ABB considering Rockwell acquisition
After almost 15 years of financial woes - over-extended with non-focused acquisitions, asbestos law-suits, big settlements, etc - ABB has successfully moved beyond the crisis years.
ABB just announced results for Q2 2007:
* Net income doubles to $729 million.
* Continued strong global demand.
* Orders up 26%, revenues up 27%.
* 14,4% EBIT margin on EBIT of $1 billion.
* Operating cash flow $396 million.
With operating profit of 13,6% last year, and a war chest of more than $10 billion, the automation giant could be preparing to make a major acquisition. They are reported to be considering two: Legrand of France, 2006 revenue $3,74B; US-based Rockwell Automation, $5,56B 2006 revenues. Both are within reach.
After its previous debacle with fragmented acquisitions, ABB will now take a very disciplined approach, focusing on strategic fit, integration costs and opportunities, as well as price.
For years I have been predicting that Rockwell would be sold. Now, belatedly, my predictions may come true. After he took over as CEO from ineffective Don Davis, Keith Nosbusch has done well with Rockwell, raising the stock to heady levels - 70-ish, with market-cap about $11 billion. But the company has nowhere to go.
My advice to Keith Nosbusch: Acquire something bigger than small-fry ICS/Triplex, or be acquired. With about $1 billion cash-on-hand, you can do it. If you cannot, this may indeed be a good time to exit.
My advice to Fred Kindle of ABB: Rockwell is fair game - go for it!
Employee compensation styles
In the age of knowledge work, outsourcing and global competition, many companies still have employee compensation systems rooted in the past. In today's business environments, pay must be performance based.
Most of today's employee compensation systems were originally developed in the old, factory environment, stemming from how hourly workers were paid and advanced in the labour-orientated hierarchy. Having a job meant a fixed hourly wage (usually including paid-overtime for working beyond normal hours) with annual pay increases based on years of service with the company, the occasional bonus and an expectation of lifetime employment.
The best knowledge-workers cannot just be paid for the hours they work - they may always be 'working'. They should be stimulated by the freedom to innovate and contribute to the business. That is the wave of the future.
This is what is revolutionising human-resource attitudes in this new century. In the era of knowledge-work, employee compensation styles should adapt to achieve maximum benefits for those who generate results.
Engineer - re-engineer yourself
In the global economy when engineering as well as manufacturing is going offshore, engineering leadership is at risk. Engineers must re-engineer themselves to revitalise their own careers and generate renewed success.
Decades ago, technology brought the era of 'specialisation' - knowing more and more about less and less. To advance faster you had to focus. But now technology has spread beyond national boundaries. Many emerging countries are developing comparable technical skills. New developments have accelerated to where companies must generate winning strategies beyond narrow technical advantages. Broad leadership vision and teamwork have become important.
If you are an engineer, this is for you. How are YOU doing? Do you still have your nose glued to your job, just hoping that others - marketing, or sales, or whatever - do not screw up and you will get laid-off when your company gets down-sized?
Engineer, broaden your scope. Start thinking about the other factors that affect your success. Heed the advice of engineering guru's to learn 'Total Concept Engineering'.
Engineer - it is time to re-engineer yourself.
Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. His popular e-mail newsletter, JimPinto.com eNews, is widely read (with direct circulation of about 7000 and web-readership of two to three times that number). His areas of interest are technology futures, marketing and business strategies for a fast-changing environment, and industrial automation with a slant towards technology trends.
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