Merger and Acquisition (M&A) activity in the industry segment I cover seems to have been hot for some time. I, along with others dependent upon the strength of the industry like say magazine media companies, view market consolidation as having the potential for decreasing revenues. Fewer companies makes for a less vibrant marketplace. Just take a look at the size of the magazines covering controls and automation these days.
Although this report covers a much broader segment than controls and automation, I always study the quarterly PwC M&A report carefully. And here is Q3 2018.
Global industrial manufacturing M&A results for Q3 2018 experienced a significant pull back in deal value from the Q2 2018 historic high with aggregate disclosed value of $11.7 billion, which is a 73% decrease quarter on quarter and a 52% decrease compared to the three-year quarterly average. The most recent quarter is directionally consistent with the 42% decrease seen in global cross-sector M&A deal value from Q2 2018. Since PwC’s last publication, the US administration has taken steps to implement tariffs on imported goods and a trade war has ensued. The uncertainty around how this will affect the M&A landscape more heavily weighed on industrial manufacturing than other sectors this quarter.
Looking at deal volume, there were 477 deals announced in Q3 2018 compared to 612 deals announced in Q2 2018, a 22% decline. The three-year average number of announced deals was 624 to which the 3Q 2018 results represent a 23% decline.
Worldwide cross-sector and industrial manufacturing deal making had been humming along with five and four consecutive quarters of deal value growth, respectively, prior to Q3 2018. The question remains if this contractionary quarter is the beginning of a trend or just a pause in action resulting from uncertainty in the economic, regulatory, and political environments.
- Total aggregate disclosed deal value sank 73% to $11.7 billion in Q3 2018, a 52% drop compared to the three-year quarterly average of $24.2 billion and a 73% decrease from Q2 2018 of $42.9 billion.
- Total deal volume decreased to 477 deals in Q3 2018, a 23% drop compared to the three-year quarterly average of 624 deals and a 22% decrease from the 612 announced deals in Q2 2018.
- There was $78.9 billion of deal value announced for the first nine months of 2018 compared to $60.4 billion for the same period of 2017, a 31% increase.
- There were 1,738 deals announced for the first nine months of 2018 compared to 1,906 deals for the same period 2017, a 9% decrease.
- A $1.2 billion merger was the largest deal announced in the quarter.
Continuous learning is essential for economic survival in this increasingly technological world. However, I believe it is also essential for growth as a human. Sometimes we get so wrapped up in technology and organizational success that we forget that our first duty is to improve ourselves.
Drawing as Thinking
When you take notes or think about a project, what do you write? Do you use pen and paper? Or some sort of notes app or outliner on your computing device?
How about drawing mind maps or sketching ideas? On listening to a recent podcast I jotted this note
Drawing is not an artistic process; it is a thinking process.
Math as Thinking
Reading Peter Diamondis’s newsletter recently, he once again talked about how worthless math was in school—“I have never expanded a polynomial in my life.” I bet he used the logical thinking instilled by working math problems his entire life!
Wishing for Certainty
When I was young I knew old guys who had worked for the same company for many years. There was a certainty about life. I, on the other hand, have never really known that certainty. Here is a thought that once again draws out that idea of clear, logical thinking
The antidote to uncertainty is not certainty—which is impossible—but clarity.
It’s all about passion
Henry Cloud—The fruitfulness of our lives will come from our hearts. Developing our inner selves helps us prioritize our lives. Our hearts will determine the “issues” of our lives.
Your most important resources are time and energy.
Andy Stanley—Leaders who don’t listen will eventually be surrounded by people who have nothing to say.
Why do we do technology?
We are trying to solve problems.
Perhaps we limit ourselves on the problems we are solving. For the past several years, the theme at National Instruments’ annual user conference NI Week has focused on solving some of the world’s biggest problems through technology.
Writing in the Daily Stoic Ryan Holiday quotes Confucius, “Virtue is never solitary; it always has neighbors.” What he meant by that was that good behavior and good thinking is contagious.
If politics is a snake pit of corruption and avarice, then good people should enter it and improve it, not simply denounce it. If capitalism is too selfish, then the caring should start businesses with better cultures (which, when successful, will steal market share from the bad actors). If a group has extreme or offensive views, it shouldn’t be cut off and isolated for fear of “normalizing it.” It should be normalized–by encouraging normal people to interact with it, correct it and prod these misguided people towards the right path.
I’d like to start this week off with a challenge. What problems are we solving? Why do we do what we do? What good are we bringing into the world?
This is an age of entrepreneurship. As the big companies gobble up smaller ones, they always leave gaps for engineers who ask why. Go out and work on a bigger problem. Start a company.
News from EdgeX Foundry including an open marketplace for IoT Edge Computing. This is an interesting extension to the platform. Also, Intel has joined the consortium.
At a glance:
- EdgeX Foundry Seeds an Open Marketplace for IoT Edge Computing with New Developer Kits and Smart Building Automation
- Community Demo at IoT Solutions World Congress
- Intel, Redis Labs, ZEDEDA and five other tech influencers commit to IoT interoperability and join EdgeX’s mission to create a unified edge ecosystem
EdgeX Foundry, an open-source, vendor-neutral project that enables an ecosystem of plug-and-play components to unify the IoT edge computing marketplace, announced the availability of EdgeX-enabled developer kits and a Smart Building Automation Community Demonstrator that will debut at IoT Solutions World Congress on October 16-18 in Barcelona.
Hosted by The Linux Foundation, the EdgeX platform is architected to run on any hardware or operating system and unify components coded in any programming language to accelerate time to market and simplify the deployment of secure IoT solutions. The framework serves as a de facto standard to bring together any mix of existing connectivity protocols with an ecosystem of heterogeneous value-add applications.
Developer kits are important tools for building new applications and solutions. A variety of dev kits are already on the market; however, the majority of these kits lock the developer into a particular back-end platform or cloud. In comparison, dev kits based on the EdgeX framework will provide developers with the freedom to choose from an ecosystem of components bound together by the EdgeX interoperability APIs.
“With the emergence of these dev kits, developers will have the opportunity to prototype with their choice of ingredients while taking advantage of plug-in components from EdgeX’s growing vendor-neutral ecosystem,” said Jason Shepherd, EdgeX Foundry Governing Board Chair and Dell Technologies IoT and Edge Computing CTO. “This allows them to focus on innovation rather than reinvention, in addition to being able to add and exchange components at any time to optimize their solution throughout the development and deployment lifecycle.”
There will be two different kinds of dev kits – community and commercial. For options in the community track, the bill of materials will be purchased independently online, the code will be downloaded straight from a special repository on the project GitHub, and questions will be answered through forums like the EdgeX Rocket Chat. The first kit is based on the Samsung Artik with Grove sensor, and options will grow through community contributions over time.
The commercial track for the dev kits will provide EdgeX members with the ability to seed the emergence of an open marketplace for IoT edge computing. These kits will offer end users with attractive options to get started with professional support so they can focus on their preferred value-add rather than supporting open source code. Commercial options will include kits based on supported versions of the EdgeX framework itself (neutral to any plug-in value add), kits based on specific IoT platforms, and microservice plug-ins for value-add such as analytics, data orchestration and security.
EdgeX Foundry is debuting a new community demo at IoT Solutions World Congress that will highlight the platform’s ability to bring together heterogeneous solution components. This first community demo showcases how EdgeX can bring together a real-world, smart flexible office space environment based on components from a variety of vendors leveraging numerous connectivity standards, operating systems and hardware types.
The growth and diversity of the EdgeX ecosystem over the last year has helped the technical community hit major milestones including the “California” release, which made the switch to Golang for the baseline reference implementation. Since the release in April, EdgeX Foundry unique code contributions from members and non-members alike have more than doubled to 70 on a regular basis.
These contributors have played a major role in the upcoming “Delhi” release, which offers major enhancements including the first management features, more security functionality such as access control and improved security bootstrapping, C and Golang-based Device Service SDKs and a reference GUI for demos and simple deployments. Projected to launch in November, the Delhi code will be well-suited for end users to begin developing commercial offers and production deployments. To find more details about Delhi or the EdgeX roadmap, visit the wiki here.
Intel joins the EdgeX Ecosystem
“Today’s announcement represents one more step in Intel’s open source journey and increased role in the advocacy, use and contribution across the ecosystem,” said Stacey Shulman, chief innovation officer for Retail Solutions at Intel. “Intel’s involvement in EdgeX Foundry will help drive scale and accessibility of solutions for both our customers and businesses of all sizes.”
Other new EdgeX Foundry project members include Basking Automation GmbH, Beijing University of Posts and Telecommunications (BUPT), DATA AHEAD, CertusNet, Redis Labs, the Federal University of Campina Grande (UFCG) /Embedded Lab, Windmill Enterprise and ZEDEDA.
“We’re standing at a critical point for digital transformation,” said Shepherd. “The massive volume of devices coming online represents a huge opportunity for innovation and is making edge computing a necessity. We need an open, cloud-native edge ecosystem enabled by EdgeX to minimize reinvention and facilitate building and deploying distributed, interoperable applications from the edge to the cloud. We’re thrilled to welcome these new member organizations into our already strong community that shares the same commitment to open collaboration and innovation.”
Here is the second news piece, and perhaps the biggest, from the ODVA annual meeting held this week in Georgia. Honeywell has become a principal member of ODVA alongside Bosch Rexroth, Cisco Systems, Endress+Hauser, Rockwell Automation, Omron and Schneider Electric. The primary focus of Honeywell’s activities in ODVA will be through Honeywell Process Solutions (HPS), part of Honeywell’s Performance Materials and Technologies strategic business group and an industry leader in automation control, instrumentation, software and services.
Honeywell Process Solutions has a 40-year history in process automation control. It has supported ODVA technologies and standards since the late 1990s with the integration of ControlNet into its distributed control system (DCS) offering. With the convergence of industrial control systems used in process and hybrid industries, Honeywell has seen both a growth in adoption and in opportunity for EtherNet/IP connectivity and now has integrated EtherNet/IP into multiple product lines including Experion Process Knowledge System (PKS) and ControlEdge PLC. Today HPS has its solutions installed in more than 10,000 sites around the world including various locations with EtherNet/IP.
ODVA has activities focused on the adoption of EtherNet/IP in the process industries. These activities include a technical working group focused on enhancements to The EtherNet/IP Specification for specific needs in the process industries. ODVA is also involved in industry-wide efforts to promote adoption of Ethernet in the process industries, such as its collaboration with FieldComm Group and PROFIBUS and PROFINET International to help promote adoption of Ethernet to the Field that will be made possible by forthcoming enhancements to the IEEE 802.3 Ethernet standard for long-reach single pair Ethernet.
“EtherNet/IP is an important platform for industrial control and, in the future, for overall digitization,” stated Brian Reynolds, senior director of engineering for HPS’ Projects and Automation Solutions business. “Honeywell leverages EtherNet/IP in its Connected Plant solutions, which allows customers to collect more meaningful data from devices to improve overall equipment effectiveness and safety. By joining ODVA as a principal member, Honeywell is increasing its contribution to the advancement of EtherNet/IP and related ODVA technology and standards, in order to increase productivity, reliability, safety, security and digitization in the process and hybrid industries.”
“Adoption of EtherNet/IP in the process industries is poised for vertical take-off within the next ten years,” said Katherine Voss, president and CEO of ODVA. “ODVA welcomes increased participation from Honeywell Process Solutions inside ODVA as we work together to bring the benefits of EtherNet/IP to users in an ever expanding range of industries within, and beyond, the process industries.”
ODVA introduced Honeywell as a principal member at its 2018 Industry Conference and 19th Annual Meeting of Members that was held October 9-11, 2018 in Stone Mountain, Georgia, USA. The introduction included an overview of HPS and its reasons for joining ODVA as a principal member along with an end-user perspective on EtherNet/IP in Action at DowDuPont. Presentations for Honeywell and DowDuPont may be viewed and downloaded with other proceedings from the ODVA online.
Which companies are leading us into the Fourth Industrial Revolution? The World Economic Forum has completed a study and named nine of the best factories in the world—certainly an audacious task. Dubbed “lighthouses”, they were selected from a survey of over 1,000 manufacturing sites based on a successful track record of implementing technologies of the Fourth Industrial Revolution.
Three of the nine “lighthouse” sites are in China, five are in Europe and one is in the United States.
The aim of this effort is to build a network of “manufacturing lighthouses” to address problems confronting industries in both advanced and emerging economies when it comes to investing in advanced technologies. Earlier work by the Forum identified that over 70% of businesses investing in technologies such as big data analytics, artificial intelligence, or 3D printing do not take the projects beyond pilot phase due to unsuccessful implementation strategies. To aid the learning and adoption of technologies by other companies, all nine lighthouses in the network have agreed to open their doors and share their knowledge with other manufacturing businesses.
“The Fourth Industrial Revolution is expected to deliver productivity gains amounting to more than 3.7 trillion USD. But we are still at the beginning of the journey” said Helena Leurent, Head of the Shaping the Future of Production System Initiative and Member of the Executive Committee at the World Economic Forum. “Our efforts to create a learning platform with the lighthouses as the cornerstone are part of the giant leap needed to capture the benefits for the larger manufacturing ecosystem including multinationals, SMEs, start-ups, government and academia”.
“The Fourth Industrial Revolution is real. Workers and management equally get augmented with technology. These pioneers have created factories that have 20-50% higher performance and create a competitive edge,” said Enno de Boer, Partner and Global Head of Manufacturing at McKinsey & Company, which collaborated with the Forum on the project. “They have agile teams with domain, analytics, IoT and software development expertise that are rapidly innovating on the shop floor. They have deployed a common data/IoT platform and have up to 15 use cases in action. They are thinking “scale”, acting “agile” and resetting the benchmark.”
The nine “lighthouses” have comprehensively deployed a wide range of Fourth Industrial Revolution technologies and use cases at scale while keeping humans at the heart of innovation. One example from each of the sites is highlighted below:
- Bayer Biopharmaceutical (Garbagnate, Italy): ‘Using data as an asset’- While most companies use less than 1% of the data they generate, Bayer’s massive data lake has led to a 25% reduction in maintenance costs and 30-40% gains in operational efficiency
- Bosch Automotive (Wuxi, China): ‘Supporting output increase’ – By using advanced data analytics to deeply understand and eliminate output losses, simulate and optimize process settings, and predict machine interruptions before they occur
- Haier (Qingdao, China): ‘User-centric mass customization model’ – Artificial Intelligence led transformations include an ‘order-to-make’ mass customization platform and a remote AI supported, central intelligent service cloud platform to predict maintenance needs before they happen
- Johnson & Johnson Depuy Synthes (Cork, Ireland): ‘Process-driven digital twinning’ – This factory used the internet of things to make old machines talk to one other, resulting in 10% lower operating costs and a 5% reduction in machine downtime
- Phoenix Contact (Bad Pyrmont and Blomberg, Germany): ‘Customer-driven digital twinning’ – By creating digital copies of each customer’s specifications, production time for repairs or replacements has been cut by 30% Procter & Gamble (Rakona, Czech Republic): ‘Production agility’ – A click of a button is all it takes production lines in this factory to instantly change the product being manufactured, which has reduced costs by 20% and increased output by 160%
- Schneider Electric (Vaudreuil, France): ‘Factory integration’ – Sharing knowledge and best practices across sites has helped this company make sure all its factory sites enjoy the highest energy and operational efficiencies, reducing energy costs by 10% and maintenance costs by 30%
- Siemens Industrial Automation Products (Chengdu, China): ‘3D simulated production line optimization’ – Using 3D simulation, augmented reality and other techniques to perfect the design and operations of its factory, employees helped increase output by 300% and reduced cycle time
- UPS Fast Radius (Chicago, USA): ‘Balancing capacity with customer demand’ – Meeting increasing consumer demand for fast-turnaround customized products has been made possible through a combination of globally distributed 3D printing centres with real-time manufacturing analytics
The World Economic Forum, committed to improving the state of the world, is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.