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March 2009

Rockwell's Nosbusch:

To gain technology advantage, change remains key

EDITOR’S NOTE: Embracing new technology, Boomers getting ready to exit the industry, the credit crisis are just some of the issues Keith Nosbusch, chairman and chief executive of Rockwell, discussed with InTech Editor Gregory Hale at the company’s annual Automation Fair in Nashville, Tenn. The following is the second of two parts.

InTech: When you are going out talking to users, what is the biggest issue they see?

Nosbusch: I think it is how do they get the most value out of their investments, out of their automation, or their information solutions, and how does that improve their business performance. For them to understand the value of technology in solving and delivering business value and helping them meet their business objectives. At the end of day, that is the question. They don’t want to invest in technology for technology’s sake. They want to be able to understand if I make this investment what does it do to my P&L? What does it do to my balance sheet, and how does it meet our company’s objectives? We as an organization have to do a great job in helping make that translation. At the end of the day, it does great technology, but it takes that technology applied to meet a specific customer’s business objectives, and we have to help them do that business translation with them.

InTech: Do you find users are saying, ‘I am making this widget, I don’t even want to deal with our systems?’

Nosbusch: That is why we are growing our solutions and services capabilities because some customers want to focus on their core competencies. Maybe automation and plant floor information is not necessarily a core competency with them, and that is a way we are able to create more value and be more valuable to our customers to fill that void and fill that need because that is our expertise. We will bring that domain expertise to our customers.

InTech: How do you capture the knowledge that will be walking out the door in the next few years?

Nosbusch: There are a couple of ways we pick that up. Sometimes we will tap into the knowledge of our customers, and maybe they can become our employees. Secondly, we are building that knowledge base in knowledge management tools that allow us to share this information around and across Rockwell Automation in our solutions and services businesses. These knowledge management tools allow us to take best practices and also standardize the way we attack similar problems on a worldwide basis so we can learn and not have to relearn every time we do the same application; also how do we teach the younger people that don’t have a lot of experience to up that learning curve faster. So, it is building a knowledge base, having a knowledge transfer mechanism and process that allow us to do that.

InTech: How is the boomer generation leaving going to affect Rockwell?

Nosbusch: There is a large percentage of engineers in the next five years that will be retirement age. So, it is impacting us. We are going to have to make sure we are creating a pipeline to replace that. It is an aging part of the population, and certainly most people in the last 10 to 20 years were not going out and saying ‘boy isn’t it sexy to be working in manufacturing’ so the industry has been struggling from that stigma, which is far from the truth. Certainly, we are now seeing people reinventing and reinvigorating those types of programs that get people excited about the fact there is a lot of high technology on the plant floor. And people’s connotation that engineering is back breaking work and boring work couldn’t further from the truth in many plants and industry. It is how do we generate and renew the enthusiasm for our best and brightest and more talented graduates to understand there is a good career in manufacturing. It is very important in the United States. You go outside the United States and you see a whole different appreciation for the value creation through manufacturing. We still need an influx of very talented people to do the manufacturing that is still in this country.

InTech: Technology is out there, and people are embracing it. However, do you see people adjusting their processes to the technology or do you see them fitting the new technology into their existing processes?

Nosbusch: I think it is both. It goes back to the earlier question of the plant floor and the IT people. If IT and engineering are working together and teaming and collaborating, those are the companies working toward getting more out of their investments as opposed to ‘well let’s continue to have them stay as separate silos.’ IT goes back to if you have an end-to-end process model or if you have stove pipe functions. I think manufacturing convergence is going to require more end-to-end horizontal processes and more system thinking, and you will have to break some of your own paradigms to get the advantage this can bring. Each company falls in a different time constant in that regard. There is no one model because where companies are in their evolution it is different and how they go about it is different, but they will have to change some of their processes and they will have to change their work flows or adjust the way they think of the problem to get the full advantage of the technology. They can keep doing what they are doing and get the same old, same old, but to take advantage of what technology can do, they will have to be willing to change some of the traditional thinking and some of the historical ways they have approached these problems. That is change management, and that is hard in any organization, ours included; but there is where you get the great power and the great pay back on these investments.

InTech: Over your career, what is the biggest change or the biggest changes you have seen?

Nosbusch: One is the change from proprietary to open. That was a water shed event that really drove a completely different mindset of how you approached your portfolio of products and your technology investments.

InTech: Was that for the better or for the worst?

Nosbusch: Much for the better. It was a tough change because it impacted the way you did business. But from a customer’s perspective, it was a huge win. A huge win. That just opened up more opportunities for companies like ours. Another change that is ongoing is the globalization of manufacturing. Take that from any dimension, supply chain, emerging markets where new plants are going up … all of that. The shrinking of the world has been a huge change and has had a huge impact on business. And that has been positive. Not painless, but positive.

InTech: Do users get the most out of their technology?

Nosbusch: That is a hard question to answer because most companies are on a continuous improvement journey. To say you get everything out of your investments from day one, I don’t think that happens. I think the evolution and the technology, as they put it in, they are able to continue to drive increased productivity, better performance, and optimizing processes. It is a journey, and it allows them to be on the journey, and you are never happy. We talk about it at our company. It is the never ending pursuit of excellence. You never get there because the bar keeps getting set higher either by your customers or your competitors. So you are constantly trying to get better at everything you do and take advantage of whatever tools are available to do that. Technology is one of them, probably the greatest tool, but that demands change; then the human aspect of it comes in and you have to mange that change and you have to do it at a pace your organization can accommodate. Companies are becoming more productive, so they are taking advantage of those investments.

InTech: How have the banking crisis and the energy issues affected your company?

Nosbusch: I think the banking crisis has not affected our company from a company performance standpoint. It has impacted customers, and therefore they are not able to make the investments they would like to make because of it. So, it has impacted our revenue; more from the customer and demand standpoint than the impact on our company. We don’t have a large energy consuming process, so the energy impact was on our transportation costs, which grew dramatically until the mid-summer time frame. From a customer standpoint, I think we benefitted because energy efficiency is a much more important topic for our customers today than it was two years ago.

InTech: Now that energy costs are lower, do you think people are putting energy efficiency off to the side?

Nosbusch: That is the unfortunate thing; there was a great sense of urgency at $4 a gallon of gas. I don’t think they have put it off to the side, but I think it has lessened some of the other financial burdens they are facing and so they are able to absorb it a lot better, but I think it has taken the attention of the fact we still need a strong energy policy.