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1 January 2002

Out, New Economy!

By Nicholas Sheble

Year 2002 favors entrepreneurs over industry titans.

The financial markets needed that. Finally we've moved from under that boulder of speculation and get-rich quick schemes—pets.com, amazon.com, ponzischeme.com, and the like—and we can get on with business. Those silly, indulgent years of stock speculation are over. table

History says that now, year 2002, during an economic downturn, is the best time to start a business. Indeed the growth of new business and new businesses is countercyclical.

That is to say, during times of rapid growth, big companies lure the best and brightest to their ranks, while during lulls, hotshots often choose entrepreneurship over working for a big outfit that's randomly slashing payroll.

And why not entrepreneurship? Think Ford, Hewlett, Heath, or Gates. During a rigorous financial climate, entrepreneurs absolutely must focus on substantive concepts such as product, landing real customers, making a profit, and growing at single-digit rates.

Recall a TAPPI convention keynote back in 1999, when the CEO of a major North American forest products company lamented, "I can't get any capital investment money for our operations. No one will invest in a profit-making organization that's returning 7% a year on investment. Shoot, people these days want 7% a week!"

Well, that of course was back in the days of the new economy. Profit in that new economy was optional. Market share was most important, then equity growth, then market saturation, and then a profit. That new economy business model mind-set won't get in the automation industry's way in 2002.

The industry continues to face contraction, but signs all point in a positive direction toward the fundamental health of the world economy and human innovation and flexibility. Why?

The U.S. economy, the driving force of the world economy, looks to turn around in the next two or three months, benefiting from falling oil prices, military success in Afghanistan, strong consumer spending, and—most importantly—increased manufacturing.

For more than a year, businesses have been steadily slashing their inventories, their unsold and stockpiled goods. These businesses will soon decide that they've cut their inventories enough. Production will increase sharply to maintain them at present levels.

That will boost economic growth significantly.

Year 2002 won't be the start of anything like the go-go '90s, but remember, the go-go '90s really weren't.

GO DISTRIBUTE TECHNOLOGIES

A concept jelling now distributes knowledge, memory, and control over expanses of geography in unfillable storage devices. Networks connect the functions at nearly the speed of light so one knows not whether one is accessing a local hard drive or a server in Indonesia.

The bytes of knowledge are a commodity, like water or electricity. Physical facilities, plants, and manufacturing are next.

Technology futurist and inventor Ray Kurzweil responded to this question, posed by The New York Times with a comment prescient and germane to the future of industrial automation: "What role will technological innovation play in responding to terrorism?".

"The 11 September tragedy will accelerate a profound trend already well under way from centralized technologies to distributed ones, and from the real world to the virtual world. Centralized technologies involve an aggregation of resources such as people (e.g., cities, buildings), energy (e.g., nuclear power plants, liquid natural gas and oil tankers, energy pipelines), transportation (e.g., airplanes, trains), and other resources.

"Centralized technologies are subject to disruption and disaster. They also tend to be inefficient, wasteful, and harmful to the environment.

"Distributed technologies, on the other hand, tend to be flexible, efficient, and relatively benign in their environment effects. The quintessential distributed technology is the Internet."

Focused more directly on industrial automation is industry commentator Jim Pinto. He sees a transition from distributed control systems (DCSs), programmable logic controllers, and industrial PCs to a new, connected environment of industrial appliances.

"Today, new technology moves too fast—the rate of change of performance increases too rapidly—to play by the old rules. So new products and equipment must be small, cheap, reliable, flexible, expandable, and disposable.

"In the future, smaller distributed factories will be built near sources of raw materials and dismantled when the sources are depleted."

If labor is a raw material, distributing factories in the electronics manufacturing business is advancing ahead of other manufacturing sectors. Is this due to the inherent flexibility of the business or plain old outsourcing to take advantage of inexpensive third world help?

Regardless, it's certainly a trend to heed. Wired magazine offers this assessment that may earmark 2002 as the year of the entrepreneur: "For decades, U.S. firms have found big savings by shifting manufacturing offshore. Electronics manufacturing has become a commodity. The reason is digitization.

"Not long ago, a telephone was about as closely related to a 35-millimeter camera as to a lawn mower. Today, your cell phone and your digital camera are brothers and sisters. Many of the electronic gadgets in our lives, from PDAs to ink-jet printers, share the same basic DNA connectors: circuit board, processor, some plastic, and sheet metal.

"Their value comes not in the assemblage of these parts but in the electronic brains and the brand on the outside. For the typical OEM, the act of assembling components is a distraction—diverting brainpower from innovation—and a cash drain.

"The move toward outsourced manufacturing represents an obvious opportunity for contract manufacturers [such as Flextronics and Solectron], but it's also a potential boon to product innovation. The future of gadget making is not about making gadgets; it's about imagining them.

"Someone else makes the imaginary real. All that money that used to go to fund infrastructure is going into design and innovation. All the value heads to innovation and marketing, allowing smaller companies, entrepreneurial firms, and those from outside the electronics industry to compete head-on with the incumbent titans."

INSTRUMENTATION PERSISTS AS KEY

Plant-floor flow, pressure, level, and temperature instruments will continue to network and data share and join certain network protocol clubs as they do. Some leverage Ethernet on the floor, while most await its arrival. Few plants to this day, though, rip out existing profitable automation schemes without guarantees of success and rapid return on investment.

The boon to the automation scheme these instruments supply stems not from new technology, though there is some. No, the boon is that instruments can be a part of the networked enterprise and can think and make decisions on their own for the betterment of the entire process.

We can wire instruments, we can wireless them, we can embed them with processing ability, we can access them with palm, table top, and laptop devices from near and far. This continues in 2002 not as a phoenix but as a fact of market and a function of marketing.

The future of flow measurement, for instance, will be something like the following, according to analysts at Flow Research and Ducker Worldwide, who surveyed users in North America, Europe, and Asia. Users are moving toward the new-technology flowmeters and will purchase these flowmeters at an increasing yet single-digit rate in 2002.

They consider new-technology flowmeters to include Coriolis, magnetic, ultrasonic, vortex, and multivariable differential pressure meters.

The market seeks accuracy, reliability, and network and software compatibility, including the ability to self-diagnose. All instrumentation, be it analysis, pressure, position, or the others, is moving toward these goals—or wants to. The trend continues in 2002, subject to the availability of investment capital and an attractive investment payback time period.

CONTROL IS AT INFLECTION POINT

Pinto added these observations and predictions for near future and far in automation. Operator training and updates will be via the Internet, with knowledge being disseminated through peer-to-peer (P2P) communications and file sharing.

Coordination of worldwide production and process plants will be through real-time information networks, with users and suppliers as partners.

Software growth arenas were supervisory control and data acquisition systems, data acquisition, and human-machine interfaces—simply emulating the functions of a DCS at a reduced price. Today, those functions integrate inexpensively in most equipment and embed in some. Now, software growth is in manufacturing execution systems that integrate factory and businesswide functions and logistics.

Tomorrow's software will operate multiprocessor systems to coordinate P2P I/O and controls. Old central-control hierarchies will give way to new self-organizing P2P networks, where intelligence resides directly in sensors and actuators. Chaos theory-based complex adaptive systems will yield results, robustness, and operating effectiveness never dreamed of.

Wireless: Formerly, industrial controls were all hard wired because wireless connections were slow and expensive. There was also some mistrust of remotely operated systems. Could outside forces tamper with them? Today, wireless links are fast and economical; soon bandwidth will be plentiful, to connect everything to everything. Also, advanced encryption technology makes wireless links trusted and advantageous.

At the local calibration and troubleshooting level, the old mechanisms of plugging in will soon obsolesce as Bluetooth connections proliferate. Instrument technicians will use wireless personal digital assistants, which will link automatically to higher levels when there is insufficient capability, to download "advice."

Microelectromechanical systems: These will bring the analog and digital worlds closer together than ever before—through revolutionary improvements utilizing semiconductor fabrication techniques to produce miniature turbines, motors, gears, moving mirrors, and sensors.

Nanotechnology: Production with old-style metal bending, grinding, and cutting will also obsolesce as nanotechnology enables building products at the atomic level. The promise of more precisely machined moving parts means less wear. Materials and products will build to order, with flawless internal structures that make them stronger and lighter. Electronics will get smaller and hence faster. As things shrink, quantum effects that reign at the atomic scale will lead to computing performance beyond today's wildest dreams.

P2P information sharing: Championed by Napster (people downloading music from one another's computers over the Internet), the P2P revolution will significantly impact future business information exchange. Suppliers and end users will share information as partners, eliminating several levels of "infomediation" and making business more frictionless.

Complex adaptive systems: The central control hierarchies will yield to new self-organizing P2P networks, where intelligence resides directly in sensors and actuators. By these new standards, today's PLC- and PC-based controls and software will seem ineffective, expensive, and even archaic. CAS provides unprecedented effectiveness and robustness—and old, deterministic control architectures will disappear.

Indeed, the industrial controls business is at an inflection point. Old knowledge is widely disseminated and becomes a commodity, causing a general business decline, but growth and success will result for leaders who recognize the revolutionary advantages that new technology brings. IT

Behind the byline

Nicholas Sheble is an InTech Senior Technical Editor.