Challenges, Opportunities at Schneider

Automation World:How is the work going at Schneider to blend an electrical distribution company such as Square D with the automation companies that Schneider acquired in Telemecanique and Modicon?

NicGihl:We have faced many challenges trying to graft automation with the electrical distribution side of the business. That’s what I’m trying to do right now. I don’t think we’ll succeed if we simply mimic the Rockwell model. We’re looking for a fresh approach to the market.

AW:What are your short-term opportunities?

Gihl:There are huge infrastructure investments being made in the United States in the coming years. Things like water and wastewater facilities. So this is a good opportunity for automation. The majority of U.S. manufacturing is “brownfield,” and it is hard to get people to change their minds on the brands of automation they use. But we have $1 billion in automation installed base, so we need to make sure we meet their needs for upgrade and new technologies.

The second market for us to target is original equipment manufacturers (OEMs). They change products more quickly than end-users. With our new directions, we should do well with them. We have refined our offerings with a broad portfolio and application help through our partners.

AW:Where are the OEM opportunities?

Gihl:Schneider Electric, through the Square D brand, is heavily into the infrastructure industries with construction distribution products. So we will leverage OEMs in that industry for automation. Other OEMs we’re looking at are what you might call commercial. You might not realize it, but there is a large amount of automation in some of the appliances you have sitting on your kitchen counter. Other potential users include designers of car washes. We just opened our automation distribution channel to all Square D distributors (see Automation World, August, p. 17). Maybe up to 500 of these additional distributors will stock automation products, which will help with those sales.

While PLCs (programmable logic controllers) once were 70 percent or so of the cost of automation, it’s much smaller now. Drives, intelligent motor starters and PLCs are smaller and cheaper. So, one of the other things we’re doing is to try to sell all things in our basket.

AW:Where is the automation industry going?

Gihl:I’m into Web sites that communicate the sales process well and are good at extracting information from there. What is needed is connectivity with your customers—the whole mass customization idea.

It’s more than just communicating order status. This looks obvious on the consumer side, but less obvious on the industrial, business-to-business side. Manufacturers should let purchasing look into the production process and see where and when orders need to be placed. We need to get rid of tasks like endless phone calls to check order status. Seventy percent of calls to Xycom (a Schneider subsidiary) are still about price and availability. That’s got to be automated and get people to just check the Web.

If we’re going to excite this business again, it’s got to be around something new, and it’s going to have to be around communications. And not just internal communications, but companies have to share information with their world.

Some are starting with the inventory piece—shortening the supply chain. But customers and suppliers need to see the whole process inside manufacturing. That is, the part is in this machine, then that machine and so on through shipping. Many of these applications will lead to new products on security and privacy.