Chindia - Crouching tiger hidden dragon

The latter part of the past century saw economic miracles emerge in Japan and South Korea. But their populations were not big enough to change the global game.

China and India together account for more than a third of the world's population. Never before have so many people risen so quickly, on such a broad scale, in so many industries at once. The sheer speed of change, made possible by 21st-century communications and technology, is transforming the global economy.

The closest parallel is the saga of 19th-century America - a continental economy with a young, driven workforce that grabbed the lead in the high technologies of the era (like steam engines, the telegraph, and electric lights.) Now this type of world-changing scenario is emerging from both China and India. But the timeframe is vastly shorter. Even America's rise falls short in comparison.

For the past two decades, China has been growing at 9.5% a year, and India by 6%. Given their young populations, high savings rates, and the sheer amount of catching up they have to do, most economists think they will continue to grow at 7-8% per year for decades. There are, of course, major social problems (poverty, pollution) but those will only slow the growth engines. The growth seems inexorable.

Within 20-30 years, India will overtake Germany as the world's third largest economy. By mid-century, China will jump ahead of the US as No. 1. Within a couple of decades, "Chindia" will account for half of global output. And the big-3: China, the US and India, will dwarf every other economy. They are the only industrialized nations with significant population growth; birth-rates in Europe and Japan are declining.

It is interesting that India and China complement each other's strengths. China will stay dominant in mass manufacturing; it is one of very few countries building multi-billion-dollar electronics and heavy industrial plants. India is a rising power in software, design, services, and precision industry.

If the two nations truly collaborate, they would take over the world tech industry. In a practical sense, the yin and yang of these immense workforces are already converging. Many multinationals are already having their tech products built in China with software and circuitry designed in India.

Both India and China are already developing a startling array of technology, some of which is truly revolutionary. India is already building a $2,000 car, cell phone service costs 2c a minute, most airline flights cost less than $ 50, major surgery costs a fraction of the same in Europe and the US.

As interactive design technology makes it easier to collaborate, the distance between India's low-cost design facilities and China's low-cost factories will shrink. The global impact will be nothing less than explosive.

Politically, the "crouching tiger and hidden dragon" will be counterweights to America's power, at the expense of Japan and Europe.

ISA at the crossroads

There are strategic reasons for the decline. In the US and Europe, industrial controls growth is anemic and the activities of all related technical societies show the same downward trends. In growth areas such as China, India, Singapore, Brazil and Mexico, technical society-related activities are growing.

But ISA and other similar organizations are slow to seize these growth opportunities. They scramble, trying to recapture past glories in a home-market that is simply not interested. The apparent lack of personal benefits to individuals has caused membership to decline from about 50,000 or 60,000, to about half that level now.

In the meantime, ISA has accumulated a surplus of some $30 million which simply stays in the bank, gaining interest. On top of this dormant cash, ISA also owns its HQ in RTP, North Carolina which has appreciated and represents another tidy nest-egg. But no one has the guts or gumption to utilize this significant capital as a war-chest. The volunteer governance makes almost any decision of consequence the subject of "analysis paralysis" and "instant indecision".

How can ISA right itself? The old 'cash cow' needs new drive. Here's my proposed 6-point plan:

1. Radical change of governance - encourage volunteer involvement, but limit that to advisory suggestions.
2. Change the executive committee to just five members, including at least 3 outside directors. The outsiders should be experienced, high-level industry executives from end-user, supplier and government ranks. Dick Morley has achieved wonders at NCMS and is willing to serve. Make him ISA Chairman of the Board.
3. Appoint an executive director with "real" executive powers - the equivalent of a CEO, empowered to make changes.
4. Utilize some of the war-chest to make significant acquisitions, to expand the scope and involvement of ISA to other complementary arenas. Suggestions: ARC, MCAA, CSIA, WINA, WBF, MESA - each would complement the ISA mission and add value.
5. Acquire ownership in several international subsidiaries in global growth areas: India, China, Singapore, Mexico, Brazil.
6. Stop investing in the same, tired old "local" exhibitions which are primarily loss-making propositions. Support foreign exhibitions and conferences where there is enthusiastic attendance and burgeoning growth.

Invensys postscripts

• After 4 years presiding over the fall of Invensys, Rick Haythornthwaite has found a new job - a government job, at that. He's just been appointed to head the Better Regulation Commission, a government appointed 'red-tape watch-dog' expected to reduce regulatory obstacles to British industry. We haven't found out what he's being paid yet; I haven't bothered to find out. Perhaps Rick needs to be employed, and this is a holdover till some company that's asleep hires him to perform another turnaround.

• The former Invensys CEO, Allen Yurko, was responsible for the fall of Invensys to about 10% of its former value. Well, after he was booted out, Yurko joined a venture capital group called Compass Partners and quickly arranged the buyout of a part of Eurotherm, Eurotherm Drives, for a sale price. The name was changed to SSD, which didn't really grow too well, apart from a couple of acquisitions to complement its declining DC drives business.

  As expected, Yurko was looking for a quick exit for Compass. Now, just a couple of years later, he has engineered the acquisition of SSD (2005 revenues of $165M) by Parker Hannifin, for an "undisclosed amount". No one knows what kind of bonus Yurko made on this deal (I expect it's a percentage of Compass' sell-versus-buy price). I don't know of any other Yurko achievements at Compass; but perhaps he expects the SSD sale to vindicate his VC credentials.

  Meantime, the xenophobic Lord Marshall of Knightsbridge, Yurko's crony from BTR, who helped precipitate the Invensys decline, has gone into retirement; we haven't heard any noises from his direction. Have you?

• Eurotherm (which acquired my company, Action Instruments, now reduced to a shell) is suffering from antiquated management under former salesman Peter Tompkins. I used to call him Repeter Reporter Tompkins when we both worked for Peter Wade (who I respected). Pardon me if I'm negative here - I have good reasons.

  According to an employee on the Invensys weblog:

  "Tompkins (to be quite blunt) is taking Eurotherm to the grave. Invensys doesn't know it, being too busy with more critical problems. They are quite happy collecting the cash that Eurotherm generates (a tribute to its founders and original management, prior to the Invensys acquisition."

Stay tuned for Ulf's progress report - the next Invensys quarterly financial updates....

Google's 3D maps

Practically speaking, Google Earth allows users to get directions and find businesses and share the information with friends. But the ability to zoom in from space to street level and take virtual flyovers inevitably generates gee-whizzes.

• Fly from space to your neighborhood. Type in an address and zoom in.
• Search for schools, restaurants, and hotels. Get driving directions.
• Tilt and rotate the view to see 3D terrain and buildings.
• Save and share searches and favorites; add your own annotations.

Pinto's Points - How to win in the automation business

The book is just coming in from the printer this week and will soon be available on Amazon.com and other online bookstores. You can order your autographed copy NOW (link below).

Hey, after my recent announcement, I sold about 60 copies in the first week. Those of you who already ordered will have received an acknowledgement, and your books should be going out this week, Priority Mail. (Foreign orders, Global Priority Mail - subsidized).

I'm experimenting with eSales; if you haven't already bought an autographed copy, please click on the link below.

Hey, it's likely that you won't read this entire book at once - it's not a thriller. But it does have lots of points that take up a page, or less. After you've had your initial read, rather than letting it gather dust on your bookshelf, you might consider leaving it close at hand as a bathroom reader...

eFeedback

"These types of changes in the world have been occurring since the days of Adam & Eve. This is the law of nature. If this law did not apply, then the Romans would still be ruling the world. The Persians would still be in control of whole of Asia. Similarly, Ghengis Khan and the Ottoman empire.

"A few centuries ago might was physical might. Now-a-days might is mental might. What I am saying is this. No matter how hard we try to keep our fellow American prosperous, the law of nature will prevail. We certainly can delay the cycle little longer by paying attention to it. But it will happen sooner or later.

"I hope we keep on enjoying the high standard of living that we have now for ever; but how long? The laws of nature have to do with human instinct. We are born with it. This instinct is responsible for the cycles mentioned above. When people get prosperous, they get lazy (instinct). In the mean time, the competition (poor people) are eager to become prosperous and they acquire all the skills needed to compete with you (instinct). Sooner or later they (the poor) succeed.

PS: My daughter graduated as a EE. Now she's looking for another career..."

"I too have observed the slow decline of exhibitions and conferences in Australia. My perspective is that of an end-user.

"About the same time as your original article on the decline of exhibitions, I attended a local IICA (Institute of Instrumentation, Control and Automation Australia) conference. Attendance was well below expectations - I'll share the feedback I provided to the organizing committee:

• The conference was well organized, the venue selection good, and the papers presented good with a decent cross-section of topics to keep delegates interested and focused
• The stalls by vendors were not that exciting; seen most of it before. It's always difficult to identify something specific that's new and of likely benefit. If a specific need is already in my mind, I'm likely to have pursued it already.
• The attendance was poor - I'd expect the IICA made a significant loss on running the event. Disappointing, but there's a bunch of reasons for this (all listed in the Pinto articled).

"Do I have the answers? Not really; just trying to find the reasons first, before identifying possible solutions. Do I personally believe that all the reasons and excuses make a valid argument for not attending conferences? Apart from vendor users-groups, I don't think that there's a real substitute for the face-to-face opportunities that conferences present.

"Is there still room for conferences? I would say yes. But we need to recognize that their place in the world has changed, and they will need to adapt to ensure their place in our technical society remains relevant."

"So much of the commentary from the scientific community regarding cloning sounds like the commentary we've heard regarding the Manhattan Project. Many of the scientists working on the bomb were just excited about their science and did not consider, or want to consider, the moral consequences of their activity.

"Remember all the articles about the peaceful uses of nuclear weapons? And the predictions that electricity would be so cheap it would be distributed free? When it came right down to it, power and money ruled."