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Re: Why is the Automation market declining?
Sep 25, 2000 1:37 pm, by Jim Pinto
Text :
Automation Listers :
This subject has stimulated a significant amount of feedback and new thinking, and I appreciate everyone's involvement!
Michael Griffin has been a major contributor - thanks, Michael. I'd like to address some of his new points :
Michael defines large as :
> For the companies I deal with, say 200 - 300 million dollars
>plus in annual sales for the largest down to 50 million dollars
>plus for some of the medium size ones. These are not giant
>companies,but this isn't a business composed of giant ones,
>rather it tends to have a lot of small or medium size ones.
Jim Pinto:
The financial and marketing definitions are :
Large : at least $ 1b and above
Medium : $ 100m to $1b
Small : $ 20m to $100m
Yes, indeed - the industrial automation is composed of a few (10-20 at most) - large companies and a host of small ones.
Michael :
> The point was though that if these companies are expanding at
>20 - 100 percent per year, why are the companies which supply
>them with components doing so poorly? What is so exceptional
>about the companies that I do business with that they are *all*
>so busy while the rest of the world isn't?
Jim :
I know *no* company in the industrial automation business that is growing 100% a year, (unless it is very tiny, which doesn't count).
Small companies (like OPTO-22 and Moore Industries - can you name a few others?) have stalled at $ 20-50m, with little or no consistent
growth (I'd really like to have *anyone* contradict me, with clear numbers).
Michael :
> Now I see Ontario booming, M. Levesque sees Quebec booming (with
>respect to the industry we are talking about) - and that just about covers
>the most of Canada
Jim :
Canada is about 10% of the US market, with *no* large industrial automation majors. Most Allen-Bradley Distributors are stuck, or declining. A-B
itself is declining. And, we are talking about some geographical segment "booming" ?
You guys are giving me a headache. Stop it!
(My apologies for my impatience - there is too much myopic repetition here).
Michael (on higher US pricing) :
> some of these US companies are physically closer to us
>than some of the Canadian companies, yet they bid 50% or more higher.
Jim :
Please understand that some US companies bid higher simply because they do *not* want the systems integration and custom-business.
Michael :
>Mr. Pinto may be entirely correct in his statement that the market is
>declining, but only from the point of view of US dollars.
Jim :
The market is declining - and *not* only in US dollars. The total market is stagnant, growing in spots, but declining overall. Doesn't anyone get my farming metaphor?? Farmers produce more, the overall market for food is the stable, but the individual farmhand (not the isolated, innovative farming conglomerate) is getting "poorer" and migrates to better work in other industries.
Please, I do *not* intend to insult the innovative and wealthy few in farming. I am drawing the parallel that there are simply fewer (and poorer) farmers.
Michael :
>Your article can be summarized as follows:
>Pinto's First Postulate: "The total automation market is stagnant
>... there may be some segments growing more than others, but the total
>market is simply NOT growing."
>Can you please cite some suitable statistics for this?
Jim :
No, it would take a book of numbers. And this is a discussion list. I refer you *not* to the Control magazines (who tend *not* to discuss these
topics openly, for fear of offending their advertisers), but to the financial analysts who drive the stock market. Rockwell, Honeywell, Emerson, Siemens and all the big companies have declining stocks, because market growth is simply not there. Consolidations (and consequent layoffs) are occurring because many companies are ailing.
Michael :
> Pinto's Second Postulate: "For the majors, their strategic core
>businesses continue to shrink and some segments are losing money."
>So, are Rockwell, Siemens, etc. seeing their PLC and motor control
>businesses shrink? Are their sales in these areas actually declining? By
how
>much?
Jim :
**Yes** indeed! PLC sales are declining (for the reasons I listed - lower price, competition, etc.) I challenge any major IA company reading this to come back and give us growth numbers for the past 1-2-3 years.
Michael :
> Pinto's Third Posulate: "most industry participants - vendors,
>customers, sales channels - continue to be blissfully ignorant of the fact
>that leadership is changing hands, talent is migrating to greener pastures
>and consolidations are occurring because business is stagnant."
> Are these people ignorant of the business stagnating, or are they
>ignorant of the "leadership changing hands" etc.? I must admit that I (a
>customer) was ignorant of both. Why though would the vendors and sales
>channels be ignorant of either stagnant business or "changing leadership".
I
>thought that that sales figures were all these guys ever talked about.
Jim :
*Key* point. It's the emperor's clothes syndrome - no one wants to admit that the industry is stagnant. Everyone *assumes* - making an ass out of u and me - that everything is OK.
*Hooray!* Michael, you have helped me to make my key point.
Let us - Michael Griffin and Jim Pinto and the Automation List challenge any major industrial automation company - Rockwell, Honeywell, Emerson,
Siemens, Invensys, ABB - to refresh this list with some growth numbers, or some of the correct facts and figures that are sorely needed.
Sadly, I think there will be no takers.
Sincerely :
jim
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Jim Pinto
email : jim@jimpinto.com
web: www.JimPinto.com
San Diego, CA., USA
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