Once upon a time, people made useful things in the shop under their apartment or in the shed out back.
The product of their labor was very much a piece of themselves. A little bit of their soul went into their creation.
Then some men had a brilliant idea. Since the demand for many things was increasing and it took too long for craftsmen to make the products, new technologies allowed machines to be set up along a line powered by water, then steam, then electricity. We can bring people into one place to make many products cheaply and sell them at a profit.
Thus, the birth of the Industrial Age in the mid-1800s.
As the price of men grew, capitalists turned to women for less expensive wages. And then they brought children into the factories.
People worked 7 10-hour days per week. Sometimes never seeing the sun. Conditions were hazardous.
Mid-to-late-19th century philosophers identified this as “alienation”, as in people were alienated from the fruits of their labor. One of my fields of study in graduate school—Marx’s theory of alienation.
Labor was divided from capital (the ownership of the factories) and each grew ever more distrustful of the other. Laboring people began striking (withholding their labor) in order to force improvements in wages and working conditions. Some strikes were bitter and bloody. The Pullman strike in Chicago led to the establishment of Labor Day.
The machinery developed in the last 30 years have served to remove humans from unsafe areas and alleviate back-breaking work. We sometimes curse automation and robots for taking jobs away from people. In reality, these have made jobs in factories cleaner, safer, and more intellectually challenging. All good things.
Loss of jobs can usually be traced to the root cause of either bad management decisions or the rise of increased competition.
I struggle to understand how management and politics combine to squeeze the wages of laboring people. These are people who build the economy and the things and buildings we enjoy. The growing gap of wages between the lowest and highest is morally indefensible.
On the other hand today Venture Capitalist Fred Wilson wrote on his blog about the technology companies that have been good about giving employees stock in the company. Something I was promised a couple of times but it never came through.
Today is Labor Day in the US. Most people celebrate a day off for one last outing before all the fall activities kick off in earnest.
Taking a few moments to pause and reflect on all those who build our good things is worth the time.
For the past couple of years, I’ve been convinced that there is a coming consolidation within the industrial software market. You would think that this would be a profitable business, but evidently it’s harder than it looks.
This thought converges with all the Industrial Internet of Things plays. We have platforms and a large variety of software—not to mention a variety of hardware plays. As buyers begin to sort out preferences, there will be changes.
GE Digital on the block
I was trying to figure out where GE was going to wind up in all this. Last fall I thought that GE Digital’s Minds + Machines conference was doomed. Then the 2018 edition was announced. Then yesterday morning I scan news feeds about 6 am and see that most of the GE Digital assets are on the auction block—evidently including Predix.
GE had a “not invented here” syndrome. Rolling your own platforms when other tried and perfected ones already exist is always shaky. So the new CEO mandated partnerships. There’s no reason to build a platform when Amazon’s AWS and Microsoft’s Azure are available. Now it appears that much of the portfolio is for sale.
But all is not lost. At the smaller end of the spectrum of industrial software there is investment money available according to a note I received from OSIsoft. The note pointed out IIoT company Seeq raised $23 million; Trendminer, Falkonry and Toumetis all recently received investments; and last year, SoftBank also invested in OSIsoft.
When we are consolidating at the top, that usually means it’s time for innovation in the newly available openings for small companies.
I could obviously point to PTC doing its part to consolidate in the IoT software space. But news just came about Plex Systems, a cloud-based ERP and MES supplier.
It announced it has acquired DATTUS Inc. Its solutions connect manufacturing equipment and sensors to the cloud, manage high-volume data streams, and analyze in-motion equipment data. The acquisition is expected to accelerate Plex’s IIoT strategy, extending the Plex Manufacturing Cloud to new streams of machine data and the underlying intelligence. The acquisition was completed in July 2018.
DATTUS brings to the Plex Manufacturing Cloud three major capabilities that will become central to Plex’s long-term IIoT roadmap: IIoT Connectivity, IIoT Data Management, and IIoT Data Analysis. IIoT Connectivity: DATTUS has simplified machine connectivity, providing plug-and-play solutions that work with the wide variety of protocols and data types used by equipment and sensors on the manufacturing shop floor. IIoT Data Management: the DATTUS IIoT platform captures and manages the extraordinary volume and variety of machine data to support real-time visibility into activity across production operations. IIoT Data Analysis: DATTUS analytics enable operational and business leaders to understand IIoT data in motion, providing decision support in areas such as predictive maintenance and machine performance.
Everybody has a list of transformative technologies. A news release from an advisory firm, ABI Research, came my way a few weeks ago. Its analysts came together and compiled a list of eight technologies they feel will be transformative in manufacturing and then they fit them with Smart Manufacturing. That latter phrase is one of the descriptors for the new wave of manufacturing strategy and technology.
We will have difficulty contesting the list. Most of these are, indeed, already well along the adoption path. I find it interesting that they refer to IIoT platforms, but they don’t view those as transforming technologies but rather as a sort of sandbox for the technologies to play in.
[This is a Gary aside—when an analyst firm makes a list of suppliers, I’d advise not considering it to be comprehensive. Rather the list is usually comprised of companies that the firm’s analysts get to sit down with and receive in-depth briefings.]
The ABI report identifies eight transformative technologies:
1 Additive manufacturing
2 Artificial intelligence (AI) and machine learning (ML)
3 Augmented reality (AR)
5 Digital twins
6 Edge intelligence
7 Industrial Internet of Things (IIoT) platforms
From the ABI news release, “The manufacturing sector has already seen increased adoption of IIoT platforms and edge intelligence. Over the next ten years, manufacturers will start to piece together the other new technologies that will eventually lead to more dynamic factories less dependent on fixed assembly lines and immobile assets. Each step in this transformation will make plants and their workers more productive.”
“Manufacturers want technologies they can implement now without disrupting their operations,” says Pierce Owen, Principal Analyst at ABI Research. “They will change the way their employees perform jobs with technology if it will make them more productive, but they have no desire to rip out their entire infrastructure to try something new. This means technologies that can leverage existing equipment and infrastructure, such as edge intelligence, have the most immediate opportunity.”
ABI summary of its research
The transition towards a lights-out factory has started, but such a major disruption will require an overhaul of workforces, IT architecture, physical facilities and equipment and full integration of dozens of new technologies including connectivity, additive manufacturing, drones, mobile collaborative robotics, IIoT platforms and AI.
IIoT platforms must support many of these other technologies to better integrate them with the enterprise and each other. Those that can connect and support equipment from multiple manufacturers, such as PTC Thingworx and Telit deviceWISE, will last.
After decades of producing little more than prototypes, the AM winter has ended and new growth has sprung up. GE placed significant bets on AM by acquiring Arcam and Concept laser in 2016, and Siemens announced an AM platform in April 2018. Other leading AM specialists include EOS, Stratasys, HP and 3D Systems.
ML capabilities and simulation software have made digital twins extremely useful for product development, production planning, product-aaS, asset monitoring and performance optimization. Companies with assets that they cannot easily inspect regularly will significantly benefit from exact, 3D digital twins, and companies that manufacture high-value assets should offer digital twin monitoring as-a-service for new revenue streams. Innovative vendors in digital twins and simulation software include PTC, SAP, Siemens, and ANSYS.
The above technologies have already started to converge, and robotics provide a physical representation of this convergence. Robotics use AI and computer vision and connect to IIoT platforms where they have digital twins. This connectivity and AI will increase in importance as more cobots join the assembly line and work alongside humans. The robotics vendors that can integrate the most deeply with other transformative technologies have the biggest opportunity. Such vendors include the likes of ABB, KUKA, FANUC, Universal Robots, Rethink Robotics and Yaskawa.
“The vendors that open up their technologies and integrate with both existing equipment and infrastructure and other new transformative technologies will carve out a share of this growing opportunity. Implementation will go step-by-step over multiple decades, but ultimately, how we produce goods will change drastically from what we see today,” concludes Owen.
Most companies think they lead their Industry 4.0 competitors in AI and robotic technologies. This sounds like Garrison Keillor describing the mythic village of Lake Wobegon, MN where “all the children are above average.” I’m finding increased interest in digital manufacturing, Industry 4.0, smart manufacturing, or whatever the initiative is called locally.
As always, hype exceeds reality until that point in time when we suddenly realize that everyone is doing it rather than talking about it. Cloud computing falls into that category.
A huge confidence gap exists between the number of companies that try digital manufacturing strategies and those that successfully apply them, a new McKinsey & Co. survey found. In the 2018 Manufacturing Global Expert Survey, 92 percent of respondents think they lead or are on par with competitors in Industry 4.0 manufacturing strategies.
The survey consisted of 700 companies in seven nations. Each had at least 50 employees and $10 million in annual revenue. It found that two-thirds rank digitizing the production value chain as a top priority. Industry 4.0 pursuits fall in three areas:
Connectivity – Using digital performance management and augmented reality to move the right information to the right people in real time. These tactics help communicate interactive work instructions and standard operating procedures.
Intelligence – Advanced analytics and artificial intelligence are fostering better decision making. Examples: Predictive maintenance; digital quality management and AI-driven demand forecasting.
Flexible Automation – New robotic technologies are safer and improve productivity. Human-machine interactive “cobots” and driverless guided vehicles are changing life on the factory floor.
“Despite this focus and enthusiasm, companies are experiencing ‘pilot purgatory.,’ They have significant activities underway. But they are not seeing meaningful bottom-line results,” said Richard Kelly, a McKinsey partner.
China, India and the United States think they lead their competition in digital manufacturing. Japan was an outlier. Its view for the potential of digital manufacturing dropped from over 90 percent in 2017 to 75 percent. Japan’s loss of enthusiasm was far greater than declines in the other three countries. Even so, the success in implementing Industry 4.0 solutions rose significantly in Japan, China and the U.S. while stagnating in Germany.
Digital manufacturing topped the operations-strategy agenda at 68 percent of companies. India led China and Brazil in setting an Industry 4.0 agenda. At 63 percent, the U.S. was 5 percentage points below the 68 percent average.
Companies are piloting an average of eight different Industry 4.0 solutions. India leads with 10.6 digital pilots. China had 10.2 and Brazil had 8.9. The U.S. was fourth at 8.5.
“The challenge is to roll out successful pilot projects to the entire organization,” Kelly said. “That’s what makes transformation happen.”
Across business sectors, connectivity, intelligence and flexible automation solutions showed relevance. Pilots under way trailed that sentiment by 16 to 19 points.
A bigger drop off came when comparing pilot programs in the three areas with those that made it to scale. Only 30 percent rolled out companywide. Industrial automation, software and semiconductors fared best. Healthcare, automotive components and paper and packaging trailed.
In Germany, the U.S., Japan and China, optimism toward digital manufacturing fell after an all-time high in 2017.
“It is quite possible companies still believe in the potential of the various technologies of Industry 4.0,” Kelly said. “But pilot purgatory has been demoralizing. Many are less hopeful about their individual chances of reaping benefits at scale. But we’re seeing great success in the number pilot projects being launched, and the general attitude toward digital manufacturing is quite positive.”
Rockwell Automation’s recent huge investment in PTC for only 8% of the company has sparked a number of thoughts on strategies not only of Rockwell Automation, but also other companies in the market. We’re looking not only at Rockwell Automation in this brief analysis, but also Siemens, Schneider Electric, and ABB.
I’ve left out Emerson, Honeywell, and Yokogawa. The only interesting thing in that part of the market is Emerson’s abortive run at acquiring Rockwell. That was strange. I don’t think that Emerson could have digested such a meal.
The analysis is not to knock anyone but to look for trends and strategies of some of our major suppliers.
I think it begins with Siemens. An executive explained the company’s digital factory strategy and vision many years ago. Then the company acquired UGS and added PLM, CAD, and other digital technologies. There followed other similar acquisitions. I’m thinking mainly of the COMOS product, here.
If you are looking for an articulation of the strategy, I suggest looking no further than Industrie 4.0 and cyber-physical systems.
Sticking with Europe and the competition over there, let’s consider Schneider Electric. This company has been building the “electrification” side of the business which also brought industrial control products and some automation–think Modicon. While it lost considerable market share in PLCs, it did remain in the market. Then it acquired Invensys adding a lot of software (something it never really was good at) but especially process control (Foxboro, etc.). This latter helps it in the power market segment and positions it well against ABB. Siemens of course is the main competitive target. Then is a strange move, Schneider used its software businesses (Wonderware, etc.) as an investment in AVEVA grabbing 51% of the company. Now it, too, has a digital factory strategy in place.
ABB, a strong competitor in the power side of the business and also in process control, acquired B+R Automation. That company was a strong second-tier machine automation supplier fleshing out ABB’s portfolio in the discrete, or machine, automation market. Then it acquired GE’s industrial business strengthening ABB in the “electrification” market. Sounding familiar.
Now look at Rockwell’s investment. That company has flirted with Dassault Systemes over many years for a PLM-to-Control strategy. But nothing ever came of it.
A couple of years ago it acquired thin-client manufacturer ACP and systems integrator Maverick Technologies and MagneMotion a supplier of motion control and conveyor technologies. Then came a large investment in PTC for a small percentage of the company. I speculated that this could be a Digital Factory play along with the respected analyst Joe Barkai, but my friend Keith Larson writing for Putman Publishing (and someone I trust to accurately report on what suppliers are saying) reported that the sought-after prize was a closer integration with ThingWorx. This would be a piece of the Rockwell strategy of “Connected Enterprise” and Larson reported that the target RA product is its MES offering.
In other words, Rockwell Automation seems focused not on the current buzz of Industry 4.0/Industrial Internet of Things/Cyberphysical systems/Digital Factory, but on “making our customers more productive.” Its roots are plant floor and it remains a plant floor supplier.
I am NOT predicting any acquisition of Rockwell Automation, but I do believe that the market needs some continued consolidation. The next five years will be interesting in this market.
I’m on a bit of a break. World Cup. Brazil v Mexico was a passionate game (unlike Denmark v Croatia). But Belgium v Japan was one of the greatest games I’ve ever seen. What a lead! What a comeback!
Notice at the final whistle there was little celebration? All the players had given everything in the match. They were worn out.
Just like when we are (or should be) passionate about something. Give it your all–then recuperate.
I’m pondering during times between matches:
What is Rockwell Automation really going to get for its $1B investment in PTC?
What does the ABB acquisition of GE Industrial mean for the electrical balance of power in Europe, America, the world?
Will ThingWorx be the ultimate connectivity tool? How much is that really worth financially?
Will the IT companies I’m following (Dell Technologies, Hewlett Packard Enterprise) be big players in edge and IoT?
Will there be another process automation acquisition/merger? (The tea leaves seem ripe.)
Feel free to join the conversation. For the Americans–Happy Independence Day.