new revolution of technology.
I remain cautiously optimistic. On one hand, the technology available can make better, more efficient manufacturers. The internet will never make razors, or cars, or barbecue grills, so manufacturing will always be a necessity. On the other hand, I have seen, especially in the automotive industry, many customers that are slow or even unwilling to accept new improvements to their plants. "It ain't broke, don't fix it" is soon followed by "Why are the Japanese building cars at such a high efficiency rate." As mentioned in the article, I have too many times seen short sighted business plans of cutting R&D and development spending to just maintain the plant a while longer. Many senior executives are just on a step waiting to move up so they look for short term gains, fat cutting, and good returns to get their next promotion. A new platform PLC5 is a vast improvement in programming and troubleshooting over a PLC2, yet how many PLC2s out there are still running - like the article says, the plant will continue to run and produce product, so how do you convince them to adopt new ideas and technologies?
I hope that some of the optimistic views expressed here are passed on to plant management, and for all of you working in plants, please consider this: The technology is here to make a quantum leap in manufacturing, increasing flexibility, efficiency and reducing costs to consumers. You can make your products better and more affordable if you take a far sighted approach to embracing the new revolution of information and automation systems.
I hope that this cry doesn't fall on deaf ears, both for the sake of my engineering and integration services and for the benefit of American manufacturing and the economy as a whole.
(stepping down off my soap box)
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Re: Why is the Automation market declining?
Nov 1, 2000 2:31 pm, by Jim Pinto
David K. e-wrote :
>I hope that some of the optimistic views expressed here are passed
>on to plant management, and for all of you working in plants,
>please consider this: The technology is here to make a quantum leap
>in manufacturing, increasing flexibility, efficiency and reducing
costs
>to consumers. You can make your products better and more affordable
>if you take a far sighted approach to embracing the new revolution of
>information and automation systems.
Jim Pinto, uncomfortable that his original article is seen primarily as a negative warning, writes :
I am delighted that David has presented this response!
The industrial automation business serves Customers (the end-user) through bringing increased Productivity. Everything else is incidental!
David K continues :
>I hope that this cry doesn't fall on deaf ears, both for the sake of
>my engineering and integration services and for the benefit of
American
>manufacturing and the economy as a whole.
Jim Pinto :
Thank you, David - I must tell you that I have had a lot of personal feedback that presents the positive and hopeful side!
It is my belief that growth is indeed coming - through agile and innovative new companies, who see what is needed and are utilizing new technology to bring results for their Customers. These are the people who succeed!
Cheers;
jim
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Jim Pinto
email : jim@jimpinto.com
web: www.JimPinto.com
San Diego, CA., USA
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Re: Why is the Automation market declining?
Nov 1, 2000 2:30 pm, by Anthony Kerstens
One thing I've seen (in automotive companies) is
an attempt to follow the Japanese model of team
and "employee empowerment".
Such methods require a high commitment, not just
from management, but also from the employees. Some
of the automotive companies that I know of that
attempted this met with little success. In fact,
going down this particular garden path diverted
attention, resources, and funds away from the
task at hand and the bottom line.
I wonder if this sort of thing is a contributing
factor to decline in the automation market? If it
is, how important a factor?
Anthony Kerstens P.Eng.
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Re: Why is the Automation market declining?
Nov 3, 2000 7:54 am, by Jim Pinto
Anthony Kerstens suggests :
>One thing I've seen (in automotive companies) is
>an attempt to follow the Japanese model of team
>and "employee empowerment".
>I wonder if this sort of thing is a contributing
>factor to decline in the automation market? If it
>is, how important a factor?
Jim Pinto comments :
I am surprised that Anthony thinks this might be a
contributing factor for *decline* - rather than growth!
Indeed, the age of the web-communications (personal email, B2B, B2C) is the age of employee empowerment! People who have NOT empowered their employees have suffered badly! The high-growth, high-tech companies (CISCO, EMC, HP) could not survive without employee ownership and empowerment!
Jack Welch of GE (although he was known as "neutron Jack" - eliminating lots of people) converted GE from the stuffed-shirt syndrome to an empowered leader. The people who could not or would not take charge were eliminated.
Anthony is right about this :
>Such methods require a high commitment, not just
>from management, but also from the employees.
Jim :
Absolutely - commitment from both sides!
Empowerment is people "taking responsibility" for their own work and results - and unfortunately, some employees just don't seem to be able to do that!
Anthony :
>Some of the automotive companies that I know of that
>attempted this met with little success. In fact,
>going down this particular garden path diverted
>attention, resources, and funds away from the
>task at hand and the bottom line.
Jim :
IMHO - the programs of employee-ownership for major companies such as GM, Delta, United and others - have saved those companies from going downhill.
Japanese "empowerment" was an extension of their earlier "lifetime employment" which was not successful. Employee-ownership and empowerment was originated in the United States.
Cheers:
jim
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Jim Pinto
email : jim@jimpinto.com
web: www.JimPinto.com
San Diego, CA., USA
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Re: Why is the Automation market declining?
Nov 7, 2000 8:21 am, by Sam
Hmmm. I don't see it that way. Not that employee empowerment doesn't make some sense, but I don't see it as the key to success in the "new" e-commerce world.
I would argue that B2B and B2C is primarily software marketing hype. Check out the companies in that sector. Check out how the overwhelming majority of companies are doing supply chain management. Note the fact that there is not a
clear standard for B2B and B2C. Vaporware and hype.
EDI is still the prevalent form of inter-company transactions. The web provides a better way of viewing downstream forecasts, but it is still not linking the supply chain.
Cisco has a unique business model. I don't see employee empowerment being the key to what their doing. They extend their enterprise systems into their supplying plants.
I think automation is more affected by cheap labor than it is modern management techniques.
From: Jim Pinto :
Anthony Kerstens suggests :
>One thing I've seen (in automotive companies) is
>an attempt to follow the Japanese model of team
>and "employee empowerment".
>I wonder if this sort of thing is a contributing
>factor to decline in the automation market? If it
>is, how important a factor?
Jim Pinto comments :
I am surprised that Anthony thinks this might be a
contributing factor for *decline* - rather than growth!
....
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Re: Why is the Automation market declining?
Nov 3, 2000 1:36 pm, by Anthony Kerstens
The question I tried to ask, but perhaps not so
clearly, was about the _attempt_ by companies
to follow the Japanese model.
Jim, let me restate my question:
I wonder if the attempt and subsequent failure
to implement management models (not necessarily
Japanese) is a contributing factor to decline
in the automation industry?
In one specific example I can think of, a
significant amount of training, reassignment
of resources, and expenditure of funds led to
dismal failure. Why? Not because the Japanese
model was bad, but the implementation was
not met by the commitment required. There was
not just a lack of commitment, but general
hostility toward those that showed interest. The
subsequent failure in fact made the situation worse.
Jim, you mention specific successes. Are there
any failures, and how big an affect did they have
on the automation industry?
Anthony Kerstens P.Eng.
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Re: Why is the Automation market declining?
Nov 7, 2000 8:22 am, by Jim Pinto
Anthony Kerstens restated
his earlier question :
>I wonder if the attempt and subsequent failure
>to implement management models (not necessarily
>Japanese) is a contributing factor to decline
>in the automation industry?
>In one specific example I can think of, a
>significant amount of training, reassignment
>of resources, and expenditure of funds led to
>dismal failure. Why? Not because the Japanese
>model was bad, but the implementation was
>not met by the commitment required. There was
>not just a lack of commitment, but general
>hostility toward those that showed interest. The
>subsequent failure in fact made the situation worse.
>Jim, you mention specific successes. Are there
>any failures, and how big an affect did they have
>on the automation industry?
Jim Pinto responds :
Yes, there has been a lot of re-alignment and effort at re-organization to develop employee ownership and empowerment. I am sure that this indeed absorbed a lot of resources. However, I cannot think of any failures that resulted specifically from this effort and wasted resources in this type of involvement.
Off-line, I received one wise-crack (at least I think it was a wise crack, and not serious) that "employee-ownership" was not an American idea - it was invented by a German (presumably Karl Marx) and implemented by the Russians
(presumably Communism).
Seriously, there is a subtle and significant difference between "collective ownership" and "employee-ownership". The former reduces emphasizes the "collective" - the State; the latter emphasizes the individual Employee-owner, who becomes individually responsible and accountable.
As you can tell, I am passionately in favor of individual-empowerment and employee ownership! I have seen significant success, (and admit that I am probably blinded to the failures).
<soap-box on>
I strongly advise Engineers everywhere to rise up, and demand stock options, ownership and equity-sharing plans! Or else, start your own company!
<soap-box off>
Cheers :
jim
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Jim Pinto
email : jim@jimpinto.com
web: www.JimPinto.com
San Diego, CA., USA
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Re: Why is the Automation market declining?
Sep 18, 2000 3:58 pm, by Russ Kinner
>And you don't even have to examine globalization issues to see the
>decline in the IA market (although those factors are very
>significant). 10 years ago nearly every system we did had a PLC in it
>bought from a big IA company. Now, hardly any use PLCs. And the stuff
>going in now is not bought from the big vendor anymore because they
>are not competitive with the new equipment that is getting bought.
>While my company is not large enough to have any macro effects on the
>market, if you add it up over the thousands of integrators in the
>market who are in a similar position it makes a difference... a big
>difference.
I keep hearing about all the customers who are abandoning PLCs but haven't seen it in my markets. Maybe our old school clients are just
resistant to change... I must agree with the general theme of this thread unfortunately, that
is the IA market is not a "growth industry". Where our practitioners will land in 5 years (including myself) is the $64,000 question (or is
it the $1,000,000 question, allowing for inflation and Regis' "final answer?").
Russ Kinner
AVCA Corporation
Maumee, OH
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Re: Why is the Automation market declining?
Sep 20, 2000 3:44 pm, by Ralph Mackiewicz
> > And you don't even have to examine globalization issues to see the
> > >decline in the IA market (although those factors are very
> > >significant). 10 years ago nearly every system we did had a PLC
> > in it bought from a big IA company. Now, hardly any use PLCs. And
> > the stuff going in now is not bought from the big vendor anymore
> > because they are not competitive with the new equipment that is
> > getting bought. While my company is not large enough to have any
> > macro effects on the market, if you add it up over the thousands of
> > integrators in the market who are in a similar position it makes a
> > difference... a big difference.
>
> I keep hearing about all the customers who are abandoning PLCs but
> haven't seen it in my markets. Maybe our old school clients are just
> resistant to change... I must agree with the general theme of this
> thread unfortunately, that is the IA market is not a "growth
> industry". Where our practitioners will land in 5 years (including
> myself) is the $64,000 question (or is it the $1,000,000 question,
> allowing for inflation and Regis' "final answer?").
I'm not suggesting that the market is abandoning PLCs. Just that the market is changing and that general purpose computing technology has advanced to the point where it can replace some of the application niches that were served exclusively by PLCs several years ago. This might contribute to the perception of a decline in the iA industry.
P.S. People have been predicting (incorrectly) the demise of the PLC since 1982 (I think it was 1982). That year there was a paper at the PLC show in Detroit by G&L that stated that relay ladder was dead because boolean state languages were far superior and special purpose controls would completely supplant general purpose controls like PLCs. Once again, buyers ended up being smarter than those making predictions.
Regards,
Ralph Mackiewicz
SISCO, Inc.
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Re: Why is the Automation market declining?
Sep 20, 2000 12:18 pm, by Alex Pavloff
> I keep hearing about all the customers who are abandoning PLCs but
> haven't seen it in my markets. Maybe our old school clients are just
> resistant to change...
I haven't been in this market long, and I'm actually more on the software/development side rather than out there in the field, but my boss,
who does have the experience, was mentioning to me about how the different geographic regions of the US use very different hardware sets.
In the midwest, PLCs abound, while on the west coast, and to a lesser extent on the east coast, PCs are much more common place. The fact that my
company, with offices in California, tends to sell more to the midwest, fits into this nicely. Our main piece of hardware, a "smart" operator terminal (where one can do some pretty complex programming along with merely displaying items from an attached PLC or motion controller) is a much harder sell in California, because people like to use PCs.
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Re: Why is the Automation market declining?
Sep 13, 2000 3:40 pm, by Anthony Kerstens
>..... Would any strategy short of
> abandonment/liquidation have saved a typewriter supplier? At some
> point it becomes like beating a dead horse: its not going to move no
> matter how hard you hit it.
I agree, but while people are beating dead horses, I certainly plan to be looking towards other ways of earning an income. After all, when
the automobile took over as transportation, did blacksmiths continue making horseshoes?
People should stop worrying about the stability of the market and concern themselves with what they are going to do when the next wave comes around. Who cares if a manufacturer goes under (aside from the employees).
Where and when that wave comes I don't know. Whatever it is, it will still have a wire attached to it, and it will need to be programmed or configured. That's what matters.
Anthony Kerstens P.Eng.
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Re: Why is the Automation market declining?
Sep 20, 2000 3:37 pm, by Jim Pinto
Anthony Kersten wrote :
>> while people are beating dead horses, I certainly plan to
be looking towards other ways of earning an income.
Where and when that wave comes I don't know. Whatever it is, it will
still have a wire attached to it, and it will need to be programmed or
configured. That's what matters.
Jim Pinto :
That's the right attitude!
There aren't any "typewriter repairmen" anymore, but I know a lot of successful people who moved on to use their skills at something better in the "new economy".
Cheers:
jim
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Jim Pinto
email : jim@jimpinto.com
web: www.JimPinto.com
San Diego, CA., USA
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Re: Why is the Automation market declining?
Sep 19, 2000 1:43 pm, by Sam
It will probably be wireless. ;-)
Anthony Kersten wrote :
>> ... Where and when that wave comes I don't know. Whatever it is, it
will still have a wire attached to it, and it will need to be
programmed or configured. That's what matters.<<
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