JimPinto.com - Connections for Growth & Success™
No. 273 : 12 October 2009

Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

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GE will emerge as next big automation player

Here's a bit of recent history: After Jack Welch's departure in 2001, CEO Jeff Immelt has taken GE stock from $40/share to $6; now it is back up to $16. The decline was largely the result of falling profit at GE Capital, which generated 50% of GE profits before the downturn. Jeff Immelt will have to do something dramatic next.

Jeff Immelt recently stated that America, and GE, must return to Manufacturing roots. He wants to rebalance GE's portfolio by becoming more "industrial", looking perhaps for Wall Street to value GE stock as an industrial conglomerate, instead of as a financial group.

What comes next? How will this impact GE involvement in the Automation business? Here's my analysis:

The recent GE & Fanuc joint-venture split was clearly NOT an isolated decision. It followed the re-organization of the PLC and software businesses into separate commercial units, which was not supported by several key people, notably John Pritchard who spent some 30 years at GE Automation in Europe and is now exiting - the first of many.

GE Intelligent Platforms (GE's Automation arm) reports to Charlene Begley, CEO of Enterprise Solutions, a mix of energy and industrial businesses. Charlene is forceful, personable, impatient and likely to survive. She ran GE Automation before moving to Transportation and then on to Plastics, which she sold to the Saudi's (SABIC) in May 2007. She was responsible for acquiring Intellution, which many insiders feel was one of the smartest moves GE's Automation business ever made. Charlene's pedigree as a GE portfolio manager looks good.

My guess is that GE will create a new industrial division. Where GE will place its Automation business is not yet known; but there will be winners and losers.

Will Charlene emerge as a winner running this new unit? Will GE keep Automation, or sell it off? Will it try to create a larger Automation unit by putting together its Automation business with its Energy unit?

All these questions will take a few months of deliberation and strategy sessions - probably till the turn of the year. After that, GE will move very quickly, probably emerging as a buyer (or seller) of Automation assets in early 2010.

Who else will emerge as potential buyers and sellers? Here's a refresher from the GE Viewpoint:

For sale:

  • Rockwell - whether they like it or not.
  • Invensys - whether they like it or not. Their pension plan was under funded, and was a poison-pill for potential buyers.
  • Honeywell - the Process Systems Division is likely to be divested by a hungry-for-growth-and-glory CEO Dave Cote.
Other Buyers:
  • ABB - Joe Hogan (ex-GE) would find GE's Automation business too small. He is more likely to be focused on Rockwell. ABB has the cash, and Joe Hogan needs to make a move. A bigger ABB would create a global alternative to Siemens.
  • Siemens, the largest industrial company, has never been able to make a successful acquisition. They'll be in the bidding.
  • Schneider - one of the winners during this decade. They could want GE's software business to add to Citect. They may also be in the market for DCS player. Invensys would be a good fit and make Schneider a world player in software and Process Control.
Stay tuned as the automation business re-groups for a new round of mergers & acquisitions.

Click GE Breaks The Mold To Spur Innovation

Click GE Organization Chart

Click At GE, manufacturing - and factory singing - matters

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Corruption of Capitalism

I believe in Capitalism. I came to America about 40 years ago and founded Action Instruments. Action employees were motivated by shared ownership and participative management. INC magazine featured Action in a cover story, "Workplaces Employees Love". I sold the company about 10 years ago; the owners, employees and I made a respectable capital gain.

Because I appreciate the benefits of Capitalism, I've studied its advances, and now its decline. It's clear to me that greed and excess are contributing to its swift downfall.

About 7 years ago (2002), after the Enron and related fiascos, I wrote 3 columns: 1. Crony Capitalism; 2. Creeping Criminality; and 3. Lure of the Lifestyle. Read them - weblinks below.

The Enron scandal generated regulatory moves. But apparently, not enough. Less than a decade later came the collapse of Lehman, Fannie Mae, Freddie Mac, AIG, and - well, you know the story.

This time, many companies were declared "too big to fail" and the government provided a cash stimulus - a trillion dollars. Where did the money come from? Credit, from future taxpayers.

Congress objected, but then succumbed to pressure by Treasury Secretary Hank Paulson, formerly CEO of Goldman Sachs. The Congressional Budget Office admitted blankly that they really didn't know where the money went. This was Crony Capitalism at its worst.

The banks quickly raised overdraft charges and other fees, returning to profitability and boosting reserves by billions. Again, they give big bonuses for key executives. Congress stands by, impotent.

The phone-log of Treasury Secretary Tim Geithner shows that almost 50% of his phone calls are with Goldman Sachs and cronies on Wall Street. This is Crony Capitalism at work.

Today, the Fed Chairman has pronounced that the "recession" is over, trying to induce consumers to start consuming again. Do you really think the "stimulus" solved the intrinsic problems? Of course not; it merely hid the effects and prolonged the decline.

I've talked with friends at many of the big banks and financial giants. No one denies that "fudging" takes place. They explain it as "gamesmanship" against regulations. Ethics is defined as "Whatever's legal". They all agree that many corporate leaders and politicians are corrupt.

Greed, lying, cheating, bribing and stealing have becomes legalized, with Congress itself as the prime example. Can you refute that? If you cannot, then how can you condone it?

The core concept of Capitalism is "free enterprise" - we can all be rich, if we work hard and are "smart". If you're poor, you're assumed to be too lazy, or too stupid, to know better. Under that "system", the rich are getting richer and richer by controlling wealth and manipulating the media. It's estimated that 1% of Americans now have more wealth than 95% combined. Do YOU think that's fair?

Meanwhile, America's middle-class keeps sliding into depression, with more and more joblessness and foreclosures. US unemployment has climbed to 10%, with several states well over 15%. Nearly 47 million Americans or 20% of the population under the age of 65, remain without health insurance. We keep talking about the American Dream. This is becoming the American nightmare!

How long can the corruption of Crony Capitalism survive? What will trigger its demise? What are the solutions?

I have pointed out that "Distributed Capitalism" is emerging as a winner - employee-ownership, profit-sharing. Big bonuses must be subject to public scrutiny. Increased regulations must limit loopholes. Greed and corruption must be publicly exposed.

I welcome your opinions and ideas.

Click Pinto (March 2002)- Crony Capitalism

Click Pinto (April 2002) - The Lure of the Lifestyle

Click Pinto (May 2002) - Creeping Criminality

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Documentary - Capitalism: A Love Story

No matter what you think of Michael Moore, you must see his latest documentary which came out in theaters a week ago.

What Michael Moore excels at is humanizing. He shows us just who is affected by Crony Capitalism, and why. He shows real people being thrown out of their homes, being pushed out of their jobs, being paid a pittance to survive.

Michael Moore's America is made up of those who have worked hard all their lives, but have little or nothing left. He shows openly how they are being looted by people that can only be described as white-collar sociopaths. They have no recourse.

This movie isn't just an emotional piece. Michael Moore lays out evidence for the viewer. He demonstrates the ingenuity with which big-money boys have landed on their feet while stepping on everyone else. Some people consider Michel Moore "anti-American." I challenge anyone to find even a little hatred towards America in this movie.

I had one big surprise. The movie explains how big companies have life-insurance policies on rank-and-file workers without their knowledge; when the employee dies, the company gets a tax-free benefit. It's actually called, "Dead Peasants" insurance. Look it up on Google.

Several experts are challenged to explain "derivatives". (Can YOU explain what they are?) Try to get an explanation from any financial person you know. You'll be amused.

Michael Moore asks scholars and clergymen to find any sort of moral justification for Capitalism. One priest flatly states that Capitalism has become "radically evil".

I thought Moore sometimes makes sweeping generalizations about some very complex issues. For example, he offers "democracy" (a political term) as an alternative to "capitalism" (an economic one).

Go see the movie. At the very least, you'll recognize the insidious evils of Capitalism gone corrupt.

Click Time - Michael Moore's Capitalism Goes for Broke

Click Christian Science Monitor - Review

Click Capitalism has proven it's failed

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Healthcare moves offshore

Global healthcare is the rapidly-growing practice of traveling across international borders for medical treatment. Today, virtually every type of health care is available in countries that offer superb doctors and medical facilities. Luxury hotels for family members are sometimes thrown in as a bonus - it's called "medical tourism".

Foreign medical treatments are often pooh-poohed by the media, as poorly equipped and unsanitary. But the reality is often completely different. When compared with often crowded US hospitals, bogged down with malpractice insurance and escalating costs, many foreign hospitals are well equipped, superbly staffed and the facilities are sometimes even considered luxurious by American standards. When it comes to doctors, consider how many US doctors are Indian, Mexican and foreign-born today.

More than 50 countries have identified medical tourism as a national industry. Many have improved their technology and standards to compare with the best in the US and Europe. A growing number of overseas hospitals are accredited under the international arm of the Joint Commission on Accreditation of Healthcare Organization, which accredits US hospitals and facilities.

Amazingly, some foreign hospitals provide operations at 10% to 25% of the cost in the US. An operation that costs $50,000 in the US can usually be done in Mexico, India, or Turkey for $5-10,000. Travel and accommodations are usually minimal by comparison.

In the US, there are more than 46 million uninsured. Also, many of the insured are suddenly told by their insurance providers that their condition is not covered because it was "pre-existing". For these people, going abroad for medical treatment becomes a life-saver - literally.

An estimated 750,000 Americans went abroad for health care in 2007, and Deloitte Consulting estimates that it doubled to 1.5 million in 2008. Forbes magazine estimates that medical tourism will be over $40 billion annually by next year. Clearly this is how America can "solve" the escalating health-care financing crisis.

"Medical tourism" companies, in collaboration with special "health travel agents" have sprung up across the country, and some insurance plans are participating. As soon as the top insurance companies start to accept foreign hospitals (which they will soon, because of the overwhelmingly lower costs) medical migration will start to soar.

Now, THIS is an interesting twist to the already burgeoning outsourcing business.

Click Medical tourism: Have illness, will travel

Click Medical Tourism Association

Click Medical tourism is growing fast

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Making dynamic Powerpoint presentations

You go to a meeting. Everyone has arrived. The lights dim, and the presentation begins. Presenters keeps showing slide after slide. Some in the back row actually doze off, while many others' minds drift off. They are being "slideswiped".

We've all heard the advice about presentations: "Tell them what you're going to tell them; then tell them; and then tell them what you told them." That gives you a license to be boring. Forget it.

For my own speeches, I like to use PowerPoint slides as cue-cards so that my audience can follow along with me. My slides are typically short, brief points, so that they don't spend time reading the slide instead of paying attention to what I'm saying. And it keeps me on track.

It's nice to have some pictures and diagrams to show. PowerPoint has many cute features - pictures sliding, or spinning in from space, etc. Don't overdo it. Keep it simple.

Of all the techy types, no one rivals the skills and pizzazz in presenting as Apple's Steve Jobs. His iPhone introduction has five lessons for making a superb sales pitch:

  1. Build tension - generate drama, with a couple of surprises.
  2. Stick to one theme per slide - one slide, one key point.
  3. Add pizzazz to your delivery - vary your speed and tone.
  4. Practice - don't wing it, rehearse your presentation.
  5. Show enthusiasm - loosen up and have fun.
You know what? As a presenter, Steve Jobs is far more engaging today than he was a few years ago, because he worked at it. We all have room to improve our presentations. Develop your own special style.

And practice, practice, practice.

Click In Pictures: 10 Presentation Tips From Steve Jobs

Click Steve Jobs' Greatest Presentation

Click PowerPoint Presentations: The Good, the Bad and the Ugly

Click Jim Pinto Speaking Engagements

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John Brewer [jwbrew15@aol.com] complains about the motives behind global outsourcing, and the bad results:
    "I have been in the Tool an Die business for 36 years and have 10 to go. I have seen how this "outsourcing" has gone. I believe it has been driven mainly by corporate, investor and individual greed. The root of all evil!

    "Investors want to get rich quick. The corporate presidents receive huge bonuses and retirement deals based on making the investors the most money. Many business decisions today are based on this aspect, and not good, sound decisions for the long haul. I think it would be an embarrassment that the big companies cannot build economically. They have in essence admitted defeat and put workers out of work.

    "As our middle income people are put out of work, the government and retailers receive less money in taxes. Sure workers may have to take less-paying non-manufacturing jobs, but again less taxes are received.

    "We are in a terrible spot. Greed got us there. We are losing our manufacturing abilities. Manufacturing and making things is where money is made. Banks and investing are just exchange of money. As jobs go away so does training. And as overseas wages go up, the work may come back to an ill-prepared work force.

    "With early rapid retirement, what the older people have learned is not being passed down to the younger generation. What a knowledge loss. I fear what lies ahead in manufacturing, and in essence our future..."

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Rod Patershuk [rpatershuk@FactoryIT.net] discusses why big companies are now at a disadvantage:

    "I've been an eNews reader for a long time, and I'm glad to see you've picked up on the book 'Support Economy'. I'd like to hear some more from the author; it's time for a recap to see if her prognostications were correct.

    "Over the last few years, the destabilizing force that Internet connectivity provides is having major impact. Centralized control of large corporations is eroding, in favor of a more distributed model.

    "What Corporations had as a comparative advantage was access to the 'means of production'. Since the information revolution, the information about the process or product has become more important than the product itself. After the arrival of the Internet, there's a wealth of information available as a commodity, as well as the technology to emulate, or quickly copy, a process.

    "The nimble, quick and creative will be the winners in the next version of Capitalism. Small companies, with low overheads, tapping into cheap information, can give customers what they want sooner than any big behemoth. The big guys won't go down without a fight, if they can learn to make quick decisions."

    Click Read Pod Patershuk's blogs about the Support Economy

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Mike Jost, [mike.jost@thermofisher.com] writes about the looming water shortages:

    "Why does everyone need to live in a warm arid climate? There is so much water in Midwest fly-over country (enough to support Brazil and the US).

    "The overpopulation of California and Arizona (not the majority of the US) is just another relic of the hedonistic, capitalism we are burying (your article on Capitalism).

    "Yes, winters are tough in the North, but water is more abundant. Maybe people should wake up. Preaching about water while we sip on water-intense California wine seems strange. They should move back to Boston, Minnesota, Wisconsin, and Iowa, where water is considered an erosion issue, versus being gone. Think about it."

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