Every company needs secrets.

Automation businesses sell just one core benefit — productivity. In today’s global markets, end-users recognize full well that whoever produces cheaper, faster and better wins.

Nations and regions are now engaged in a fight — albeit peaceful — that will impact many generations to come. It’s a war of ideas and innovation, of agility and tenacity. It will take new thinking to stay ahead.

For several decades now, the assumption has always been that the U.S. and other industrialized nations will keep leading in knowledge-intensive industries while under-developed and developing countries focus on lower skills and lower labour costs. That’s now changed. Many countries now compete both with low wages and high tech, plus significant government subsidies and incentives.

ASYMMETRIC MOTIVATION

There’s another key human factor — asymmetric motivation. In North America and Europe, salaries are high and the motivation to work long hours is limited to those few who have natural drive. By contrast, in developing countries like India and China, the drive for upward mobility is far more. In China, manufacturing people work diligently for comparatively low wages and government-provided housing. This asymmetric motivation results in huge productivity differences.

TALENT AND INNOVATION

What’s left? Talent and innovation, which should be encouraged, stimulated and rewarded. The solution is to encourage entrepreneurship and talent to thrive in the manufacturing sector. Today, innovation only costs money and has no reward. The recent lawsuits on intellectual property, and the perceived ideas of openness, have certainly discouraged innovative people.
It is significant that science and engineering professionals are dangerously absent from all levels of policy and decision-making.

The short-term financial mindset must change. Business needs to realize that continual quarter-to-quarter increases in revenue and profits cannot be sustained with manipulation of work that is done elsewhere.

CHINESE SECRETS

I remember visiting a Chinese steel plant several years ago and thinking to myself that I could have just as easily been in England, Brazil or North America.

In the instrumentation room, filled with old but serviceable displays, meters, recorders, switches and controls, I asked my host, an instrument engineer, where their process and controls information came from. He pointed out an old textbook, like one you might find at any flea market. Then I looked at his library and there was a first edition of Bela Liptak’s Instrument Engineers’ Handbook, amid other similar tomes and the usual collection of supplier catalogues.

“Do you follow these textbooks closely?” I asked, “or do you develop your own variations?”

He smiled wisely, “Ah, we also have our own secrets.”
This was when I realized that most of the basic knowledge related to the industrial revolution — how to make steel, cement, plastics, or just about anything else — has already been widely disseminated. Anyone who wants to do it does it.

LOSING THE KNOWLEGE BASE

Clearly, the knowledge base that was once the advantage in the North America and Europe is being lost. In many large end-user companies process experts and instrumentation engineers, with deep and intimate knowledge of key equipment and processes, have been eliminated and have become independent contractors available to competitors in the U.S. and worldwide. The proprietary edge is frittered away, a casualty of short-term financial thinking.

At this stage, recognizing the need for engineering expertise to keep equipment and processes up-to-date, some end-user companies have partnered with major automation suppliers who take complete responsibility for all automation systems. It seems like a mutually beneficial arrangement, but also raises many questions:

How do you choose the primary automation vendor/partner?
Do you simply select one of the major automation suppliers (from a handful of global contenders) and exclude bright, up-and-coming companies?
Do you abandon the multitude of systems integrators and other significant suppliers of materials, instruments and equipment, to rely solely on one source?

Will the relationship be profit-based, or on a cost-plus basis?
After settling on a primary supplier, internal engineering talent soon becomes non-existent; so, who will negotiate upgrades and contract changes?
If the selected automation supplier flounders financially, how will the situation be corrected?

COMPETETIVE DIFFERENTIATION

Quality, price and availability are all becoming commodities in the fast-moving new global business environment. To succeed, you need a competitive differentiator — the proprietary edge. This cannot come through short-term consultants. It can only be developed by consistent, long-term investments in people and leadership. It requires sustained development budgets for automated processes and plant equipment, which requires strong and committed in-house engineering talent.
Like that Chinese engineer, you need to say, “Ah, we have our secrets.” nanm

Jim Pinto is a technology entrepreneur, investor, futurist, writer and commentator. You can email him at: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or sign up for his newsletter at: www.jimpinto.com/signup.html.