Don't judge a supplier by its name

For those of us who live and breathe the rarified vapors of technology based automation, it&rsquos pretty hard to fathom how life existed without electronic automation. Yet, it has been a short 30 years since the venerable PLC became anything more than a novelty outside of the Big 3 in Detroit.  Sometime in the late 1970s, microprocessors changed our lives forever. Since those early days, the power of these tiny chips forever changed the way we think about manufacturing.

 

From no-touch sensors to motor temperature monitors and back again to arch-flash safety devices, microprocessors have infiltrated every part of the  automation manufacturer world. In recent years, communication capability and stand-alone electronic intelligence has pushed its way into all reaches of &ldquothings automatic.&rdquo Microprocessor-enabled valves control liquid flow based on the input of electronic float switches. The possibilities seem limitless and the market reflects that fact.

 

Today, the size of the automation market has grown so vast, it is difficult to measure. The very definition of the market is openly argued. And, each individual segment of that automation market becomes exponentially harder to measure and define. To illustrate this point, let&rsquos talk about the two main disciplines of the automation market: discrete automation and process automation.

 

Discrete automation is characterized by production of individual parts. Automobile, light bulb and electronic manufacture can be thought of as discrete automation. Process automation is characterized by the production of a fluid or gas. Oil refineries use process automation. But what kind of manufacturing is tire making &ndash where process and discrete assembly steps are combined? The definitions get cloudy very fast.

 

Let&rsquos just say the world of automation&mdashboth discrete and process&mdashis huge. A two-year-old news release from the ARC Advisory Group projected the process automation side of the market alone to be $79 billion by 2010 (and that is just half of the equation). Cheap electronics, new manufacturing techniques and the competitive pressures of the world market keep the automation train rolling along &ndash even in poor economic conditions.

 

And at the same time...

 

At the same time these techno-electronic breakthroughs were manifesting themselves in the automation products business, the world of business was in flux. The last quarter of the twentieth century brought a fundamental shift in the way business is conducted. During the early stages of the shift, automation breakthroughs allowed for a reduction in manufacturing labor. Later improvements in white collar productivity allowed for a similar reduction in office administrative employees. But, there was more ahead.

 

Changes in world economic conditions brought right-sizing, outsourcing and professional service contracts. To illustrate this point, we need only look at the typical plant engineering department of the 1970&rsquos. The department was a self-contained group with resident electrical, mechanical and civil engineers on staff. It was not uncommon for these departments to number in the hundreds. During the 1980&rsquos, this changed dramatically. Entire departments were re-engineered to a handful of generalists - more project managers than engineers.   

 

Consolidation hit the world of manufacturing in 1980&rsquos. Government figures indicate 1989 was the top merger year. In the automotive industry alone, the number of companies dealing as suppliers to the Big 3 automakers dropped from 30,000+ in 1988 to less than 8,000 in 1999. These same consolidations affected the companies&rsquo distributors which did business across North America. These numbers from Thomas Financial Securities Data (Mulligan 1999) illustrate the changes, which surely would have affected wholesale distribution during these times. 

 

Mergers in Billions of Dollars in Business

Business Services	63 Billion
Communications Equipment	31 Billion
Machinery	26 Billion
Chemicals	25 Billion
Drugs	24 Billion
Instrumentation	23 Billion
Electronics	18 Billion

 

Distributors from all lines of trade were affected by this consolidation. Nowhere was this consolidation felt more than in those supplying products into the industrial manufacturing sphere.

 

Finger pointing&hellip

During the early days of automation, plant engineering departments served the role of integrator. Engineering departments provided detailed specifications to suppliers of mechanical, electrical, hydraulic and other components. The distributor answered specification questions, helped anticipate spare part needs and provided timely delivery. The engineering group did the rest.

 

  

As the 1980&rsquos unfolded, the newly downsized engineering departments found they could no longer handle the same workload. Opportunistic distributors added technical expertise to support their &ldquomain line&rdquo products. But, new developments in business practices continued to affect the flow of products and expertise. 

 

Economic pressures, driven by downturns in the economy, forced many major customers to look at the advantages of single sourcing products. No longer were there three suppliers from each of the main lines of trade. Instead, customers began to consolidate their purchases. With a single distributor serving each of the supply disciplines, vendor lists were dramatically trimmed. But, problems persisted.

 

The advancement of microprocessor controlled communications created issues when products which were supposed to work together didn&rsquot. Many end customers felt as though they were left holding the bag. The term &ldquofinger-pointing&rdquo was coined to describe the issue. When a programmable logic controller didn&rsquot communicate with an intelligent valve or an electric motor burned up when &ldquoproperly&rdquo applied with a variable frequency drive, the customer felt disenfranchised and lost.

 

Distributors began to morph&hellip

 

Distributors live and die based on their ability to add value to their end customers. Many distributors saw the &ldquofinger-pointing&rdquo phenomenon as an opportunity. And, a few began to refocus their product offerings. The addition of complimentary products provided value (single source supply & no finger-pointing). The newly refocused products drove competitive differentiation for the distributor in the market. 

 

As distributors looked for ways to expand their business, selling additional products to a core group of loyal customers made great sense. Selling products which complimented their existing product mix provided value for the customer. Often, the new products slowly moved the distributor away from their historical past. 

 

The changing world of motion control&hellip

 

Nowhere is this more evident than what many now call &ldquomotion control.&rdquo Long before the world of electronic automation, precise motion control has been around since the early days of the industrial age. For instance, the tolerances required in gun manufacture developed in the late 1800&rsquos were roughly equivalent to those being used today. The precise motion control used for automobiles, jet engines and even the space orbiters was possible long before modern motion control techniques were developed.

 

Motion control as we know it today combines the technologies of mechanical, pneumatic, hydraulic and electronic components. Because there is no scholarly definition for motion control today, allow me to provide one. 

&ldquoMotion control: The hardware, software and human interface devices required to precisely control speed, acceleration-deceleration, position or orientation. The system must be programmable and capable of changing aspects of the control to match operating parameters.&rdquo    

Is it any wonder that so many of today&rsquos leading distributors provide value in the motion control arena? Power transmission distributors, electrical distributors, fluid power distributors and automation solution providers all compete for a role in this market. Many times, the distributor with the greatest expertise has a historical background in a completely different technology. Nowhere is this more evident than those members of the Power Transmission Distributors Association (PTDA).

 

  

While the name conjures up mental pictures of gears, belts and bearings, the members of PTDA exemplify this migration of technologies. Case in point, a recent informal survey conducted by River Heights Consulting of Davenport, Iowa discovered that members of PTDA are responsible for over $800 million of the new motion control business.

 

One such member of PTDA is Eastern Bearings, Inc. of Waltham, MA. Eastern Bearings employs value-add specialists in motion control and a number of other specialized technologies. During a project at a waste handing facility in Maine, Eastern Bearings&rsquo motion specialist proposed a new motion control system which combined technologies from multiple manufactures to provide a crane system control which simplified maintenance and reduced operating cost. The integrated system was engineered and manufactured &ldquoin house&rdquo. It included detailed configured HMI screens and automated troubleshooting aids. Did all this come from a &ldquobearing&rdquo supplier? No, it came from a 45-year old company with a proud history that happened to start off in the bearing business.

 

Everybody came from somewhere...

 

Today and in the future, there will be no electrical supplier, no hydraulic supplier, no mechanical suppler instead, there will be automation solution providers. Names continue, often carrying the proud mantra of the past. In the 1930&rsquos, bluesman Willie Dixon penned the song, &ldquoYou Can&rsquot Judge a Book by Its Cover.&rdquo A modern version might be, &ldquoYou Can&rsquot Judge a Distributor by the Product in Its Name.&rdquo

 

Remember our first point all of this automation market (we are so fond of) didn&rsquot exist just 40 years ago. Everybody came from someplace. Don&rsquot let supplier names fool you.