With oil & gas prices low and much of the process industries in economic doldrums, “The market is facing challenges, and innovation is a key driver to sustaining growth,” said Takashi Nishijima, CEO, Yokogawa Electric Corp. “We must re-create ourselves to create wealth and value to society.”
Nishijima spoke by video to attendees of the 2016 Yokogawa Users Group Exchange and Exhibition this week in Orlando, Florida. In keeping with the motto, “Co-innovating tomorrow,” adopted on the company’s 100th anniversary last year, the company intends to win new customers, expand its relationships with its client base and serve society at large by focusing on three areas: building a stronger defense, operational effectiveness, and capital expense efficiency. “Yokogawa is moving into the future one step at a time,” Nishijima added. “We’ll be working with you to build greater bonds of trust and to stimulate growth.”
The opportunities presented by co-innovation were then described by Dr. Tsuyoshi “Ted” Abe, vice president and CMO, Yokogawa Electric Corp. “Analysts are always looking at the short range,” Abe said. “Let me focus on the long range.”
Having seen the benefits of mechanization and power, mass production and electrification, computers and automation, we are entering the fourth industrial revolution, this one brought about by cyber-physical systems and information technology, Abe said.
“In 1965, Moore’s Law was just an observation that the number of transistors per square inch of integrated circuit was doubling every two years,” Abe said. “Now we observe that the available computing power per person is rising exponentially as its cost is falling.”
Other examples of the logarithmic trends in IT cited by Abe included the rapid growth in people using the Internet, from 2.5 billion today to 3.4 billion in two years. The number of Internet-connected devices was 2 billion in 2006, 15 billion in 2015, and 50 billion are expected by 2020. Miniaturization also continues apace, as represented by the University of Michigan’s “Micro Mote” computer. “It’s the size of four grains of rice—including processors, memory, battery, solar cells and wireless communications,” Abe said.
Peer-to-peer communication by smart connected devices is widely expected to flatten the five-layer Purdue model to two layers, device and enterprise, with little or no need for intervening I/O, controllers and SCADA, Abe said. “This obviously requires IT and operations technology to converge, despite well-established and justifiable differences in cultures and priorities.”
Technology to the rescue
“We’re working on a platform for sustainable evolution and sustainable value creation, with core innovation,” Abe said. When it comes to technology change, “You can read the future, change to accommodate it, be open to it, make it, or follow it. We choose to make the future.”
With cyber communities Facebook, Tencent, Google, Whatsapp, Line, LinkedIn and Twitter among the world’s 10 largest “populations” (along with China, India, and the United States), “we see new forms of enterprise rising to meet growing challenges for a burgeoning population of human beings,” Abe said. Adequate and fairly distributed supplies of energy, food and water require innovation in human behavior. Abe sees six major factors “changing the game” for humanity:
- The crisis-prone global economy
- The governance gap
- The potential for increased conflict
- Wider scope of regional instability
- The impact of new technologies
- The role of the USA
“All can be addressed through measurement, control and information,” he said.
“Our big, hairy, audacious goal—BHAG—is sustainable processes,” Abe added. “While Yokogawa today has many industrial customers, our future customers are today’s children. We must all work together, to contribute to save the earth for our children. Leadership does matter, but not only at Yokogawa. Let’s work together for a co-innovative tomorrow for our bright future.”
North America financial results
Yokogawa Corp. of America (YCA) has seen steady growth since its founding in 1957, and has been adding jobs and manufacturing capacity in Newnan, Georgia and in Coldsprings and Freeport, Texas. “But when we made our Transformation 2017 three-year interim business plan as part of our longer 10-year plan, oil was not at $40 per barrel. It was closer to three figures,” said Daniel Duncan, CEO, YCA. Still, revenues for fiscal 2015 were down just 1% from 2014, with record profits. “2016 is tougher.”
Current regional plan highlights include focusing on customers, “to engage with you on your business, challenges and issues, and only after that, look at our portfolio of products, solutions and services,” Duncan said. “We’re putting boots on the ground and people in place, investing in great products but also expanding our value beyond technology—creating new value by partnering and innovating through cooperation with customers.”
Yokogawa is maximizing its own efficiency to help keep costs down by optimizing internal processes, developing enabling technologies and investing. “We’re investing in account managers so we can spend more time with customers to understand their needs and add value,” Duncan said. “We’re adding specialists who can talk in depth about the technologies we can bring to bear; product managers to own products and solutions, work with headquarters to develop maps and support infrastructures; and field services across the USA—resources who can be in your facilities when you need us.”
A strengthened cadre of safety consultants is expert in safety systems lifecycles and risk reduction, and, “We have TUV certification of our entire project methodology. We’re the only company in North America that has that,” Duncan said.
With the economy as difficult as it has been, “We will never forget how we’ve managed to survive 100 years,” Duncan said. “It’s thanks to your willingness to trust in Yokogawa, and adhering to our five core values: respect; integrity; gratitude; create value; and collaboration.”