Industrial Technology Supplier State of the Business

Industrial Technology Supplier State of the Business

A tale of the business state of two industrial technology supplier companies–GE and ABB.

This is a great article tracing the heritage and woes of GE. While the company is still strong in all the basic industrial categories, it’s moves deeper in to financial and entertainment industries have cost it dearly. Not to mention decades of financial sleight-of-hand. When I was at Minds + Machines last fall, I wondered if this might be the last. The new CEO hinted at changes in GE Digital at the conference. Shortly afterwards, the shoe dropped. GE Digital was to be essentially gutted. No more grandiose plans for a huge software platform that would be the solution of everything digital. Smaller applications and partnerships were to be the new direction. There will be some GE people at ARC this week, I’ll see what else I can learn.

Meanwhile, ABB released its full year 2017 financial results. It has been in the midst of restructuring since Ulrich Spiesshofer assumed the reins in 2013 succeeding GE alum Joe Hogan. ABB touts its progress in this report.

Ulrich Spiesshofer, ABB CEO

“In the transition year 2017, we shaped a streamlined and strengthened ABB. Now, our digital-first portfolio for customers in utilities, industry and transport and infrastructure is based on two clear value propositions: bringing electricity from any power plant to any plug, and automating industries from natural resources to finished products,” said Spiesshofer. “The annual results include the dampening effect of our massive transformation. With our targeted actions to shift our center of gravity, we have improved competitiveness, addressed higher-growth segments and de-risked ABB. We delivered four consecutive quarters of increasing base-order growth. The momentum we have built in 2017 positions us for profitable growth as the global markets are improving. Today’s proposal to increase the dividend for the 9th consecutive year demonstrates our confidence in the future.”

Full-year 2017 Group Results

ABB delivered a steady financial performance in 2017 despite market headwinds and its ongoing transformation. Total orders were steady (steady in US dollars). Base-order growth (base orders are classified as orders below $15 million) showed increasing momentum each quarter, and for the full year increased 5 percent (6 percent in US dollars), mitigating the effect of lower large orders. The large order share of total orders in 2017 was 8.5 percent, versus 13.5 percent in 2016, in part as a consequence of ABB’s business model shift. Total service orders grew 8 percent (8 percent in US dollars) to 20 percent of total group orders.

The order backlog at the end of December 2017 was $22,414 million, 4 percent lower (2 percent in US dollars) compared with the prior year. The book-to-bill ratio2 was 0.97x for 2017, compared with 0.99x in 2016.

Revenues improved 1 percent (1 percent in US dollars) to $34,312 million, with positive contributions from Electrification Products and Robotics and Motion more than offsetting the declines in Industrial Automation and Power Grids. Total services revenues grew 3 percent (3 percent in US dollars) and now stand at 18 percent of total group revenues.

ABB executed on its Next Level strategy throughout 2017. The company launched ABB Ability, its digital solutions offering, and continued to invest in digital, sales, branding and research & development. It delivered strong cost savings in White Collar Productivity and supply chain/operational excellence and completed or announced a number of important transactions. It continued to de-risk its portfolio by divesting non-core businesses, and taking actions to implement its EPC (Engineering, Procurement and Construction) business model change. These activities impacted full year results. The company’s operational EBITA declined 2 percent (1 percent in US dollars) to $4,130 million, inclusive of approximately $140 million of charges related to the EPC businesses. The reported operational EBITA margin was 12.1 percent, 30 basis points lower due to charges related to the EPC businesses and would have been steady without these charges.

Net income in 2017 rose 17 percent compared with the previous year to $2,213 million, reflecting primarily lower transformation-related restructuring and restructuring-related expenses and net gains recorded on the business divestments in the year. Basic earnings per share grew 17 percent to $1.04. Operational EPS2 was $1.25, 1 percent lower in constant currency4

Cash flow from operating activities was steady compared with 2016 at $3,799 million for the full year. ABB continued to benefit from improvements in net working capital which generated approximately $600 million of cash during 2017. Net working capital as a percentage of revenue was reduced to 11.3 percent, a 10 basis point improvement year on year. Capital expenditures for the group were $949 million during 2017. Free cash flow of $2,926 million was 5 percent lower than 2016 and the company’s cash return on invested capital (CROI) was 12.4 percent2, mainly impacted by the acquisition of B&R.

Greater Investment In Autonomous Vehicles For Manufacturing Than Passenger

Greater Investment In Autonomous Vehicles For Manufacturing Than Passenger

Quick, when you think of self-driving cars and trucks and other news of autonomous vehicles, what comes to mind? OK, maybe an unfair question today given the Waymo v Uber lawsuit trial that began yesterday. But most of us think in terms of passenger cars rather than industrial uses.

PwC worked on a study and Bobby Bono (pictured), Carolyn Lee, and Todd Benigni all of PwC wrote a blog post, Can you be a first mover in industrial mobility? discussing the investment in manufacturing outdistancing the investment in passenger vehicles.

PwC Bobby Bono

When it comes to self-driving vehicles, passenger cars may grab most of the headlines, but they aren’t capturing most of the investment in the space. According to a PwC analysis, of the $6.8 billion raised by autonomous-transport startups since 2012, about 62% has gone to companies working on technology for vehicles ranging from drones to unmanned forklifts and tractor-trailers, all pieces of the larger ecosystem of industrial mobility.

Significantly, these investments in the pioneers of industrial mobility have been accelerating in recent years. From 2012 to 2014, companies working on automobiles received about as much investment ($660 million) as those building non-auto solutions ($702 million). But from 2015 to 2017, non-auto investment increased five-fold to $3.5 billion, while investment in companies working on tech for passenger cars rose a comparatively modest 188% to $1.9 billion.

Why does this matter? The rapid growth in capital pouring into startups working on industrial mobility reveals that hefty bets are being placed on the prospect that the impact of autonomous vehicles may well first made more forcibly upon industrial applications – even as self-driving passenger cars continue to capture consumers’ imagination.

Attitudes toward self-driving trucks are a good example of this cautious approach. Nearly two-thirds of respondents in the survey said they’ll wait and see how the technology evolves before adopting it. That’s especially interesting, given that most all survey respondents estimated that autonomous trucks could slash transportation costs by up to 25%. In a nutshell: they see the potential, but aren’t quite ready to jump in.

Cost is arguably the most important factor keeping manufacturers on the sidelines. The high cost of autonomous technology was the most frequently cited barrier to adoption in our survey, with nearly six in 10 respondents identifying it as a hurdle. At the same time, 86% said advanced industrial mobility’s ability to deliver a cost advantage was among the factors most likely to prompt them to embrace the technology.

With investment in industrial mobility surging, it’s a fair bet that businesses may see autonomous technology’s value proposition start to seem more attractive (and proven) sooner rather than later. And, it only stands to reason that some early adopters – and the early-stage companies developing the technology they implement – will score a competitive edge while their peers loiter on the sidelines.

Entrepreneurial Thinking From The Masters

Many entrepreneurs or people with entrepreneurial thinking within companies read this blog. Many more of you should be–entrepreneurs, that is.

I picked up this bit of wisdom of Elon Musk from the Abundance Newsletter of Peter Diamandis (Singularity University). Check out “Deconstructing Elon Musk.” Diamandis distilled three key parts of Musk’s genius. I recommend going to the Website and checking out the article in its entirety as well as subscribing to the newsletter. I hope this stirs some passion.

The three parts are

  • Deep-rooted passion
  • A crystal-clear massively transformative purpose
  • First-principles thinking

A brief description of each to whet your appetite.

Deep-rooted passion: “I didn’t go into the rocket business, the car business, or the solar business thinking, ‘This is a great opportunity.’ I just thought, in order to make a difference, something needed to be done. I wanted to create something substantially better than what came before.” – Elon Musk

After selling PayPal, with $165M in his pocket, Musk set out to pursue three Moonshots, and subsequently built three multibillion-dollar companies: SolarCity, Tesla and SpaceX. Ultimately, it was his passion, refusal to give up, and grit/drive that allowed him to ultimately succeed and begin to impact the world at a significant scale.

A Crystal-clear massively transformative purpose: Musk’s MTP for Tesla and SolarCity is to accelerate the world’s transition to sustainable energy. To this end, every product Tesla brings to market is focused on this vision and backed by a Master Plan Musk wrote over 10 years ago. Elon’s MTP for SpaceX is to backup the biosphere by making humanity a multiplanet species.

“I think fundamentally the future is vastly more exciting and interesting if we’re a spacefaring civilization and a multiplanet species than if we’re or not. You want to be inspired by things. You want to wake up in the morning and think the future is going to be great. And that’s what being a spacefaring civilization is all about.” – Elon Musk

First-principles thinking: (from an interview with Kevin Rose–who has a podcast you should subscribe to) “First principles is kind of a physics way of looking at the world. You boil things down to the most fundamental truths and say, “What are we sure is true?” … and then reason up from there. Somebody could say, “Battery packs are really expensive and that’s just the way they will always be… Historically, it has cost $600 per kilowatt hour. It’s not going to be much better than that in the future.” With first principles, you say, “What are the material constituents of the batteries? What is the stock market value of the material constituents?”

It’s got cobalt, nickel, aluminum, carbon, some polymers for separation and a sealed can. Break that down on a material basis and say, “If we bought that on the London Metal Exchange what would each of those things cost?” It’s like $80 per kilowatt hour. So clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell and you can have batteries that are much, much cheaper than anyone realizes.”


Improve the Climate And Also Improve Business Profits

Improve the Climate And Also Improve Business Profits

Let’s put aside politics and just talk good business strategies. I had a boss. He was quite conservative on the political scale. It was the time of “sustainability”. He thought that was only liberal, tree-hugger gibberish. I told him–think money. Less waste equals more profits. Waste is unsustainable.

Those of us who think Lean, think about how to reduce waste.

As usual, where politicians bicker, businesses do things to improve profits while also benefiting the environment.

This report came to me.


  • RE100 total renewable electricity demand of over 159TWh/yr is now equivalent to the 24thlargest country electricity use – ranking between Poland and Egypt;
  • 25 companies had reached 100% renewable electricity by the end of 2016; five of these in 2016
  • With three new members announced today, RE100’s 122 members are increasing renewables capacity globally, with operations spanning 122 countries.

LONDON: A rapidly growing group of ambitious multinational businesses are actively reshaping the energy market through their global investment decisions and accelerating a zero emissions economy, a new report release today (Tuesday January 23) shows.

‘Approaching the tipping point: how corporate users are redefining global electricity markets’, a new report from RE100 – a global corporate leadership initiative led by The Climate Group in partnership with CDP –  tracks progress made in 2016-17 by companies committed to 100% renewable power.

The report also provides insight into emerging trends in corporate sourcing of renewables around the world, with 122 RE100 members operating in 122 countries averaging 1.3 times more renewables in their electricity mix than the global rate of renewable electricity use.

Thanks to falling costs of renewable energy technology, there is a notable shift away from renewable energy attribute certificates towards direct contracts with suppliers, as well as onsite generation and offsite grid-connected generators (power purchase agreements, or PPAs) – meaning that increasingly, members are directly growing renewable energy capacity.

Specific findings in the report include:

  • 25 members had reached 100% renewable electricity by the end of 2016, with Autodesk, Elopak, Interface, Marks and Spencer and Sky reaching this goal during 2016, while Equinix and Kingspan surpassed their interim targets during the same year;
  • The biggest achievers in 2016 included Bank of America, Astra Zeneca and Coca Cola Enterprises Inc., whose share of renewable electricity increased more than threefold;
  • The proportion of renewable electricity being sourced via power purchase agreements grew fourfold in 2016, while the quantity of electricity sourced from onsite generation increased x15 (via supplier-owned projects) and x9 (via member-owned projects);
  • 88% of respondents cited the compelling economic case for renewable electricity as a major driver – with 30 out of 74 reporting that renewable electricity was either cost competitive or delivered significant savings on energy bills;
  • Policy barriers represent the most common challenge for RE100 companies, alongside a lack of availability of suitable contracts or certificates in some markets.

The report comes as government and business leaders gather at the World Economic Forum Annual Meeting in Davos, Switzerland, to discuss pathways to a sustainable economy, and a few days after Nike signed its second major wind contract, in Texas, US, that will take the company more than half way to reaching 100% renewable electricity globally as part of RE100.

Helen Clarkson, Chief Executive Officer, The Climate Group, said: “I’d like to congratulate every RE100 member accelerating the roll-out of renewable energy through their investment decisions. Their leadership is vital for overcoming policy challenges, shifting global markets, and inspiring many more companies to reap the economic benefits of renewable electricity. Rapidly growing demand from world-leading RE100 companies – and increasingly their suppliers and peers – means governments can confidently look to ratchet up targets in 2020 for slashing greenhouse emissions, to deliver on the Paris Agreement.”

Paul Simpson, Chief Executive Officer, CDP, said: “CDP data shows a jump in renewable energy procurement and that motivations are not only environmental but economic. With nearly 90% of companies driven by the economic case for renewables, this demonstrates a fast approaching tipping point in the transition to a zero-carbon economy.  These companies prove that energy is becoming a board level issue across the globe and sustainability is essential for future business security. Now, it’s time to tip the balance and make 100% renewable the new normal.”

Regional trends

The report also shows key findings by region:

  • In Europe, renewable energy has been the main source of electricity for RE100 members for the second year running. However, the lucrative PPA market is largely untapped; EU policy makers have an opportunity unlock its full potential through the next phase of the Renewable Energy Directive;
  • In the US, we have seen a major increase in the use of PPAs by RE100 members, with continued momentum on renewable electricity sourcing by major businesses, despite political uncertainty;
  • In India, the amount of renewable electricity consumed by our members has more than tripled, thanks to falling costs. The diversity of ways in which companies are sourcing renewables has also increased.


RE100 now brings together 122 global companies, with a collective revenue of over US$2.75 trillion and operations spanning six continents. Together they represent over 159TWh of demand for renewable electricity – more than enough to power Malaysia, New York State or Poland, and equivalent to the 24th largest electricity demand of all countries.


The Climate Group is an international non-profit organization, founded in 2004, with offices in London, Beijing New Delhi and New York. Our mission is to accelerate climate action. Our goal is a world of under 2C of global warming and greater prosperity for all, without delay. We do this by bringing together powerful networks of business and governments that shift global markets and policies. We act as a catalyst to take innovation and solutions to scale, using the power of communications to build ambition and pace. We focus on the greatest global opportunities for change. Our business campaigns RE100 (renewable electricity), EP100 (energy productivity) and EV100 (electric vehicles), brought to you as part of the We Mean Business coalition, help companies to reduce emissions, enhance resilience, and boost the bottom line. They champion leadership, encourage the sharing of best practice, and tackle barriers to action. Visit and follow us on Twitter @ClimateGroup and Facebook @TheClimateGroup.

Led by The Climate Group in partnership with CDPRE100 is a collaborative initiative uniting the world’s most influential businesses committed to 100% renewable power. Renewables are a smart business decision, providing greater control over energy costs and driving innovation, while helping companies to deliver on emission reduction goals. RE100 members, including Global Fortune 500 companies, have a total revenue of over US$2.75 trillion and operate in a diverse range of sectors – from Information Technology to automobile manufacturing. Together, they send a powerful signal to policymakers and investors to accelerate the transition to a low carbon economy. Visit and follow us on Twitter @theRE100 #RE100.

CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$100 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 6,300 companies with some 55% of global market capitalization disclosed environmental data through CDP in 2017. This is in addition to the over 500 cities and 100 states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP, formerly Carbon Disclosure Project, is a founding member of the We Mean Business Coalition. Please visit or follow us @CDP to find out more.

Accelerate Manufacturing Repair Processing

Accelerate Manufacturing Repair Processing

Here is an interesting idea in the manufacturing services meets social media area. Let me know if you use this and how it worked. Volt480, which is dedicated to helping manufacturers recover faster during downtime, announced a new app that quickly connects plant managers with locally available service providers including automation system integrators and industrial electricians through an on-demand marketplace. The Volt480 app also uses machine learning to help solve problems faster.

The value proposition: When equipment fails due to this technology, companies can lose on average $40,000 an hour. The Volt480 app reduces downtime by quickly locating specialized technicians to troubleshoot and repair complex, interconnected systems that are sometimes mixed with obsolete technologies. The service also helps streamline the burdensome procurement process to quickly order and pay for emergency services.

“Volt480 was developed to help plant managers recover from downtime in half the time and half the cost,” said Volt480 Chief Executive Officer Bhavnesh Patel. “Because we know that every minute counts when production systems fail, we connect you immediately to a highly-skilled expert near you through our on-demand platform. Our real-time filtering algorithm enables manufacturers to find the right resource with the right skills right away.”

How it works

Volt480 combines an on-demand, crowd-sourced services platform with machine learning technology that collects data on the problem and solution across a wide variety of production equipment and technologies. This knowledge enables the company to build machine-learning models to address future failures.

Customers use the app to locate and connect with service providers who are knowledgeable and experienced with their equipment. Service providers set their own rates, and Volt480 processes the payment through the service, saving customers from working through the traditional PO/invoicing process.

Manufacturers then have an opportunity to rate their experience with the service provider, which can be viewed by other potential customers.

“When manufacturing equipment breaks down and production stops, every moment counts. Plant managers don’t have time to research the equipment and match it with a service provider that may or may not be familiar with the system, especially with older or obsolete automation control systems,” said Jim Keighley, former vice president of engineering for Kraft Foods. “With Volt480 at their fingertips, they can quickly browse for local/regional service providers, see ratings, prices, profiles, distance from their facility and contact them in an instant. And payment is easily handled via credit card.”

Volt480 also opens doors for service providers, helping systems integrators, control engineers and automation engineers build their businesses through a new network of potential customers.

“By registering my services with Volt480, I can be introduced to hundreds of potential customers,” said Richard Morales, a controls technician with Tornado Automation. “And I have the potential to be paid faster and with less effort than the traditional PO/invoicing process.”

“The machine learning capabilities of the Volt480 app will help speed the repair process, getting our clients back to work faster and our technicians on to their next assignment,” said Jeff Lea, CEO of Real Time Automation.


Volt480 is being rolled out as a pilot program for small-to-midsize manufacturers in Texas. The app is available through the Apple App Store and Google Play. After completing the pilot launch, the program will be offered to more than 16,000 food manufacturers in California and Texas.


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