http://www.controleng.com/ en http://www.controleng.com/typo3conf/ext/tt_news/ext_icon.gif http://www.controleng.com/ 18 16 TYPO3 - get.content.right http://blogs.law.harvard.edu/tech/rss Tue, 18 Jun 2013 08:05:00 -0400 http://www.controleng.com/industry-news/single-article/will-your-automation-business-survive-thrive/6498f4a7a421ae74c82b4d6d95a860e9.html Accounting for engineers: Beyond engineering, system integrators and other automation and controls... The consultant, from Adelaide, SA, Australia, explained to system integrators that company leaders need a balanced understanding and application of 1) strategy and vision, 2) leadership and motivation, 3) finance, and 4) operations. Many leaders, especially those in mid-market companies (MMCs) with engineering backgrounds, have the most expertise in operations, then in strategy and vision, followed by leadership and motivation, with often little knowledge of finance. Employees or third-party accountants hired to fill in the gaps usually don’t explain what they often assume others know. Tragically, profitable companies can go belly-up before leaders realize they’ve missed key indicators, such as cash flow, that are not entirely obvious in traditional accounting methods. “We want to shape future by acting now in real time. How you choose to deal with challenges will define you as a leader,” Setchell explained. Frustration, he said, often stands in the way of success. “Find the silver lining in every cloud and run with it.” Balance, before bankruptcy He discovered during time as a turn-around consultant that ultimately, only two things are relevant: Cash flow and people. Looking at related metrics before a company gets to the brink of bankruptcy can help companies run more effectively. Balancing time spent in four areas provides a good start. 1. Strategize daily. Most leaders have 20 undone things from yesterday and 80 more from today. Strategy and vision can get pushed aside. 2. Motivate those around you. 3. Understand operations (be good at what you do). Companies rarely underperform because you don’t have good operational skills. 4. Understand finance. Illustrating the importance of organizational balance, Setchell asked, “Which of the following columns provide the best support for a structure?” ----   ------- ----   ------ ----     -- ----      - Obviously, the column on the left is ideal...and, unfortunately, rare. Improve in four ways Setchell provided some questions in four areas to consider improving balance. Foundation: Why do you exist? (Don’t just answer, “To make money.”) Is your business foundation able to support your future vision for next two years of massive opportunities, during the fastest rate of change yet? If the foundation is not strong, a company will collapse. A painful; example of this was Enron that fooled many smart people for long time. If nothing else, celebrate weekly that you’re still here. “If all you do is grumble, then employees will suffer and productivity falls.” Operations efficiency: Can your operations engine produce timely, high-quality output? Companies not well positioned for a downturn wind up cutting employees and then, even if they survive, can become part of a second wave of bankruptcies as they try to grow too quickly with limited resources and funding.  Like people, a company will choke more quickly than it will starve. Growth at 10%-14% is better than 50% with the wrong pricing strategy. Market leaders (like a salami company) can go out of business in five days after having a “small” problem with botulism. Market: Who are your customers? Are your sales and marketing strategies complementary? Sales is tactical, to identify and close deals. Marketing is strategic, to create a desire to do business with you. Why is marketing an afterthought for most businesses? Part of putting strategy before tactics is that companies should have a clear pricing strategy related to their dominant competitive advantages (DCA), meaning, “Why you should buy from us, and not others.” Most MMCs don’t have one, and those that think they do often answer, “Good customer service.” A DCA is something you can say that your competitor cannot. People: Do you have a validated a way to evaluate people to ensure effective communication and performance? Few leaders have psychology degrees, though there are many tools available to help with this greatest asset. Scary, but too-often true, is the saying, “Whippings will continue until moral improves.” Tolerating the wrong people within an organization can suck energy out and suffocate innovation. 3W: What, by whom, when Some core management principles to implement are: Action responsibility using 3W accountability, which is defining what will be done, by whom, and when. Let who define when, but then hold the person or team accountable for that. To provide instant accountability, every meeting should start with 3Ws from the prior meeting. “Sorry, Nick, I was too busy to get that done.” That is not acceptable answer. The rest of us were not sitting around scratching our butts. If you cannot finish, you need to ask for an extension. Within 2 weeks, this teaches people to make deadlines. You’ll learn who is legitimately overwhelmed and who is taking you for a ride. Entrepreneurial measurement of fiscal focus: Do you really understand accounting? Do you really want to? Setchell has short list of key fiscal indicators to keep from going belly-up without noticing. (He started his career in a Big 8 accounting firm.) Decision validation: Validate your gut feel with a mechanism that enables you to ask two key questions for each major decision - “Should we do this ? Can we do this.”  While “gut feel” decisions may go serve well for a time, they can sink the company. Strategic investments: Use J curve management for key projects, to avoid dropping dollars through the cracks or spreading your organization and people too thin. Risk management: Use real-time planning. For chief executive officers, creating value and mitigating risk are the only two responsibilities, Setchell said. Most CEOs are inclined to one or other. Balance is challenging. A leader of a software company had to fire an “Einstein-brilliant, hard worker” who was in late daily (though worked more hours than everyone else) and regularly did things his “better” way, rather than following individual, team, or company best practices, regularly upsetting everyone else. After his departure, productivity went through the roof. A sensitivity analysis can help identify how can to allocate scarce resources. Companies fly blindly when they don’t know how changes will affect the business. Price is the most powerful driver of change and is a double-edged sword. Discounting is the fastest way to destroy a business. One of the least powerful ways to change is to reduce indirect costs. When a crisis hits, most companies cut indirect costs. How you make investments will make be a massive determinant of how much value you can create during the next 2 years of huge opportunities. If you change 1% in key areas, what happens? Rank them and put most the most sensitive on top and least on bottom. In one specific example, a 1% price increase can increase profitability almost 4%. Increasing work (volume) by 1% creates a 1% gain. This shows that for system integrators (and many businesses), price is at least four times more important than volume. Dropping prices and increasing volume won’t work. Businesses often fear increasing prices for fear of lost sales. Do not set your strategic direction by the rants of the weakest salesperson. Frequently challenge the critical question: What is and how suitable is our pricing strategy? Match your pricing philosophy with your product delivery strategy. For example, a little blue box from Tiffany is very expensive, so Tiffany sells less than Walmart. Walmart can drop prices until it picks up every sale in the world, but do NOT sell Tiffany products at Walmart prices. You will fail. This is the most common reason for failure. Set your pricing strategy by the strength of your DCA, by the strength of your brand. An exercise showed how, at one company, 10% higher prices allow greater investments in supporting DCA and margin, while lower prices erode margin, increase volume, require much more work proportionally for a smaller margin, and strain resources to pick up what could be “pain in the ass” customers, according to Setchell. Impact of price discounting: If you give away half your margin on each sale, then you may have to work twice as hard to get back to your previous levels. Mathematically price increases normally benefit a business; price decreases harm it – this is  the opposite of conventional wisdom. Manage J curve investments: Companies invest money now in something not immediately profitable to gain benefits later. The J-shape of the curve happens as the activity 1)  is cash flow negative for a time, then 2) is cash flow positive in the short term, but still negative from start of the project, and then, if successful 3) is cash flow positive over the life of the project.. The idea is to minimize the depth and breadth of the valley, move to phase 3 as quickly as possible, and not undertake too many J curves at once, which can kill a company. J curves  include a new product launch, equipment purchase, acquiring a competitor, expansion, location change, or a new hire. Are you prioritizing and managing cash flow related to J curve investments? Few businesses have a defined way of tracking J curves. Caution: Do not become emotionally attached to any project, riding it to the bottom. Watch for flat-liners and pet projects that are ski slopes to the bottom. There must be a predetermined point for any project past which you will not put in any more money. For example, there are three phases of recruitment: faith, hope, and charity. Faith that they’ll work out, hope that they’ll work out, and charity, past which point, the person is not only costing you the price of salary and any benefit, but also dragging down others. Next page has more accounting advice for non-accountants: See more on value and timing of projects and a cash-flow testimony. Value, timing Do NOT take on too many J curves at once, because a company can stall with too many, no matter how brilliant the next idea is. Will the next J curve add value, AND is it the timing right? Questioning the logic of a J curve today with today’s logic doesn’t mean you are questioning the original decision. For example, closing a gold mine at $400 an ounce might have made perfect sense, but the decision can require reconsidering after gold prices exceeded $1000 per ounce. At the time Rolls-Royce went bankrupt in 1972, Setchell said, it was developing 35 jet engines, spending 40% of its resources working on projects that were not returning profit. Albert Einstein is attributed with saying, “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” Numbers are the language of business. Leaders need to equip themselves with numbers that provide key metrics. A balance sheet is difficult to understand and doesn’t provide an easy snapshot of a business’s health. For each $1 of investment how many dollars of revenue can be generated and for  each $1 of revenue, how much profit is there? With the given risk of an activity, is the return sufficient? Is enough cash flow generated to continue being an entrepreneur? These are important numbers that accountants don’t provide. Better accounting Traditional generally accepted accounting principles (GAAP), using traditional income statements and balance sheets can hide what’s really going on in a company. Setchell said company leaders need to focus on  return and cash flow by looking at:

• Percentage return on operations (ROO, a measure Setchell made up, is a simpler measure than return on capital employed, used by many large public companies.)
• Percentage of operational cash
• Revenue leverage rating
• Revenue profitability rating.

Those have eight “fiscal focus levers,” according to Setchell, that practical actions can target. Four have to do with the ability to create revenue or input leverage: revenue collection, inventory management, supply chain management (the accounts payable relationship to suppliers), and fixed asset utilization. Four have to do with reasons for creating revenue or output leverage: price strategy, direct cost control, indirect cost control, and volume strategy. Avoid self-delusion. Numbers must include the actual costs of company leaders or founders, even if they’re not taking full salary and benefits. Cash flow is the lifeblood of a business. If profit is like food to a business, then cash flow is oxygen. You can live for a little while without food, but not very long without oxygen. Anyone ever place call to customers on Thursday to make payroll on Friday? That’s too close for comfort and why cash flow is important. Each action relating to the eight levers impacts cash flow. The cash-flow calculation is money in and money out, like rainwater in a tank. If you can buy supply chain items on credit, that creates good flow. Selling on credit, creates more pressure on flow. Operational cash flow statement is best tracked over a 12-month period. Total money in is revenue. Operational cash flow, if negative, can be an early warning liquidity problem, showing that a company could be profitable but going broke. Looking at only revenue and profit means that the company could go broke without anyone noticing. “This reporting format creates through-the-roof performance,” Setchell said. Think of ROO percentage of an interest rate of return for dollars invested in a business, perhaps the “most powerful single number to measure business success,” Setchell said. Looking at business with these tools provides a roadmap to strengths and weaknesses and a decision validation tool, with numbers entrepreneurs can understand. Seeing input versus output shows how input is the investment and real operating profit (ROO) is the output after calculating for expensing with owner salaries and the like. Revenue/investment x real profit/revenue = ROO. “Using this formula makes any business more valuable. I’ve done this more than a thousand times. It works.” Decision validation helps people understand what to validate and what to ignore. Are we able to fund this decision without jeopardizing our future? Should we and can we? You need a “yes” on both before saying “yes” to a decision. An example looks at what a business can do with money rather than what money costs the business. Don’t get talked into a logical decision if it’s wrong, Setchell said. It may be advantageous to offer to pay your supply chain instantly if they will discount by 2.2%-5%. Do the math within your supply chain in both directions, he recommends. Cash flow testimony Adrian Fahey, CEO, Sage Automation, who has worked with Setchell to improve business decisions in his 300-person company, noted that cash is king. With most engineering businesses, Fahey said, 90-120 days for receivables is usual; moving that to the high 50s or low 60s performs very positive results. Knowing the cost of decisions helps to more effectively position a company for downturns and accelerate more quickly during economic expansion. “When the rest of market headed for the hills, we pumped money into our business, contrary to conventional wisdom. Now we’re enjoying stronger returns than competitors,” Fahey said. Balanced accountability Parting advice from Setchell: For CEOs to succeed in today’s market, they must:

• Develop a balance of experience and desire to learn and broaden skills.
• Have healthy thirst to learn new stuff. Understand quadrants of business drivers to target personal development in company leaders.
• Define and harness the foundation of the business
• Challenge and influence market (across the organization)
• Understand and challenge management of people
• Make and follow procedures for operations
• Implement core management principles to maximize value
• Hold teams accountable with 3W action management
• Understand measurements focused on creating value
• Make more effective decisions (should we/can we)
• Hold strategic investments accountable by managing the J curves
• Learn from the past to influence the future.

About the conference, CSIA More than 500 attended the 2013 CSIA Executive Conference, CSIA said, exceeding the 2012 record of 470. Founded in 1994, the Control System Integrators Association (CSIA) is a not-for-profit, global professional association that seeks to advance the industry of control system integration. Control system integrators use engineering, technical, and business skills to help manufacturers and others automate industrial equipment and systems. CSIA members provide services for dozens of industries. Headquartered in Madison, Wis., CSIA helps members improve their business skills, provides a forum to share industry expertise, and promotes the benefits of hiring a certified control system integrator. CSIA has more than 400 member firms in 27 countries. - Mark T. Hoske, content manager, CFE Media, Control Engineering, Plant Engineering, and Consulting-Specifying Engineer, with information from CSIA, mhoske@cfemedia.com. ONLINE www.RealTimeCEO.com  www.controlsys.org  See other control and automation events.]]> System Integration Tutorials Slider Homepage Item - CTL July SyndicationType: Article SyndicationSource: CFE Media (in-house) Syndication: System Integration System Integrators Syndication: Manufacturing Methods (Quality Six Sigma Kaizen Kanban Lean Manufacturing Project Management) Videos Cyber Security Thu, 06 Jun 2013 10:10:00 -0400 http://www.controleng.com/industry-news/single-article/cyber-security-tools-and-methods-for-network-penetration-testing/45a930f0027aa9e1dd7f49c5f620e1e9.html Measure risks and vulnerabilities in your industrial networks using tools developed for electric... Matt Luallen recorded at the SANS SCADA Summit last February, Justin Searle discusses new tools for network penetration testing that he and his company, UtiliSec, developed for electric utility users. While this kind of testing is common in conventional IT environments, he discusses the specific needs of industrial networks and how methodologies need to be changed. These tools will soon be available under the name Samurai STFU as free, open-source software, and UtiliSec is looking for information from users on how they have put them to work with potential areas for improvement and additional development. Ultimately Searle hopes to develop a community of users exchanging information and best practices. The video also discusses differences between the specific needs of conventional IT compared to industrial users, and why there are often more similarities than one might expect. UtiliSec  www.utilisec.com SANS Institute  www.sans.org Cybati  https://cybati.org Peter Welander, pwelander@cfemedia.com]]> Process Control System Integration Plant Safety and Security Cyber Security SyndicationType: Video SyndicationSource: CFE Media (in-house) ArchivedSyndication: Safety Security (Intrinsic Process Machine Plant Arc Flash OSHA Personal Protective Equipment) Syndication: Process Manufacturing Slider Homepage Item - CTL Wed, 24 Apr 2013 12:13:00 -0400 http://www.controleng.com/industry-news/single-article/hannover-messe-2013-kuka-introduces-lightweight-robot-gives-rides/2aeb4f978eff8f53ef6671eefeab4de3.html Kuka Robotics LBR iiwa, a lightweight robot that is “sensitive and yielding,” makes its debut at... "We will be presenting everything our group offers at Hanover Fair: from components to research and development, up to and including complete plant systems. Of course, we are especially proud of the LBR iiwa, the entirely new generation of robots we will unveil at the show," said Dr. Till Reuter, CEO of Kuka AG, in a pre-show statement. LBR IIWA: Intelligent, industrial work assistant The LBR iiwa fulfill’s Kuka's promise to the market to present a lightweight industrial duty robot. Kuka engineers have developed a machine with completely new automation possibilities. Offering “mechanical and drive systems designed for industrial use, the sensitive and yielding LBR iiwa rings in a new era in robotics,” the company said. Kuka presents four applications for the LBR iiwa at Hanover Fair – all demonstrate the sensitive robot's key features. 19 dancing robots Kuka offers a show of 19 dancing robots in an application that is about 6 m high. Kuka's entire robot family is featured, from the smallest robot, the KR Agilus, to the largest model, the KR 1000 titan. The KR Quantec series, the welding specialists KR 5 arc HW and KR 16 arc HW, and the LBR iiwa are featured in the robot lineup. Lightweight construction, durability, efficiency Various applications at the Kuka Competence Center demonstrates company expertise in the growing lightweight construction sector. Visitors can watch live demonstrations of processes, such as welding aluminum, joining metal alloys and an induction welding process for joining carbon-fiber composites. Results of a joint research project on energy-efficient car body assembly are also being discussed. The display shows how manufacturing systems and solutions can be automated in a sustainable and resource-conserving manner. At another part of the booth, Kuka presents the forming expertise of its machine tool segment. The trend in the forming technology area is also towards lightweight construction, such as processing CFRPs or fiber-reinforced composites. Successfully completed projects for assembling transmissions, engines and drive assemblies have repeatedly demonstrated Kuka's performance capabilities in assembly and testing systems. Presentations: energy efficiency, startups Visitors to Hanover Fair can receive tips from experts in various Kuka presentations. On Thursday, Kuka specialists plan lectures on: “Energy efficiency in car body assembly systems,” “Efficient joining technologies for aluminum parts,” and “Virtual startups for manufacturing systems.” Robocoaster The Kuka “Robocoaster” can seat two passengers at one time, offering brave riders “considerable gravitational forces, ranging from a sense of doubled body weight to a feeling of weightlessness,” the company said. Kuka Robot Group “Robocoasters” are certified by the TÜV Technical Inspectorate in Munich and comply with the relevant safety standards. In June 2004, Kuka called the Robocoaster “the first – and only – robot anywhere in the world that is licensed to carry human passengers.” - Edited by Mark T. Hoske, content manager, CFE Media, Control Engineering, and Plant Engineering, mhoske@cfemedia.com. Video by CFE Media’s Steve Rourke. ONLINE extras Kuka provides more info about its Hannover Fair booth. Also see the Control Engineering Machine Safety blog, with more safety advice about codes, standards, and best practices related to machine safety. See links at bottom to other collaborative robots that can operate with and next to humans as an assistant, including: “New robotic safety regulations are pending.” ]]> System Integration Machine Control Slider Homepage Item - CTL Videos Cyber Security InterConnection Automation: Pump Control InterConnecting Automation: Motors and Drives InterConnecting Automation: LEAN InterConnecting Automation: PLCs--Sensors and I/O InterConnecting Automation: Variable Frequency Drives Mon, 08 Apr 2013 14:20:00 -0400 http://www.controleng.com/industry-news/single-article/new-robotic-safety-regulations-are-pending/6256d870e34fcbb18a7cceed0297e839.html Robotics, subject to many safety regulations, are about to get a few more, addressing some... Standards, including safety standards for robotics, level the playing field in the marketplace when all players meet them. Safety standards lower risk to life and limb, limit liability, help meet market demands, and lower costs by unifying designs and manufacturing. And globally harmonized standards lower costs for machine builders and end users, according to the “Robot Safety Standard Update” from Roberta Nelson Shea, director, Safety and compliance, C&S Wholesale Grocers, and director, safety and compliance, Symbotic LLC. Nelson Shea, who has been involved in safety for more than 30 years, said safety standards can increase productivity by lowering risks related to machinery and work practices. She presented at the 2013 Robotics Industries Forum in February, organized by the Robotic Industries Association (RIA), and summarized some key points in a short video clip with CFE Media.  Video summary: adoption, plus introduction, bibliography In the video, Nelson Shea, chair of the RIA Robot Safety Standard Committee, explained that the committee recently submitted to ANSI an update to the Robot Safety Standard (ANSI RIA R15.06-2012). It is a direct adoption of ISO 10218-1 Robots and part-2 Integration, with an R15.06 introduction and bibliography. It helps robot manufacturers, other machine builders, system integrators, and end users, she said, as it brings the world closer to global harmonization of robot safety standards, which should drive down costs. It also includes requirements for optional safety capabilities embedded in robots and for “collaborative” robots, those intended to operate in automatic in the same area and at the same time as humans. Part 1 relates to robots only, and does not include end-effectors. Also, she said, when the standard talks about operators, it means all personnel, not just personnel associated with production. The new ANSI standard, when approved, will carry a 2012 date because this is when it was submitted to ANSI. To provide for a transition, the existing R15.06-1999 standard can be used until the end of 2014. Other robotic safety notes, standards, help A few other notes from her presentation: - ISO provides a standards framework.  ISO standards are voluntary unless adopted as regulation.  - ISO and EN (European) standards are meant for improving trade/ commerce by unifying border requirements.  - ISO 10218-1 applies to the robot manufacturer. - ISO 10218-2 applies to the suppliers, manufacturers, and integrators of the component or machine (robot system/ cell). If a user acts as supplier or an integrator, the user is required to comply with the standard.  - ISO 10218-2 requires performing a risk assessment. - ISO 10218-2 allows the minimum (safe) distance to be based on worst anticipated loads, speeds, and extension, not the worst possible. - ANSI is market-driven, as is the United States. ANSI provides no technical oversight, rather ANSI requires that standards be developed in accordance with its Essential Guidelines. The premise is that if an accredited organization manages the development process and that process is approved by ANSI, then the resulting standard is appropriate for that market, application, and purpose. ANSI accredits an organization to be a standards development organization (SDO). ANSI standards are not required to use or reference any other ANSI standards. - American Welding Society (AWS) has a standard for safety of weld robot systems. AWS does not intend to normatively reference the new 2012 RIA safety standard (ANSI RIA R15.06-2012). - ANSI standards and technical reports are voluntary unless OSHA adopts them, which OSHA rarely does. - OSHA standards are regulatory (required by law) and NOT comprehensive for machinery. There’s no OSHA robot standard, for instance. OSHA applies to users (at the company that uses a machine). There can be requirements that apply to employees. - Other ISO robot safety standards activity include Technical Specification (TS) 15066 in process, with information about collaborative robots and their use, including force and power limiting provisions. Rethink Robotics, Universal Robots, ABB, and Kuka have robots that are inherently safe by design. “This is accomplished by having reduced power and forces (also payload), such that any contact would result in no injury or only a slight injury.  When combined with sensing technology, the risk is further reduced to humans who might share the collaborative workspace,” said Nelson Shea. - Mark T. Hoske, content manager, CFE Media, Control Engineering and Plant Engineering, mhoske@cfemedia.com. ONLINE extras Robotic Industries Association to adopt ISO functional safety standard www.robotics.org – Robotic Industries Association www.CSWG.com  www.symbotic.com  Also see the Control Engineering Machine Safety blog, with more safety advice about codes, standards, and best practices related to machine safety. See related articles below.]]> Machine Control Plant Safety and Security Tutorials Videos Cyber Security InterConnection Automation: Pump Control InterConnecting Automation: Motors and Drives InterConnecting Automation: LEAN InterConnecting Automation: PLCs--Sensors and I/O InterConnecting Automation: Variable Frequency Drives Fri, 15 Mar 2013 13:38:00 -0400 http://www.controleng.com/industry-news/single-article/borrow-now-to-invest-expand-economist-says/79fa823d563336ed27788d2bbca4d91f.html To prepare for the next five years of growth technology, companies should borrow and invest to... Based on the next four to five years of anticipated U.S. economic growth, Alan Beaulieu, president and economist with ITR Economics, provided a list of recommendations for technology companies. Beaulieu was speaker at the 2013 Robotics Industry Forum last month and is slated to keynote the CSIA Executive Conference in May. Technology companies should model positive leadership within the organization; invest in customer market research and training programs; review and augment competitive advantages; spend money on new products, marketing, and advertisements; improve efficiencies with investments in technologies and software; check systems for readiness to accommodate increased activity; add sales staff and hire top people; lock in costs when practical; judiciously examine credit; and work on “what’s next.” Find out what your customers care about and spend money to satisfy those needs. This will cost some money to do it right, and now is the time to borrow, he noted, with low interest rates. Year 2019 will be like 2009, so be ready, Beaulieu suggested. Beaulieu started his presentation by explaining that ITR Economics has a 96.2% accuracy rating across all industries. Economists don’t often want to talk about accuracy, he observed. Other trends and advice that he delivered, with additional humor, follow. The U.S. economy will stay positive in 2013, and GDP industrial production will stay above last year’s levels for the year. Most Americans think this is a tepid recovery, and 40% of Americans still think we’re in recession. Why? Unemployment is still high. And perhaps some watch too many cartoons and do not read as much news as they should, he suggested. New industrial orders will increase 3% for 2013. The only soft spot in the next five years will be a slight consumer-led recession late in 2014. It won’t be a double dip. Rough in 2019 Generally, the U.S. economy will be up through 2018. “If you’re able, I suggest you retire in 2018,” he told the audience. “If you’re a business owner, you might consider selling in 2018...to someone you don’t like...in another state...for cash. Or give the business to your kids if you need to teach them that life isn’t always positive. If you’re not old enough to retire, get yourself into position to buy a competitor in 2019.” Don’t be overextended in 2018. Clearly we’re in recovery, leading indicators are pointing up, liquidity is not an issue, exports are up, we have a stimulative monetary policy, employment is rising and companies are right-sized, banks are lending, and retail sales and construction spending are improving. As individuals, in the past few years we’ve done what our government cannot do: reign-in spending, increase savings, and reduce debt. Borrow now to invest If you’re in a business with a good balance sheet, he said, you should be borrowing now to invest in the business. In 2013 borrow as much as you can; get record low rates to invest in your future. You can borrow today at 3% or in the future at 7%. How much should you borrow and invest? Borrow until you cannot sleep at night, he said. Real estate and rental properties are good to buy now to enhance your retirement portfolio. This will change in 2014 because of regulatory changes that progressively will get more severe. Interest rates won’t stay low. We are not Japan. History tells us this is the left-hand side of a curve, and for those not old enough to remember, there is a right-hand side. For next 20-25 years there will be increases in interest rates. Ask those who have lived through it. Everything is different when rates go toward the right-hand side of the curve. Energy independence is nearly here; we can be a net exporter of oil. We can attract foreign investment into the U.S. to create the roaring 2020s. Monterey Bay alone may have 1.4 times the oil reserves of Saudi Arabia. Manufacturing is coming back into the United States, which will be more globally competitive than in the past as shown by manufacturing as a percentage of GDP. Companies are making cars in the Carolinas to export to South America. Concerns: Budgetary mismanagement There are some concerns, Beaulieu said. China will expand because of stimulus money in 2013. China is interested in creating jobs and keeping its population happy. We will sell more goods there. China’s growth will slow in 2014. “Fiscal cliff” is a bad name given to help Congress understand the problem that it created. We then are supposed to pat Congress on back for partially solving that problem it created. Let’s be clear that in Congress, budget cuts currently mean a slower rate of deficit increase, not actual cuts to the deficit. Leaders in Canada have made actual cuts, and in 2016 they will be in the enviable position of being debt free, able to lower corporate tax rates to attract businesses. Deficit math apparently remains difficult for those in the U.S. government to comprehend as annual budget deficits continue to add to nearly $17 trillion federal debt. Please note that there is so much debt and so much government overspending that raising taxes on the top 1% would be a very small dent and would only placate those who believe rich people are evil. Total U.S. public debt is 120% of GDP. Stimulus cannot cut the deficit. We are past the point where the U.S. economy can grow enough to eliminate the debt. Be encouraging Find ways to inspire employees facing higher energy, food, health, tuition, and FICA expenses. (He recommended reading Jack Stack’s “The Great Game of Business: Unlocking the Power and Profitability of Open-Book Management.”) Without encouragement, employees can bring discomfort to work, leading to bad attitudes, decreased productivity, and lower levels of customer satisfaction. We have to find ways to pay employees more without increasing net costs. As for the fear of defense spending decreases, we’re already below last year’s levels, and we’re winding down two wars. Of course we can cut defense spending. Those in business need to advise government. Only the USPS cuts service instead of waste when faced with huge annual deficits. Avoid predispositions and political labels. There’s no political party more or less likely to increase or decrease the debt. It depends more on global events. Also note that U.S. “sequester” cuts, touted as severe, are miniscule compared to cuts going on in Europe. However, because of efforts there, most of Europe will have a balanced budget in 7 years. At our current rate of progress, 2060 is when we balance our budget. That means economic strength will fall to Europe, with a stronger Euro than dollar, in the long term. Unsustainable spending will lead to Depression An international comparison of healthcare spending from 1980-2008 shows that U.S. healthcare is extremely expensive. If we only use current methods to address the budget, health care, and social security, our goose is cooked. U.S. spending is unsustainable, and we’ll face a Depression in the 2030s as it all collapses on itself. At least we’ll have our smartphones to tell us where the food lines are. Because life expectancies have increased, the retirement age also must increase to help address the demographic (not ObamaCare) problem. Those of us over age 55 outnumber those under 18 for the first time. Means testing must be used to help pay for premiums. These were intended as social safety nets, not universal entitlements. As for ObamaCare, it will cost jobs and hours (5-10 hours week) for those who don’t work full-time and do not have access to healthcare. And raising minimum wages, studies show, also causes job losses among the people it is intended to help. Dodd-Frank is a horrible law: 848 pages without a single regulation. The ITR Leading Indicator shows the next 11 months are likely to be positive. Things to watch include energy and water, Canada and exports, higher education, healthcare practices, food, funeral services, alcohol, security, and legal services. How to change the future The audience asked many questions, including, “Is a way to avoid the Depression predicted for the 2030s?” Beaulieu suggested that if the U.S. hasn’t adopted an austerity mind-set by the end of this decade, we won’t be able to avoid Depression, given current trends. For those under 40 now, note that a Depression creates buying opportunities that will not quit. For those prepared, there are real-wealth creation opportunities. “What can change the future?” another asked. As tragic as they were, 9-11 and Hurricane Katrina didn’t change the U.S. economy much. Changes have to be applied consistently over many years to create real change. Only something really big can change long-term economic trends quickly, he said, like a comet hitting the planet or some kind of endemic that wipes out most of the elderly. Having children at a sustainable rate is very important to a nation’s long-term prosperity. We’re a little behind there, but an immigration policy revision could take care of that. Beaulieu said the future presents challenges and opportunities, and we cannot hand responsibility to government or culture. Capitalism, free markets, business, and innovation hold answers to every big problem. Providing the right education, jobs, and technologies will allow us to overcome challenges and make the difference for a free and prosperous future. It’s our turn. We have to do it. There is no option. www.ITReconomics.com  - Mark T. Hoske, content manager, CFE Media, Control Engineering, Plant Engineering, and Consulting-Specifying Engineer, mhoske@cfemedia.com. ONLINE More from Alan Beaulieu: If your 2011 was good, 2012 will be better]]> System Integration Machine Control Tutorials March SyndicationType: Article SyndicationSource: CFE Media (in-house) Syndication: Labor (HR Contracting Outsourcing Retention Knowledge Management) ArchivedSyndication: Machine and Motion Control (Pneumatic Hydraulic Electric) Robotics Syndication: System Integration System Integrators Syndication: Business Trends and Research Fri, 08 Mar 2013 16:12:00 -0500 http://www.controleng.com/media-library/videos/videos/in-an-interview-with-control-engineering-michael-assante-and-tim-conway-offer-security-suggestions-for-plant-operators.html In an interview with Control Engineering, Michael Assante and Tim Conway offer security suggestions... 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