Schneider Electric Foxboro and Triconex Innovation Days 2019

Schneider Electric Foxboro and Triconex Innovation Days 2019

I’ve followed Foxboro and Triconex for many years now in my coverage of the process automation business. A great company that, not unlike too many others, suffered now and again with very poor management. The company has now settled in nicely at its home in Schneider Electric and appears to be healthy here.

Much credit must go to Gary Freburger. He provided a steadying hand as the leader before and through the transition, as well as guiding the integration into the new home. He is retiring at the end of the year. I’ve met a number of great leaders and a few stinkers in my 20 years at this side of the business. Gary’s one of the great ones. And his chosen successor (see more below) seems more than up for the task of building on his successes.

Marcotte Succeeds Freburger as Process Automation President

This week’s major announcement revealed that Nathalie Marcotte has been selected to succeed Freburger as president of its Process Automation business, effective Jan. 1, 2020.

Nathalie Marcotte Official Picture  jpg

“After a long, successful industry career, including more than 15 years serving Invensys and Schneider Electric in various senior leadership roles, Gary has decided to retire,” said Peter Herweck, executive vice president, Industrial Automation business, Schneider Electric. “We thank him for his many contributions and his strong legacy of success. We wish him well, and I congratulate Nathalie on her appointment. She brings more than 30 years of industry knowledge, expertise and experience, as well as a long record of success. I look forward to working with her as we build on the success Gary has delivered.”

Since joining the Schneider organization in 1996, Marcotte has held several positions of increasing responsibility, including vice president of Global Performance and Consulting Services; vice president, North America marketing; general manager for the Canadian business; and, prior to her current position, vice president, marketing, Global Systems business. As the company’s current senior vice president, Industrial Automation Services, she is responsible for Schneider Electric’s Services business and offer development, ranging from product support to advanced operations and digital services. She is also responsible for the company’s Global Cybersecurity Services & Solutions business, including the Product Security Office.

“As we move through this transition, it will be business as usual for Schneider Electric and our Process Automation customers,” Marcotte said. “Gary and I are working very closely together to ensure there will be no disruptions to our day-to-day operations. This ensures our customers have the same access to the exceptional people, products and technology they have come to trust and rely on to improve the real-time safety, reliability, efficiency and profitability of their operations.”

“I thank Gary for his many contributions to Schneider Electric and to our industry in general. Under his leadership, our customers, partners and employees have never been better situated to succeed, today and tomorrow,” Marcotte said. “This transition will have no impact on our technology strategy and portfolio roadmap. We remain committed to our continuously-current philosophy, which means never leaving our customers behind. Now, by leveraging the strength of the full Schneider Electric offer, we can take the next step toward enabling an easier, less costly digital transformation for our customers, while keeping them on the path to a safer, more secure and profitable future.”

Following the opening keynotes, I had the opportunity to chat privately with Freburger and Marcotte. Following summarizes a few key takeaways.

Digitalization and Digital Transformation.

These topics were prominently displayed in the ballroom before the keynotes. In fact the welcome and opening presentation were given by Mike Martinez, Director of Digital Transformation Consulting. These are common themes in the industry—in fact, not only process automation, but also at the IT conferences I cover. Each company has its own unique take on the terms, but it still boils down to data, data integrity, databases, and data security. All of which were discussed.

Key Points From the Presidents.

Integration across Schneider Electric. One priority has been working with other business units (and their technologies) across the Schneider Electric portfolio. This could be PLCs and drives, but power is a huge emphasis. Schneider Electric management wants very much for its process automation acquisition to integrate well with its historic electric power business. This is seen as a strategic opportunity. One thought-provoking observation—is the process engineer/electrical engineer divide as serious as the IT/OT divide? No direct answer. But these domains have historically had little to no collaboration. One to watch.

Close working relationship with AVEVA. If you recall, Schneider Electric bundled its various software acquisitions including the ones from Invensys (Wonderware, Avantis) and used them to buy into AVEVA—the engineering software company. Bringing automation and software together was a constant source of pain for Invensys. Schneider Electric dealt with it through a separate company. Along the way, cooperation seems to be better than ever. Marcotte explained to me that Foxboro combines its domain expertise with the more broadly general software platforms to achieve customer values. See for example my previous post on Plant Performance Advisors Suite.

Cybersecurity.  Marcotte has been leading Schneider’s cybersecurity efforts. These are seen as a key part of Schneider Electric’s offer. See especially the establishment of the ISA Global Cybersecurity Alliance. They don’t talk as much about Internet of Things as at other conferences, when I probed more deeply about IT, cybersecurity was again brought up as the key IT/OT collaboration driver.

It’s been a struggle, but the Schneider Electric process automation business (Foxboro and Triconex) seems as strong as ever. And the people here—both internal and customers—are optimistic and energetic. That’s good to see.

Emerson to Buy General Electric’s Intelligent Platforms Business

Emerson to Buy General Electric’s Intelligent Platforms Business

There was plenty of cool new products unveiled at last week’s Emerson Global Users Exchange. As a former product development manager, I liked the “peanut butter and chocolate” moment when Emerson’s engineers were trying to solve the human location in a plant problem. They realized that many customers already have a WirelessHART mesh network. Why don’t we use location tags with WirelessHART as the communications service? Cool.

Topping the news released during the week was announcement that Emerson has agreed to acquire Intelligent Platforms, a division of General Electric. Intelligent Platforms’ programmable logic controller (PLC) technologies will enable Emerson, a leader in automation for process and industrial applications, to provide its customers broader control and management of their operations.

This is a great acquisition. It reveals Emerson as a company that has its act together. This is the consolidation trend in the industry. Siemens has a complete portfolio (well, mostly). ABB recently acquired B+R Automation in a similar move. Schneider Electric added Foxboro and Triconex from Invensys to its mostly factory automation portfolio. So there are four major companies aligning their competitive offerings. And all are focused on digital transformation for their customers.

Even Rockwell Automation has built a process automation business over time. It recently shunned acquisition with its money and instead invested $1 billion for a little over 8% of PTC in order to achieve a closer partnership with ThingWorx (and a seat on the board). Maybe having an executive on the board, it can learn how Jim Hepplemann managed to build a company through acquisition.

Back to Emerson. GE IP (formerly know as GE Fanuc) has a line of PLCs, motion control, and HMIs. It hasn’t promoted its products for years, but they are still alive and well in Charlottesville, VA. This is a great strategic move.

As for GE? Well, we know that it is having a fire sale. I’d wondered about this part of the business. Now we all wonder about what’s left of GE Digital. We know from a Wall Street Journal article that it’s for sale. And also we know that the board just replaced the CEO evidently for not moving quickly enough. But…will anyone want GE Digital? I’m sure everyone has looked. Here’s a thought. What if it wound up with an IT company to complement these burgeoning IoT practices?

Rockwell Automation Continues to Bet Big On Solutions Services

Is service and solutions the boost Rockwell Automation’s process automation business needs to take off? Talk on the street has it that the product side of the process automation business has not been as robust as it once thought. Meanwhile I’ve also been told that solutions and services, not products, has been the driver for growth in the Connected Enterprise initiative.

Then this announcement that Rockwell has acquired Maverick Technologies fits in all categories. Maverick is a major systems integration player. This following the acquisition of Automation Control Products, although both relatively small acquisitions, may show Rockwell Automation’s charted path to growth.

Two side notes in this announcement. First, this press release introduces Ken Champa as the new Sr. VP of the Control Products and Solutions business replacing Blake Moret in that role. The only mention I could find of him even on the Rockwell website is in Chinese. The second interesting thing (not mentioned in the press release) is that Maverick has become a major supporter of both ISA and MESA International over the past few years. Wonder if that will continue.

From the press release, “Rockwell Automation Inc. has acquired leading systems integrator Maverick Technologies to expand domain knowledge and help deliver innovative control and information solutions to customers in industries, such as chemical, food and beverage, and oil and gas. The acquisition significantly strengthens Rockwell Automation’s expertise in key process and batch applications to help its customers realize greater productivity and improved global competitiveness through process control and information management solutions”

“Industrial control and information solutions are most effective when they result from close collaboration between a knowledgeable supplier and the user,” said Ken Champa, Rockwell Automation senior vice president of Control Products and Solutions. “The combination of our global industrial automation leadership with MAVERICK’s platform-independent domain expertise will help our customers reduce complexity and realize unprecedented productivity.”

“We will continue to deliver our domain expertise, now with the power of a Fortune 500 industrial automation leader at our side,” said Paul Galeski, MAVERICK founder and CEO. “This creates the best combination available to help uncover the benefits of information that drives performance in process industries.”

ABB Stabilizes Its Financial Ship — Industrial Automation

ABB Stabilizes Its Financial Ship — Industrial Automation

ABB has had a rugged financial period, but its latest financial results indicate a righting of the ship. I’m not a financial analyst; I didn’t sleep at a Holiday Inn Express; but, I’m interested in corporate strategies and performance especially among industrial technology suppliers.

What follows is mostly from the company press release. However read CEO Ulrich Spiesshofer’s remarks. There are two significant comments. One–recovery in the Power Systems business. ABB moved some talented individuals from the process automation business over to Power Systems. It wasn’t an overnight success, but the team has made an impact. Two–“productivity improvements”, which is usually a euphemism for fewer people doing more work.

Anyway, I noticed a little bounce in ABB’s stock price in the last week. Looks promising.

Full-year 2015 Summary:

  • Next Level strategy delivering positive results
  • Orders and revenues stable, order backlog up 5%
  • Operational EBITA margin up 60 bps to 11.8%
  • Operational earnings per share +5% (constant currency)
  • Cash return on invested capital up 70 bps to 13.4%; free cash flow +16%
  • Power Systems ‘step change delivers strong financial turnaround in 2015
  • 7th consecutive dividend increase to CHF 0.74 per share proposed
  • 4 new Board members proposed for election at the next annual general meeting

Q4 Summary:

  • Orders (-2%) reflect challenging market conditions; base orders -6%
  • Operational EBITA margin up 60 bps to 11.7%
  • Power Systems reached target margin corridor; strategic portfolio review of Power Grids on track
  • Accelerated productivity and cost out measures in white collar, supply chain and operational excellence
  • Net income of $204mn including a total $496mn restructuring and related expenses
  • Cash flow from operating activities +18%


Full-year and Q4 financials impacted by currency translation due to strong appreciation of US dollar

“We took decisive actions to improve our customer focus and realized profitable growth in target segments to mitigate the impact of significant market headwinds. At the same time, we simplified the organization, drove productivity improvement and accelerated our cost reductions,” said CEO Ulrich Spiesshofer. “As a result, we increased margin and free cash flow. The successful turnaround in Power Systems demonstrates our execution capabilities and our focus on sustainable value creation. With our strong financial position and a leaner, more market oriented organization we are well placed to manage through the global uncertainties which we will continue to face in 2016.”

Short-term outlook

Macroeconomic and geopolitical developments are signaling a mixed picture with continued uncertainty. Some macroeconomic signs in the US remain positive and growth in China is expected to continue, although at a slower pace than in 2015. The market remains impacted by modest growth in Europe and geopolitical tensions in various parts of the world. Oil prices and foreign exchange translation effects are expected to continue to influence the company’s results.

Full-year 2015 Group Results

“We are shifting our center of gravity, fully in line with our Next Level strategy by driving organic growth in targeted segments, strengthening competitiveness and lowering risk,” said CEO Ulrich Spiesshofer. “We drove technology leadership with the launch of YuMi, the first truly collaborative robot. We strengthened our technology leadership position in the area of the Internet of Things, Services and People, for instance with our innovative Octopus offering for optimized vessel operations. Furthermore, our focus on high growth markets such as food and beverage and Africa is paying off.”

Orders were steady for the year (down 12 percent in US dollars). Large orders (above $15 million) grew 10 percent (down 5 percent in US dollars) and offset a base order decline of 3 percent (14 percent in US dollars). The order backlog at the end of December 2015 amounted to $24.1 billion, an increase of 5 percent (down 3 percent in US dollars) compared with the end of 2014. The book-to-bill ratio remained steady at 1.03x.

Revenues were steady (down 11percent in US dollars) compared with 2014 as revenue growth in Power Systems and Power Products offset the decline in Discrete Automation and Motion and Process Automation. Service revenues grew 6 percent (down 8 in US dollars) and grew 1 percentage point as a percent of total group revenues (adjusted for divestitures; 0.5 percent prior to adjustment).

ABB continued to execute its Next Level strategy in 2015 which resulted in a 60 basis points improvement of the operational EBITA margin to 11.8 percent and free cash flow generation improving 16 percent in constant currency (6 percent in US dollars) to $3 billion. The main drivers for the group’s enhanced profitability were the successful turnaround of Power Systems and continued cost savings and productivity measures.

“The strong execution of our strategy is showing results,” said Ulrich Spiesshofer. “In 2015 we continued to focus on growth opportunities in a disciplined way while mitigating the impact of market headwinds through capacity adjustments, productivity measures and cost reductions. Transforming ABB, we have made good progress towards enhancing our performance culture by implementing our new performance management and compensation model for more than 70,000 people in 2015. The divisional realignment has been completed and the strategic portfolio review of the Power Grids division is to be completed in 2016 as previously announced.”

Net income for the year amounted to $1.9 billion and was impacted by $626 million of restructuring and related expenses for capacity adjustments and white collar productivity measures. Successful measures to improve net working capital contributed to higher cash flow from operating activities (constant currency) and free cash flow conversion and supported an increased cash return on invested capital2 (CROI) of 13.4 percent. Basic earnings per share in the period was $0.87 and operational earnings per share2 on a constant currency basis was $1.35, an increase of 5 percent.

Emerson to Buy General Electric’s Intelligent Platforms Business

Aveva Calls Off Schneider Electric Software Reverse Merger

A news item from the Department of the Blindingly Obvious. Aveva’s board has called off discussion for the “reverse merger” with Schneider Electric Software. It cited two reasons: the structure of the deal was overly complex and software integration issues. Yep, they are certainly correct on both counts.

You may recall that Schneider would give Aveva its software businesses (Wonderware, Avantis, SimSci, Indusoft, Citect I presume) and a huge chunk of cash in return for a 53% stake in the “New Aveva.”

I have watched many software mergers over the past 10 years. None ever achieved technology integration. They were all organizational and technical nightmares.

Then think about all the Wonderware technology embedded in Foxboro products. I’d get a headache even trying to sort through the legal and organizational problems.

A good software company

Wonderware (perhaps with other pieces of the software portfolio) would make a marvelous software company with adequate investment behind it. I still think that Schneider Electric will find a way to divest it. Running software is qualitatively different from running an electrical components and process automation business. Right now Schneider is still investing in the business, and that is a good sign.

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