A small group of journalists and writers trekked to the Detroit area March 12-13 to glimpse the future of Manufacturing in America sponsored by Siemens Industry and its local distributor/partner Electro-Matic. We toured the local Founders Brewery facility, visited with faculty and students of Industrial and Systems Engineering at Oakland University, and attended the annual thought leadership panel.
Food and Beverage
Founders Brewery, craft brewery founded in Grand Rapids, MI, built a smaller version of brewery/restaurant in downtown Detroit not far from Ford Field and Greektown. The automated part of the brewery and instrumentation was supplied by Siemens. We toured the brewery, had an awesome sandwich, and sampled some of the many craft beers from founders.
A complete change of pace (well, maybe not as I remember my college days) took us north to Rochester, MI to Oakland University. Robert Van Til, Ph.D., Pawley Professor of Lean Studies and Chair of Industrial and Systems Engineering (ISE), introduced us to his program and several students who explained their experiences both in class and working in local factories.
Siemens has donated much software and equipment to the program. Students explained how they had been trained in Siemens PLM software and used the simulation application to model real-world problems. They impressed me with a maturity I doubt that I had at that age, but also with how smoothly they integrated Lean Manufacturing concepts with their factory cell simulations.
-> An important point. I hold the impression left over from some years ago that young people view manufacturing negatively—as dark, dirty, unsafe, backwards places to work. Much to the contrary, these students all viewed manufacturing as a place to use their technical training to make an impact. They see how they can contribute to an organization immediately. I guess the work we’ve done over the past 20 years to clean up our factories and apply technology are being rewarded.
Nothing beats an early morning meeting to talk finance. Actually, it’s not that bad. Before the Wednesday summit meeting, we met with the Siemens Finance team. Note: we did this last year, as well.
Siemens has identified six challenges for manufacturers on the journey to Industry 4.0. Challenge No. 2 identifies access to finance for the scale of investment over time that manufacturers need to make in digital and automated technology platforms.
The team has released a white paper, “Practical Pathways to Industry 4.0 in the USA.” This would be Finance 4.0 for Industry 4.0. Snipping one section, “Integrated Strategic Finance,” here are a few points:
- Evaluate potential sources of finance for both OPEX and CAPEX
- Consider how you’ll finance all aspects of digital transformation
- Align with strategic growth vision and technology investment
- Find financing partners with willingness and skills for this journey
- Is your CFO a ‘virtuoso’ in linking initiatives to financial outcomes
Siemens Finance has many financial instruments in place to help from brownfield upgrades to greenfield projects—and for complete equipment financing, not only Siemens equipment.
Thought Leadership Summit
Raj Batra, President of Digital Factory for Siemens Industry Inc., took the ball from MC Eddie Murray (former NFL kicker), discussing how manufacturing executives in the US are very optimistic about the near future for manufacturing. One large problem is finding talented people to fill the positions. He also discussed Siemens technology and how it is helping manufacturers, for example like adidas who in this “order the latest fashion online” world need to shrink the 18 month timeline from concept to delivery of new shoes. Siemens PLM to the rescue.
Greg LaMay, Director Global. PLM Implementation for KUKA NA, showed how his team is using Siemens PLM applications to break silos within the company to improve time to ship and customer experiences.
John Greaves, IoT, RF, and Blockchain Solutions Architect (with a portfolio like that, he could probably bring the world to an end 😉 ) at Lowry Solutions, showed how Blockchain (the technology used by Bitcoin, for example) is already used for critical supply chain applications.
Alan Beaulieau, Ph.D., Economist, and President of ITR Economics (check it out, he wrote a column for me at Automation World for several years and he’s a great speaker), gave his usual well researched and reasoned view of the economic scene. Hint: it’s better than you might think reading the newspapers or listening to TV. itreconomics.com
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.
Is it any wonder about the wisdom of dropping my graduate work in political science while returning to manufacturing and technology?
Try these pieces of obfuscation this week from Washington.
The big tax cut and simplification bill turns out not to simplify anything. Manufacturing organizations sending information to me believe it offers financial rewards to companies who keep workers offshore. Many of us will see little or no tax cut. Do you ever wish like I do that people would mean what they say and say what they mean?
This from FACT. A letter to Congress persons.
On behalf of the Financial Accountability and Corporate Transparency Coalition (FACT) Coalition, we write to urge you to oppose H.R.1, the Tax Cuts and Jobs Act (TCJA). This bill would create significant new tax incentives to move U.S. jobs, profits, and operations overseas, while exploding the deficit. The bill’s complicated structure also creates multiple new loopholes to allow for expanded tax avoidance by large, multinational companies at the expense of small businesses and wholly domestic companies.
The FACT Coalition is a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.
The final conference bill would move the country to a territorial tax system. The primary goal of a territorial system is to permit offshore corporate profits to escape U.S. tax. Taxpayers already lose an estimated $100 billion every year to aggressive tax avoidance by multinational companies. These changes would further incentivize corporate profit shifting abroad — leaving regular taxpayers to pick up the tab.
This is an item from Sara Fischer writing in the Axios Media Trends Newsletter.
Why it matters: Multi-billion-dollar deals — along with regulatory changes such as the repeal of net neutrality rules — are often justified as ways to spur innovation and increase consumer choice, but consumer advocates argue the actions could actually make access to some popular content more expensive. The real question: Is choice at the expense of price really giving consumers what they want?
Those of us who have been around the block a few times know a couple of things. 1) Big companies don’t really innovate—they acquire smaller innovative companies to develop their portfolios. 2) Industry consolidation (mergers) occur during a period when innovation runs out of energy and companies are beginning to fail. What we’re waiting for is the new innovation area.
Climate, Environment, Business
As politicians debate political theory—most likely with an eye toward electoral votes—regarding environmental policy, businesses have long ago discovered that a sound environmental policy reduces costs and improves operations. Try this item from Axios Generate’s Ben Geman.
Coal and climate tussle: Mining giant BHP said Tuesday that it plans to abandon the World Coal Association, and may also leave the U.S. Chamber of Commerce over differences on climate policy, including the Chamber’s opposition to pricing carbon and its attacks on the Paris climate deal. BHP’s newly published review of its membership in trade associations is here. Quick take, via the Financial Times: “The move reflects the growing importance of environmental, social and governance standards within multinationals, which want to protect their brands and insulate themselves from threats posed by activists and consumer boycotts.”
Just for fun.
Here’s one Fun Thing gleaned from the latest Axios newsletter.
Listening to Mozart is said to raise your IQ. Does playing his music make you a better employee? AP’s David McHugh answers from Frankfurt:
- “Definitely so, say many global companies and their workers, above all in Germany and Asia, where accountants, engineers, sales reps and computer specialists bring violins, cellos, oboes and trombones and gather in their spare time to rehearse and perform lengthy, complex pieces of classical music.”
- “A conspicuous number of big German corporate names — along with a handful in Japan and Korea — have their own company-linked symphony orchestra.”
- Why it matters: “The orchestras serve as public relations tools, playing charity concerts and livening up corporate events. … [And] a symphony orchestra is an excellent model for the creative teamwork companies need to compete.”
Well, we have the people from Emerson Automation playing rock and roll at every Exchange these days. Time to pick up that guitar again.
An enterprise computing and IT infrastructure company user event seems a weird place for a discussion of the Internet of Things and the Refinery of the Future. But there I was moderating a bloggers’ Coffee Talk with Doug Smith, CEO, and Linda Salinas, plant manager, of Texmark Chemicals, along with an executive of Hewlett Packard Enterprise (HPE) and one from PTC (ThingWorx).
HPE invited me to Madrid, Spain, (and paid my expenses) as an Operations Technology blogger to participate in Influencer sessions, interview a number of technologists, and experience its Discover Madrid user conference. Several times during each of the three days November 28-30 we participated in coffee talks. These were Live Streamed by Geekazine. This is a link to the first day. My session was toward the beginning of the first day, and I appear at the end of day three.
Telling the IoT Story
Texas toll manufacturer Texmark Chemicals teamed with HPE and Aruba to build a Refinery of the Future featuring advanced IIoT capabilities. The results: better process analytics, increased up-time, uninterrupted productivity, satisfied customers, and safer workers.
Every IoT implementation I have seen so far relied on predictive maintenance as the justifying application. Here, the first priority was safety. Then came predictive maintenance, improved operations, and consistent quality.
Texmark produces dicyclopentadiene (DCPD), a polymer precursor for everything from ink to boats. DCPD manufacturing processes involve flammable materials requiring stringent safety measures — and as demand increases, so does the complexity of the supply chains that rely on it.
Its manufacture involves heat and highly reactive chemicals, making safety a top priority. And as demand for DCPD grows, the global supply chain becomes increasingly complex, requiring ever more stringent controls, granular visibility, uninterrupted productivity, and regulatory oversight. Texmark must ensure its workers adhere to Process Safety Management (PSM) procedures at all times, and that its facility is managed in ways that put worker and community safety first.
As a contract manufacturer, Texmark must be prepared to adapt to customer requirements, which can change with little advance warning.
And it must continually drive plant efficiency and productivity. Historically, Texmark has depended on physical inspections of process equipment to ensure all systems remain in working order. However, these plant walk-downs can be time-consuming and labor-intensive. Texmark has 130 pumps in its plant, and spends nearly 1,000 hours a year on walk-downs and vibration analysis.
Depending solely on physical inspections also carries risk, because it relies on employees who — based on years of experience — can tell if a pump is starting to malfunction by recognizing slight variations in its noise and vibrations. But what happens if an employee with that skill is out sick, or reaches retirement age? Texmark needs ways to institutionalize that type of intelligence and insight.
Texmark’s vision for next-generation worker safety, production and asset management hinges on the emerging promise of the Industrial Internet of Things (IIoT): sensored devices combined with advanced analytics software to generate insights, automate its environment, and reduce the risk of human error.
The IIoT architecture must eliminate the need to transmit device data over a WAN, but instead support analytics at the edge to deliver real-time visibility into equipment and processes.
Texmark launched a multi-phase project to implement an end-to-end IIoT solution. Phase 1 and 2 established the digital foundation by enabling edge-to-core connectivity. Aruba deployed a secure wireless mesh network with Class 1 Div 1 access points and ClearPass for secure network access control. Aruba beacons provide location-based services for plant safety and security purposes. The wireless solution cost about half of what it would have cost to deploy a hardwired network.
For its edge analytics, Texmark selected the HPE Edgeline Converged IoT platform, an industrialized solution that supports robust compute capabilities. HPE Pointnext implemented the system as an HPE Micro Datacenter, which integrates its compute and networking technology within a single cabinet. HPE also upgraded Texmark’s plant control room to enable seamless edge-to-core connectivity and high-speed data capture and analytics, and to meet Texmark’s safety and security standards. The Edgeline system runs Texmark’s Distributed Control System software, integrating its operations technology and IT into a single system.
Phase 3 builds on the foundation established by these technology solutions to support Texmark’s use cases: predictive analytics, advanced video analytics, safety and security, connected worker, and full lifecycle asset management.
Texmark’s new IIoT solution will help make its workers even safer. It can monitor fluid levels, for example, reducing the risk of spills. It can alert Texmark immediately if a system starts to malfunction, enabling the company to respond before workers or production are endangered. And in the event of an emergency, it can help protect workers by ensuring Texmark knows their precise location and movements within the facility.
Other benefits will improve the company’s bottom line. Texmark can use data from IIoT sensors to identify which systems require hands-on evaluations, for example, so it can conduct physical inspections in a more focused and efficient manner.
The new IIoT solution makes it easier for the company to plan inspections and maintenance. To work on distillation columns, Texmark must often take systems offline and erect costly scaffolding. Improved maintenance planning will reduce these associated costs by at least 50%.
OK, so I study productivity, write about it occasionally, and practice what I preach—almost. Back from five trips in six weeks, getting back in the routine is proving tough. Yesterday I dove into email and didn’t come up for air until afternoon. Missed my post.
I’m still catching up from my Rockwell Automation trip the week before Thanksgiving and my Hewlett Packard Enterprise trip the week after. No, I don’t get jet lag. It’s just finding my morning routine.
Today’s post number one is another Rockwell Automation post. Last year witnessed the introduction of a little bot called Shelby. It was essentially an iPhone app similar to Siri. These bots incorporate Artificial Intelligence (or Machine Learning) and voice interaction. This year, the company expanded on the technology.
These bits of technology will be commonplace in a very short time.
Rockwell’s background discusses how expert data scientists requiring weeks of work plumb reams of data to uncover insights. Rockwell claims that expertise has been boxed in the new Project Sherlock artificial intelligence (AI) module.
This data-driven analytics algorithm is delivered inside a module that fits directly into the controller chassis. Once installed, Project Sherlock AI leverages novel physics-based modeling to “learn” the application that controller manages. The solution scours controller tags to identify the application or allows users to choose what they would like modeled by selecting inputs and outputs via an add-on-instruction (AOI). Project Sherlock AI will then quickly learn from the stream of data passing through the controller to build a model. This process can be accomplished in a matter of minutes. Vast quantities of historical data are not required, nor must the data ever leave the automation layer.
Once the model is built, the Project Sherlock solution continuously watches the operation looking for anomalies against its derived, principled understanding. If it spots a problem, it can trigger an alarm on an HMI screen or dashboard. Future iterations will go beyond diagnostics to direct users on how to remedy the issue or to automatically adjust system parameters to fix the problem without human intervention.
“Project Sherlock brings industrial producers amazingly smart analytics in a package that is easy to implement,” said Jonathan Wise, platform leader for the Control and Visualization Business, Rockwell Automation. “As our customers undergo digital transformation – using production data to help improve business outcomes – they can’t wait on expert-driven analytics. Even if there were enough industrial data scientists out there, not every company has the time or funds to employ them. This machine-learning tool creates powerful analytics from your automation infrastructure, painlessly – delivering value moments after it’s dropped in the Logix backplane.”
Project Sherlock diagnostics offer drastically reduced false-positive alarms as compared to other artificial intelligence solutions due to its physics-based modeling and foundation in industrial applications. For example, Project Sherlock AI can tell if a boiler temperature shift is related to a benign change in upstream operations or an abnormality that requires correction.
The initial version of Project Sherlock AI will include ready-to-use templates for boiler, pump and chiller operations, ideal for process or hybrid applications. Users can model additional applications with guided configuration.
Communications with the module are prioritized by the controller, so users can select how much data is sent and intervals of communication. The module does not add to controller CPU-load nor add to network traffic. Project Sherlock AI pilots have been running and producing results for the past 18 months.
Customers will be able to purchase the module in mid-2018.
This new artificial intelligence engine is part of a larger, expanding ecosystem of analytics offerings from Rockwell Automation that run across the plant floor for devices, machines and systems, as well as throughout the enterprise. Rockwell Automation developers are building connections so users who employ FactoryTalk Analytics for Devices tools will be able to interface with Project Sherlock AI via the Shelby chatbot and action cards. Analytics from Project Sherlock AI will be easily integrated into the FactoryTalk Analytics Platform to integrate plant-floor data into business intelligence strategies.