Rockwell Automation CEO Affirms Continued Industry Leadership

Rockwell Has the Technology Leadership

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“Even in these troublefd times,” began Keith Nosbusch, chairman and CEO of Rockwell Automation, “Rockwell Automation is on a very exciting path. We’re well-positioned to both weather the storms of the current economic situation and prosper into the future.”

Keith Nosbusch
“What we have to do now is to continue our plans and keep our eye on the ball.” Rockwell Automation CEO Keith Nosbusch is bullish on the company’s ability to weather any economic downturn and prosper long-term.

Nosbusch updated a media-only crowd gathered in Nashville, Tenn., for the company’s Manufacturing Perspectives event, which leads up to the Automation Fair event on Wednesday and Thursday of this week.

“Rockwell Automation has the technology leadership,” he added, “the intense customer focus, and the financial strength, together with a strong balance sheet and a seasoned management team.”

Nosbusch segmented an update on the company’s financial picture into two parts based on the two overarching business units: Architecture and Software and Control Products and Solutions. Architecture and Software includes the Logix platform, FactoryTalk, Pavilion and Incuity. 2008 revenues from this business unit were $2.4 billion, with $3.3 billion coming from Control Products and Solutions.

“In 2004,” Nosbusch said, referring to the year he became CEO, “our revenues were 61% in the United States. In 2008, they were a little under 50%, and 50% of our employees are outside the U.S. Our goal is to have 60% of revenues from outside the United States by 2013.”

Nosbusch described the company’s recent acquisitions as catalysts for continued growth: ICS Triplex, Proscon, the Irish life sciences system integrator, Pavilion Technologies, CEDES (a maker of safety light curtains), Incuity for enterprise manufacturing intelligence and visualization, and the most recent acquisition of all, Xi’an Hengsheng—a heavy-industry integrator with a strong customer base in central and western China.

Turning to the economic situation, Nosbusch noted that GDP has slowed down, and that some degradation is occurring. Even though this situation started in the mortgage and investment-banking arena, he said, it is likely that there will be reduced capital expenditures in the months ahead.

“Rockwell Automation has more resiliency than many of our competitors. What we have to do now is to continue our plans and keep our eye on the ball,” he added.

There are new drivers in the market, Nosbusch continued, noting the importance of globalization, productivity, innovation and sustainability. But the most important megatrend, he said, is the convergence of control, communication, information and power on the manufacturing floor.

“Imagine a highly linked environment enabled by modern technology and global standards that can flexibly combine and leverage information,” he said.

This manufacturing convergence and the connected enterprise, Nosbusch said, will drive greater productivity, integrate the global value chain, enable innovation and reduce time to market—and enable the shift to sustainable production and reduce business risk.

The Logix platform brings together multiple control disciplines, is scaleable, information-enabled and open, Nosbusch said. “This is game changing technology—our installed base now exceeds $3 billion, and we expect to achieve $8 billion by 2013. The Logix platform is future-proof.”

So what is Rockwell Automation’s strategy? Nosbusch said that the process industries were the largest growth area for Rockwell Automation, and the strategy there is the displacement of the traditional DCS and the extension of Rockwell Automation’s reach into process safety.

“Process provided $700 million revenues this past year,” he said. Safety, too, is a key growth initiative centered around control. Rockwell, Nosbusch noted, is the only significant player in both machine safety and process safety.

As for network convergence, Nosbusch suggested that the future holds universal acceptance for Ethernet and a resolution to the age-old IT-versus-production culture clash. Here, too, Rockwell Automation partner Cisco Systems plays a critical role, with the companies' unified reference architecture for manufacturing and the co-branded Stratix series of network switches.

Nosbusch’s vision for Rockwell Automation is the ability to use standard Ethernet for unified communications—voice, video, mobility and powerline. This, he said, would come from collaboration and provide speed, flexibility, leverage and a lower total cost of ownership.

Rockwell Automation’s contribution to sustainability in manufacturing includes its product line of Intelligent Motor Controls. These, Nosbusch said, provide increased energy efficiency. This segment is approximately 25% of Rockwell Automation’s business, and the company enjoys a top-three global position with a highly differentiated intelligent motor control center product line.

In solutions and services, Rockwell Automation has repeatable solutions for industry that leverage knowledge, with re-usable engineering, tools and processes. Rockwell Automation also is concentrating on acquiring and retaining industry experts, as well as acquiring new businesses that will help fill gaps in the product portfolio.

In answer to a question, Nosbusch said that Rockwell Automation was going to “of course, align our cost structure with reality, but we’re going to continue to invest, focus on emerging economies and fund our key new products and solutions. We may be forced,” he went on, “to re-prioritize and align our priorities, but we have a very strong balance sheet and our free cash flow is very strong. That’s why we’re continuing to pay our dividend and re-purchase our stock.”

And what kinds of acquisitions might Rockwell Automation make in the future? “Look at the last eight, and you’ll see where we’re going,” ” Nosbusch said.

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