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5 for Friday: The Emerson-NI Acquisition Talks, the “Cloud” On More Solid Ground and Using the Word “Rightshoring”

Jan. 27, 2023
Machine Design takes a look at the week past, and a look ahead to the issues facing the design and manufacturing sector.

1. When Dr. T Speaks…

I met National Instruments founder Dr. James Truchard many years ago during one of NI’s media events in Austin. He is simply called Dr. T by his colleagues, and his presence at those events was not unlike Steve Jobs at Apple or Jack Welch at GE. When he talked, you listened.

So when Dr. T said in an interview with Bloomberg this week that the company he founded in a garage in 1976 should be acquired by Emerson, it was an idea worth listening to.

As Machine Design and other Endeavor Business Media partners have been reporting this week, Emerson has put up a very public $53-per-share cash bid to acquire NI, which comes to roughly $7.6 billion. These mergers and acquisitions often fly under the radar until they are finalized, so Emerson’s very aggressive public stance is a bit unique. They’ve even created a web page to discuss the specifics of their offer to acquire NI, which long has been a company of interest for St. Louis-based Emerson.

Two things are worth noting in all of this: The proposed move by Emerson would further consolidate the global digital manufacturing space, strengthening Emerson’s position in the process. Emerson’s well-known interest in NI’s technology as an adjunct to existing strength in automation and software will further elevate the company into the upper echelon of digital manufacturing suppliers.

The other item to note is how this might spur other market leaders and other complementary suppliers to look for acquisition partners. It should be noted that as all this happened this week, Schneider Electric also finished its acquisition of Aveva. The Emerson-NI deal may be the largest consolidation we may see for a while, but it won’t be the last.

2. I’ve Looked at Clouds From Both Sides Now

We have been writing relentlessly about cloud computing the past few years, and while it’s a perfectly sound strategy, it’s wildly inaccurate. We have almost come to believe that “the cloud” is an ethereal  place as opposed to a great big boxy data center that someone else is responsible for. As Machine Design notes this week, the move from plant-based data centers to what has becomes known as the cloud for data management is finally evolving as a good thing instead of a loss of control.

For decades companies have continued to invest (often grudgingly) in their data centers. What once was considered to be a competitive advantage for an organization has evolved into a relative disadvantage siphoning significant amounts of capital in an attempt to keep up with technology trends, changing business paradigms, security demands and compliance requirements,” said Bruce Bookbinder, product marketing manager at Aras. “With the cost of specialized technical resources surging and new system strategies introduced regularly, many IT departments feel the situation has simply become a losing battle. Eventually, companies question why they are spending so much time and effort in an area that is not even a core competency for their organization.”

It’s a fair question, and one that has been asked in other areas of the last, such as parts management and maintenance. Particularly at a time when manufacturing personnel continues issues persist, examining what your team’s essential roles are helps provide clarity when looking at skills you can find from third parties.

3. Finding And Nurturing Skills

On the topic of workforce development, one key we see is taking workers as we find them and building on their natural talents to meet the skills needed in modern manufacturing.

A good primer on this is the interview Machine Design’s new editor-in-chief Rehana Begg did as part of our continuing WISE Wednesday series. She spoke with GM’s Ankita Joshi and Suncor’s Hibba Syeda about how their unique qualifications and specific skills sets are folded into their company’s need to continue to grow their employees in engineering roles. It’s a first-hand look at how to combine formal education, interest and soft skills into a better employee for now and the future.

4. The Word is “Rightshoring”

I admit to having a blind spot for the word “reshoring,” which I think is, if taken to its full meaning, designed to bring all manufacturing back to the U.S. and then export all of those goods from here. That’s proven to be a terrible business model. Of course, so has offshoring, which depends on the search for low wages, but only works when transportation, logistics and supply chain costs support the low wages and thus keeps end costs to the consumer low.

The most recent supply chain tangle has renewed calls to reshore a lot of American manufacturing, which does have the advantage of bringing a given supply chain closer to home. But the real concept gaining a foothold is “nearshoring,” which Fleet Owner, an Endeavor Business Media partner, reported on this week as part of the recent Heavy Duty Aftermarket Week 2023 panel session in Grapevine, Texas.

Rob Phillips, president and CEO of Phillips Industries, explained that 20 years ago, China was an ideal place to operate because costs were so competitive. Today, however, due to container costs that drive up the cost of freight, as well as tariffs between the U.S. and China, nearshoring manufacturing capacity to Mexico has made the most sense for Phillips.

“If I look back in my 20-year career, the decision to move to Mexico was probably the best in my career,” Phillips explained during the HDAW panel session. “We’re very bullish on Mexico. I’m a huge fan of the workers’ level of experience from an engineering perspective. We don’t have labor issues; we have people that want to help.”

For me, the correct word is “rightshoring”—finding where local manufacturing, regional manufacturing and global manufacturing intersect to produce the most goods at the lowest cost with the highest quality in the safest working conditions. That location might be around the block or across the Pacific. It can’t all be one or the other.

5. The Best Custom Drive Systems

For those of you who missed our live webinar on Thurs., Jan. 26 that covered how to best select and source a customized drive system, the on-demand version will be available at machinedesign.com next week. Presented by Parvalux, the webinar covers:

  • How to leverage standard products in a highly customized drive solution.
  • How a customized drive solution may actually speed up your development time, reduce your selection risk and optimize product value.
  • Why it is important to involve other departments early in the design process, including product management, purchasing, manufacturing and finance.

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