Manufacturing Perspectives-- Rockwell Automation

Over 100 journalists including about 50 from offshore are attending this year, according to John Cohn, senior vice president for strategic development and communications, who welcomed us to the annual Manufacturing Perspectives at Automation Fair. According to Keith Nosbusch, chairman and CEO of Rockwell Automation, Automation Fair is the largest free training and exposition for automation in the world. I'm not sure that's true, but it certainly is true for North America. Nosbusch put up the "safe harbor" slides, which is something I don't recall them doing before... He announced 10% revenue growth in 2007, with 10-12% expected for 2008, with an operating margin of 19.7% sustained in 2008. The restructuring of Rockwell in early 2007 was into two business units: Control Products, and Solutions and Services. Industrial control products like motor controllers and VFDs fal into Control products. 12% CAGR since 2004 for Control Products and Solutions. Expansion into China, Poland and Mexico. Architecture and software segment contains all the PLC/Logix and software products, including automation products for motion, sensing and safety. Architecture and Software is looking at a 10% CAGR. This segment generates the highest ROIC in the company, because its intellectual capital is the strongest in the company. Continued market share gain in the process industries, and expansion in Asia and Eastern Europe. Three world class acquisitions: ICS Triplex, Proscon, and Pavilion. All of these growth initiatives are aimed at process, and delivery of services. Proscon will take Rockwell deeply into the life sciences industries, as both an engineering and integration firm. Pavilion will also take Rockwell deeper into the environmental business. Global expansion shows 49% of revenue outside the US. By 2009 Rockwell expects more than 50% of revenue to be from outside the US. More than 50% of RA employees serve outside the US. Built 3rd factory in China, in Shanghai. In US and Canada we expect slower but continued economic growth, weak dollar is fueling strong export growth, but the housing market, tight credit and higher oil prices are concerning. Latin America has strong continued growth. In EMEA, Western europe is moderating, but continuing growth, while eastern europe is growing rapidly. Asian markets continue to grow at high rates. Convergence in the Connected enterprise is a major thrust trend that Rockwell sees, and is positioning itself to take advantage of. Faster time to market, lower TCO, better asset optimization, and other buzzwords were mentioned. Major trends: collaboration in realtime with suppliers, governance and compliance challenges, and enabling convergence. Our automation domain expertise differentiates our information offering. Our discrete expertise differentialtes our process offering, stretching into process dreates new differentiators in our discrete offering. Replacement of existing DCS is the largest growth area. Process grew by 27% and we expect strong growth in 2008, with a 40+% CAGR. Winning process automation projects is ongoing in many industries and verticals, globally. Food, Beverage and Brewing, Life Sciences, Household and Personal Care, Oil and Gas/Energy, Mining Aggregates and Cement, Utilities, Water & Wastewater...all have had big wins. Leveraging Network convergence to produce plant wide information. Continuing adoption of ethernet/IP is assured, and Rockwell/Cisco's reference architecture and network capabilities. Big buildout of Factory Talk application Suite using Pavilion8 Technology will enable information convergence. We have the most comprehensive safety offering in the industry, both machinery and process safety markets. Rockwell has 12% market share in machine safety, and 13% of Process safety (#3 position) market. The safety business is expected to be $2.9 billion. Intelligent motor control responds to $100/bbl oil by providing dramatic energy savings in both industrial and commerical applications. Solutions and Services business is a large and growing ($16 billion available) market. We expect to differential RA product performance. We have produced growing revenue at a 15% CAGR. We are producing "packaged solutions" for Food, Beverage, Life Sciences, Home, Health and Beauty, Specialy Chemical Pulp and Paper, Oil and Gas, and Cement. We are shifting our business model to one that is more service based to enable us to better leverage our intellectual property expertise. Longterm growth and performance stategy: Geinvestment, Intellectual Capital produce Revenue. We need to drive 3-4% cost productivity to fuel a disciplined reinvestment strategy and deploy our intellectual capital to produce secual, organic growth, and expand our offerings by aquisition. Nosbusch gave a litany of "What's new at Automation Fair" including a full portfolio of industrial Ethernet, and lots of other stuff.