by Gary Mintchell | Feb 20, 2015 | Commentary, News
This m&a activity was reflected in my own practice. There was much activity in divestiture on some company’s parts which means acquisition for other companies. It was an active year. Following is a report from PwC US. Interesting reading throughout–as much about workforce issues as companies restructuring.
Following a strong fourth quarter, the industrial manufacturing industry closed out a stellar year for merger and acquisition (M&A) activity, according to Assembling Value, a quarterly analysis of global deal activity in the industrial manufacturing industry by PwC US.
Total deal value (for transactions worth more than $50 million) soared in 2014, reaching $127 billion, an increase of 163 percent over the prior year and surpassing the 10-year high of $92.4 set in 2006. There were 213 industrial manufacturing deals (worth more than $50 million) recorded in 2014 for a total of $127 billion compared to 148 deals worth $48.3 billion in 2013.
Both deal value and volume spiked drastically in the fourth quarter of 2014, recording 56 deals worth $24.1 billion compared to 38 deals totaling $9.6 billion in the same period the previous year. Megadeals worth more than $1 billion were also in abundance in 2014 with 24 announced transactions worth $91.6 billion.
“The strong momentum for manufacturing deals in 2014 carried into the fourth quarter as horizontal consolidation and divestitures of non-core business continued to drive robust activity,” said Bobby Bono, U.S. industrial manufacturing leader for PwC. “Companies are monetizing non-core or underperforming assets, leveraging scale in core businesses and considering joint ventures and new strategic alliances to expand into long-term attractive markets, particularly in developing economies with a growing middle class. In addition, management’s attention has shifted away from headcount reduction and cost-cutting programs toward growth initiatives and filling the talent gaps.”
Manufacturers continue to struggle to find and retain talented workforce and a skilled labor portfolio is becoming a more important factor in evaluating potential M&A targets. Sixty-four percent of respondents to PwC’s Q4 Manufacturing Barometer cited a need to fill skill gaps in their businesses over the next 12-24 months and over the past year, two-thirds also reported having open positions that they were unable to fill with experienced or skilled employees. In order to begin filling the gap, 78 percent of respondents plan to hire new skill function employees over the next 12-24 months with the broadest needs in engineering/design (62 percent), manufacturing (44 percent) and R&D (28 percent).
Regionally, acquirers from Asia led the way in terms of volume in 2014, accounting for 107 of the 213 deals; however, inbound activity in the region remained subdued. China was the most active acquirer nation, accounting for 35 percent of all deals during the year.
While emerging market activity boomed in the fourth quarter, local market deals remained dominant and no cross-border activity was generated from Asia. Europe, on the other hand, saw a significant amount of local, inbound and outbound activity despite continued economic malaise in the region. Local and foreign buyers continue to scour the region for high quality businesses as they look to align their business portfolio with long-term attractive markets.
“China-involved deals in 2014 exceeded any year of the past 10; however, foreign buyers have become increasingly wary due to an oversupply of capacity, materials and debt in the region and local market consolidation. Given a perceived lack of innovation, inability to move up the value chain and cooling domestic markets, we expect Asian manufacturing companies to begin looking for opportunities in established markets in 2015,” said Bono.
According to PwC, strategic as well as financial investors continued to pursue high-quality industrial assets and were more willing to acquire companies with stable growth prospects, even at a higher valuation. In the fourth quarter of 2014, financial investors accounted for 36 percent of all deals.
“We expect market expansion, access to next wave technologies, and the compelling need to generate synergies to drive manufacturing M&A activity, particularly in established markets. The potential impact of the first round of regulatory tightening on U.S. economic activity along with the talent crunch will be key areas of focus for management but companies with healthy balance sheets and favorable access to financing will have a clear opportunity in 2015,” Bono concluded.
by Gary Mintchell | Feb 18, 2015 | Automation, Industrial Computers, News, Operations Management, Security, Technology
There remains some unfinished business from the ARC Forum held last week in Orlando. Security as a key component of the Industrial Internet of Things was a recurring theme. Mentor Graphics held a press conference to highlight advances in embedded computing. Later, I met with Alan Grau, CEO of Icon Labs, to talk about security.
Building security directly into embedded control is a burgeoning trend. Expect to see more—and demand more from your suppliers—about building in security at the embedded level.
From the press release:
Icon Labs, a provider of embedded networking and security technology, has announced the integration of Icon Labs’ Floodgate security products with Mentor Graphics’ Nucleus RTOS and Mentor Embedded Linux. The integrated solution creates a secure platform for industrial automation and extends the Internet of Secure Things initiative into industrial control systems.
Icon Labs’ Internet of Secure Things Initiative defines a platform for developing secure, connected devices. The platform is designed to ensure that security is intrinsic to the architecture of the device itself and incorporates security management and visibility, device hardening, data protection and secure communications. These capabilities provide the foundation for the Industrial Internet of Secure Things. Natively securing the devices simplifies protection, audit, and compliance independent of the secure perimeter, reducing the need for expensive and complicated security appliances.
“Security is a top priority for our industrial automation and critical infrastructure clients. Partnering with Icon Labs allows us to provide an integrated solution that enables security and regulatory compliance,” stated Scot Morrison, general manager of Embedded Runtime Solutions, Mentor Graphics Embedded Systems Division. “Icon Labs Floodgate product family provides a comprehensive security platform for developing secure, embedded devices using Nucleus and Mentor Embedded Linux.”
The integration of Icon Labs’ Floodgate products and Mentor Graphics’ embedded OSes provides:
- Security policy management
- Event and command audit log reporting
- Integration with the McAfee ePolicy orchestrator (ePO)
- Integrated embedded firewall
- Firmware and data anti-tamper support
- Integrated solution on both Nucleus and Mentor Embedded Linux
“Today’s modern industrial automation devices and systems are complex connected devices charged with performing critical functions,” says Alan Grau, CEO of Icon Labs. “Including security in these devices is a critical design task. Security features must be considered early in the design process to ensure the device is protected from the advanced cyber-threats they will be facing now as well as attacks that will be created in the future. By partnering with Mentor Graphics, we are able to offer a solution in which critical security elements are integrated into the operating system, ensuring security is a foundational component of the device.”
by Gary Mintchell | Feb 18, 2015 | Automation, Commentary, News, Operations Management, Safety, Safety
I am a conservationist.
What that means is that I have a lifestyle of conserving and preserving. Especially nature. It doesn’t mean that I’m political. Or even anti-development.
On the other hand, I have ceased being political. Whether I’m “liberal” or “conservative” (as if anyone really knows what all falls under those labels!) bores me. Don’t care for the discussion.
But it’s a weird world. Take industrial risk management. I guess that there are many “conservationists” who do not want to build the oil pipeline known as Keystone. They are afraid of oil spills.
OK, that means one of two things–either they wish to live in a petroleum-free society or they endorse shipping massive amounts of oil across our nation via rail. I’d like to see them accomplish the former. And look at the unintended consequences of rail-based shipping, especially when we as a nation do not really care about upgrading the infrastructure.
If you study the comparative risks, oops, looks like pipelines are a better option.
One of my economics professors used to say that people never really vote their economic interests because they are voting emotions. Interesting observation think about it. Maybe the conservationists are actually achieving the opposite of their desired outcome. Wouldn’t be the first time in politics that happened. Won’t be the last.
Now, I’d never tell you to rush right out and email your congressperson. Even if they had not voted already, it would be too late. I’m in favor of the movement to require congresspersons to wear jackets like those the NASCAR drivers do–there’s a patch that shows who all their sponsors are!
But I do think that no matter your politics that you should stop and think that maybe you’re supporting an outcome that is exactly opposite of what you think you are.
It’s a good business and engineering idea, too. Maybe you’re too stuck on an idea that you’ve missed the real solution.
by Gary Mintchell | Feb 12, 2015 | Automation, News, Operations Management, Security
In years past there were as many as 10-12 companies presenting at the hours-long press conference “marathon” preceding the official beginning of the annual ARC Industry Forum in Orlando. This year, there were only five companies presenting. I’ve already written about the Honeywell announcement.
Yokogawa devoted most of its 30 minutes discussing the 100th anniversary of the company. This announcement follows along with one of the main themes of the overall conference—cyber security.
Yokogawa Electric Corp. (www.yokogawa.com) announced its collaboration with Cisco Systems Inc. to deliver Shell’s SecurePlant initiative. SecurePlant is a comprehensive security management solution for plant control systems that was jointly developed as an initiative between Cisco, a leader in the IT industry, Yokogawa, a leader in mission-critical plant automation systems, and Shell. The three companies have agreed to proceed over the next three years with the implementation of SecurePlant at around fifty Shell plants globally.
Industrial producers around the world face a wide range of operational challenges in areas such as cyber security that pose a pervasive threat to safety and availability. Most companies with global operations, however, still take a relatively simplistic plant-by-plant approach, such as implementing operating system security patches and anti-virus pattern file updates. As a result, security levels tend to vary at each plant.
In the general practice of control system security management, individual control system vendors extensively validate security patches and anti-virus pattern files to confirm that they do not interfere with system operation and then report the results to their customers for implementation. Since plants tend to use a variety of control systems and equipment from different vendors, occasionally with multi-generation platforms from a single vendor, this process is often complicated. For this reason, plants increasingly have the need for plant-wide integrated services that take a more holistic and efficient approach to the management of system security.
With the aim of standardizing security practices at Shell plants around the world and minimizing control system vulnerability, Yokogawa and Cisco collaborated on the design of the SecurePlant service and will jointly provide deployment and operational services.
The SecurePlant solution is designed as a standard solution that consists of the delivery of OS patches and anti-virus pattern files for control systems and the provision of real time and proactive monitoring of solution delivery, as well as a help desk operation to manage this solution.
Supplier-certified Windows security patches and virus signature files are distributed from a SecureCenter to the SecureSite at each plant via Shell’s existing global network. The real time and proactive monitoring capabilities enable the centralized management of plant security. A customer help desk operated jointly by Yokogawa and Cisco is available 24/7/365 to manage solution related incidents.
Moving forward, Yokogawa and Cisco will continue to offer comprehensive security solutions involving the deployment, operation, and monitoring of control system environments. These services are applicable to plants of all sizes in a wide variety of industries, including facilities spread out over a large geographic area. In addition, both companies will leverage their technologies and experience to develop deep industrial automation (IA) solutions such as remote system maintenance, remote plant asset management and Big Data on the top of a secure remote access platform to help companies in making faster decisions, reducing total cost of ownership (TCO), and achieving operational excellence.
by Gary Mintchell | Feb 10, 2015 | Automation, News, Operations Management, Workforce
The ARC Forum, held annually in Orlando, drew approximately 700 total attendees including perhaps 60 members of the media for the 19th iteration—Industry in Transition. Media members devote Monday afternoon each year to meeting with a parade of companies presenting new products and ideas.
First up this year in my writing agenda is an update to industrial process workforce training tools. I’m seeing increasing sophistication in companies combining ideas and technologies from computer gaming with simulation of process plants to train the current and future workforce—especially the new people who grew up with gaming technology.
Honeywell Process Solutions (HPS) managers announced its new UniSim Competency Suite, which improves operator competency and helps prepare them faster through realistic training experiences for console and field operators in the process industries.
Leveraging more than 30 years of experience in process simulation and operator training, Honeywell’s new suite of simulation software offers an integrated, robust training experience that will help industrial facilities address a growing shortage of trained operators.
“In the near future, many operators at industrial plants in developed countries will retire, while process industries in emerging economies will continue to face the challenge of critical skill shortages,” said Ali Raza, vice president and general manager for Honeywell Process Solutions’ Advanced Solutions business. “The expanded UniSim Competency Suite helps our customers train its workforce faster in a more realistic environment to drive safe, incident-free, efficient startups and ongoing operations.”
The UniSim Competency suite features proven simulation models as well as new technologies including:
- UniSim Operations: Operator Training Simulator (OTS), a dynamic plant simulation system that allows users to accelerate knowledge transfer by consolidating an entire lifetime of experience into a concise process training curriculum; features realistic process, control and safety systems modeling
- UniSim Curriculum: Customizable competency model that aligns and assists in improving critical requisite skills and behaviors; tracks operator progress; built from Abnormal Situation Management Consortium’s research into operator competency to help businesses define, deploy and manage a structured competency program
- UniSim Tutor: Knowledge capture and propagation tool; provides a repository for domain knowledge and experiences; teaches and evaluates “what if” reflexes and diagnostic abilities
- UniSim Field View: Interactive, navigable, panoramic view for realistic field operator training; uses actual facility photographs and extends UniSim Operations simulator training to include field operators
- UniSim 3D Connect: UniSim Operations simulator integration and connectivity to 3D virtual environment; provides credible and realistic experiences for field operator
“Industrial plant owners and operators around the world recognize how simulation technology can help them achieve a significant competitive advantage in today’s demanding global environment,” said John Roffel, Operator Competency product director for HPS. “This suite provides our customers with the confidence and tools needed for operator competency management.”
