The Hindu Business Line : `The US is not losing its competitiveness'

On terrorism and new approach to manufacturing: "The FDA wants to know, ``what's in them?'', ``who made them (right down to the worker who was on the line at that point of time)?'' and ``where did they come from?"

Mr John D. Cohn, Sr Vice-President, Strategic Development & Communications, Rockwell Automation

Rockwell Automation, Inc. is a leading global provider of industrial automation power, control and information solutions. Headquartered in Milwaukee, Wisconsin, US, the company employs about 20,000 people serving customers in more than 80 countries.

Talking to Business Line recently in St. Louis, Mississippi, US, Mr John Cohn, Senior Vice-President, Strategic Development and Communications, Rockwell Automation, said technology and innovation in manufacturing processes are the competitive advantages that the US enjoys and they are not going to go away in a hurry.

Excerpts from the interview:

There is a feeling that the West, in general, and the US, in particular, are losing their competitive edge in manufacturing. Do you agree?

No. I think with the of innovation that is going on in the US in manufacturing — the kinds of things that Rockwell Automation makes in automation, control — and in the information world, I think it is possible for us (the US) to export these. I do not believe that the US is losing its competitiveness.

A lot of money is being spent in development and research and it is significant. As regards innovation, creativity processes will provide the manufacturing edge to this country for a long time.

But don't you think that in some select sectors such as automobiles, basic industries in the US have lost a bit of their edge...

I see it in areas such as textiles which are labour-intensive. To compete with economies enjoying low hourly wages, several people are moving work offshore.

As for automobiles, from a market share perspective, it is true that the Japanese and Koreans are increasingly posing a threat.

The US car manufacturers have a lot of legacy issues that are beyond their control. Let us wait and see what happens with the next design cycle, the improvements that are being made.

But the US is still producing 17 million cars. Large non-US manufacturers will continue to set up shop here (in the US) and build cars and we will have to see how the US companies respond to the new products.

So, you think the jury is still on this issue?

Yes. As far as the auto sector is concerned, we have been in this situation before. But the reality is they have a serious challenge ahead.

But, as far as the US manufacturing as a whole is concerned, where is its competitive edge being sustained and improved upon?

I think a lot of consolidation is going on in life-sciences and the food industry. The paper and steel industries are also doing quite well. All companies are globalising their business models and moving closer to the customers.

What exactly is the source of competitive advantage that US manufacturers have?

Technology is a big one. And, then, there is innovation in manufacturing processes.

On the question of investment in new plant and machinery, how do you think the US economy is placed at the moment?

In the past recoveries (economic), there have been a lot of investment in plant and equipment. This recovery (current) has been different. Manufacturers are holding back on capacities. They do not want to expand too quickly because of what happened last time. They are continuing to reinvest in existing facilities to continue to drive more and more utilisation. The big `binge and purge' (capacities) are no longer with us. This is a kind of slow, gradual, upward, sequential growth.

In your assessment, what kind of investments are being made across different sectors in the US economy?

I think people are investing in the `logics architecture' (manufacturing) and `information' space.

Could you explain this concept in some detail?

The plant floor, which is the control side with logics architecture, allows us to offer customers multiple control discipline so that they can buy discrete, motion, safety, all in one platform. Then, we can link up plant floor data with the enterprise business system at the top of the company so that our customers can make real-time business decisions based on the data available. And this is a big, big business opportunity; it is really the next wave of productivity.

Can you explain this by citing an example from a specific industry?

I think in the life-science industry, there is the issue of tracking and tracing of products as part of regulatory compliance. Anything in the manufacturing process — from the raw material to the exact composition of the mix of inputs, the labelling/coding of output — can go wrong and the system should allow one to trace the problem to its inception.

Imagine a production line in a pharmaceutical company, even after all the pills are manufactured and reach store shelves, there is an issue. The Food and Drug Administration (FDA) would want to know, ``what's in them?," ``who made them (right down to the worker who was on the line at that point of time)?'' and ``where did they come from?''

The absence of such information can be expensive from a regulatory compliance point of view.

If the factory automation system that allows one to do this in a seamless manner is scaled up easily or linked to the enterprise business systems at the top, there will be productivity .

So, is this some kind of a magnetic bar code system that you employ as part of the architecture of manufacturing control?

It is not just bar code per se. It is kind of what we (Rockwell) do; it is a new technology.

Wasn't such information always available on the shop floor?

No. It was very costly. But, as I said, our system allows it to be done seamlessly and in a much more cost-effective manner.

In some respects, regulatory mandates are driving the `control architecture'...

That is right. Basically, companies feel the need to be better-oriented towards customer concerns and this is responsible for some of the innovations in control systems of manufacturing that we are seeing today. But regulatory mandates in such industries as pharmaceuticals and food processing, triggered, no doubt, by issues of bio-terrorism, have accelerated and made these control requirements more stringent.

So, the current climate of concerns over terrorism is providing a business opportunity for companies such as yours which are into automation systems for manufacturing control?

I would say in another way: Government mandates usually mean good business.

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