The future of smart manufacturing: Think local, think small

Oct. 19, 2015
In this Big Picture Interview, José Rivera explores how collaborative team approaches help companies compete globally.

José Rivera took the helm of the Control System Integrators Association (CSIA) in March. The new CEO, previously a senior vice president at Schneider Electric in France, has big plans for CSIA in the next year, including the launch of integration best-practices training in Mexico. It’s a momentous time for American manufacturing, he says, and organizations’ success will depend on how quickly and adeptly they adopt the technology and lean strategies that can help them operate more efficiently and attract tech-savvy talent. For more, watch our video interview with Rivera at

PS: You're new this year to the role of CEO at CSIA. How have things been going, and what are you looking forward to with CSIA heading into 2016?

JR: 2015 will be recorded as a year of transition. Bob Lowe, who was my predecessor, had been there for quite a while, and I came in with a slightly different organization. Our association keeps on growing. We want to leverage our brand in a big way and make it more relevant. I think that our association is one of the few places where you have system integrators coming together, and that is of huge value for the automation vendors, who try to find partners for the delivery of solutions to their clients. But it's also for end users that want some sort of a seal of approval, if you will, and with our certification, that's what we provide for the quality of the system integration work to be done.

The other part that is important for us will be leveraging our brand and taking it abroad. Today we have 91 members outside the U.S., and we have been trying to expand abroad. We have been putting effort before my time into Latin America, and what I am doing is I refocusing it to be mostly Mexico. I have (traveled) there for a whole week, and we are trying to set up quarterly events, which is something that we don't do in the U.S. We're doing that together with partners; we're trying to create the environment that we have here, which is an environment of trust and collaboration. We don't have that there yet. We do have two members that are certified in Mexico and the numbers are continuing to grow, but we need to create this environment to get going and deliver more over there. If we can get that model going, we can replicate it in other parts (of the world). Because it's not that easy to just take the model that has been successful here and assume it's going to work exactly the same way when you take it abroad. Some elements will be different. And this thing of quarterly events, it's something that we're testing.

I think that the other area where we are putting a lot of effort is in training, and this is training for our members. So, best practices in, say, project management—this is one of the trainings that we have been asked to provide. But also for system integrators that are part of the network of the automation vendor partners, and they want to have best-practices training. We're putting one together right now for Mexico, for one of our big partners. This will be a three-day training with an instructor. This same partner, they are now talking about doing it in other parts of the world. And we want to leverage this for all of the system integrators in that country or region.

PS: How will that training be structured?

JR: Normally what we do is we pick some parts of the best practices. Our best practices are written as a series of questions—"Do you have the team?" "Do you have the processes?" These types of things. You cannot read it like a novel. You read it one question at a time and then you get going in terms of thinking about what it is you have as a company. The way our instructors have been doing it is they supplement the dryness of the manual with some simulated cases. They have some cases presented to them and then they have to get in teams and try to come up with answers, or they have a discussion about the current state of their particular company, and they share that with the group. This is where a lot of the learning happens.

PS: Why was Mexico chosen in particular as a focus? Was it proximity? Familiarity with the market?

JR: In the case of Latin America, (Mexico) was selected because of proximity, not only geographical but also cultural. We have a lot of American companies with a very strong presence down in the region. And within Latin America, (with respect to) questions about Mexico, Brazil and a couple of other places, Mexico seemed to be the better choice at least for now. We all know about the issues going on with the economy in Brazil, and that also would have been a bit harder for us because of the language, Portuguese vs. Spanish. I think it was not a very tough decision. Mexico is a big market; it's close.

I was at the MESA conference earlier this year, and there was a presentation by Cessna. They do not just bits and pieces; they are now going to be manufacturing an entire plane in Mexico. It's no longer that factories that are just set up (there) because of cheap labor; these plants are brand-new plants with all of the technology. It's a big departure from the past. These are world-class factories set up in Mexico and other parts of Latin America. Panduit has a big factory in Costa Rica, and that one is also state-of-the-art. Intel has a presence there, and places like Amazon have customer centers there.

PS: We hear about how evolving technologies and smart manufacturing are poised to transform the production landscape—resulting in reshoring, the construction of smaller-footprint plants in urban centers, etc. Do you see an accelerated rate of change for the industry, and if so, where and how do you expect to see that reflected?

JR: I think there are forces that will drive reshoring—like the technology of 3D printing. If that becomes more of a critical component of the economy, you will have a disruption in the way we are building things. You no longer have to rely on cheap offshore sites to manufacture things; you can do it locally, much closer to your customers. And then you can include so much more customization. That's why proximity makes much more of a difference. Some of these things exist already, but you will see them in much more strength.

If we go through the history of 3D printing, it has been around for like 25 years. But it's now that it is gaining all of this momentum and excitement in the market. I think that we are standing in front of having this having an impact in our economy faster than we were anticipating. But I also think there are other elements that will be driving manufacturing here in the U.S. There are some components that are driven by, for example, the importance of being local. Not just because of technology but because of freshness or customization. Other (factors) will be because of where the resources are. All of the manufacturing related to fracking has been a local industry. And it has been a local industry because the U.S. has taken the lead on this technology of shale, and the technology will now be exported. And I'm talking big equipment that we'll be leveraging.

PS: What do individual U.S. manufacturers need to do to maintain or enhance their competitiveness in the global marketplace?

JR: The U.S. has very often been the leader with technology and translating the technology into products that it then exports, and then later on the other countries catch up and you have the erosion of the competitive advantage. So as long as the U.S. keeps the lead on technology development, that will trickle down through the whole economy.

One thing must be said: Technology development does not always have to translate into manufacturing. A lot of the technology has been on the IT side of things. Even if you take a look at Apple, they have been experimenting with doing some manufacturing back in the U.S. So maybe they will end up with a hybrid model. What I will also say is that manufacturing for a lot of the young generation is not sexy and is not attractive, and that is an issue. If we don't think of manufacturing as being something important, we will not generate the intellectual capital that will lead to having a competitive advantage in the marketplace. That attitude needs to be changed.

And the manufacturing places have changed in a very big way. It's no longer the dirty steel mills. I think that some programs on TV, you see that they show factories, and I think it's very good. And you have a lot of STEM programs to promote science and technology, and other programs trying to get more women involved also in engineering fields, which is all very important. I think we need to present manufacturing from a different perspective again.

I want to say one thing about the modernization of maintenance and reliability: I think that if you go back to the days where you would buy a turbine from one vendor and you were forced to buy the reliability equipment, that is a case where technology was available, but it was available only for the very expensive pieces of equipment. Today, that technology has trickled down to much smaller devices and much more affordable deployment. What that has forced is to have a different attitude toward asset management by more people than just the reliability expert of that turbine generator. Here is where I think there needs to be additional education, which is thinking of all the possibilities of asset management for many more assets and have more of a plan.

From my experience working for suppliers of asset management technologies, a very big hindrance of deploying and really leveraging these technologies is, one, people, and two, which is reflective of the people, is the processes in place that are not written to take advantage of the technologies. These are the two things that need to be tackled.

Where our association comes in with the system integration part. If you bring in a system integration company early on in discussions about what you want to accomplish, they can help with selection of technology, and they can take a bigger picture in terms of what else needs to be done. So it's not just about putting this vibration equipment here for this machine; it's the rest that comes along, including the changing of processes, the retraining of the maintenance teams. There is where I think we can play a role—if we come and we are able to be part of the discussion early on, then when it comes to deploying the technology, then they will be able to follow what we provide, which is best practices, and make that a success.

PS: Who should be responsible for reaching out for help with system integration? Is the responsibility on the IT side or the maintenance side? We hear often that maintenance can do a better job of speaking up for itself.

JR: I totally agree with the fact that maintenance is often a quiet crowd and one that has not had all the visibility that it should have. I think that any way we can help this group get their voices heard is worthwhile.

I would add one more element, and it applies not just for investments in reliability and asset management but also for overall investments in automation: One very big problem that we face is that big capital is invested in projects, in automation projects, and you have business plans being written up with return on investment, and then it gets justified, and that's great. But then once the project is ongoing, there is very little information captured that lets you confirm or prove the savings that you are generating. That doesn't take place. So when the time comes for the next automation project, you don't have the hard data to back up the investment that you made for the previous project, so you end up being put into the cost category, not the investment category. So you're now begging for money as opposed to having a solid plan that increases the return to the bottom line of your company. And that is a huge problem. We should force ourselves to do a much better job capturing and reporting data its associated financial impact and have the discipline to be able to provide the hard data such that our investment in innovation and maintenance is viewed as an investment and not as a cost.

PS: That’s such a challenge because so often the hard numbers end up being categorized or received as avoided costs, and we've heard stories from the plant floor of people saying, "Our CFOs just do not want to hear about avoided costs because the cost never happened, so it's not part of our traditional ROI payback." This resonates with a lot of what we've heard, which is that plant managers still fight to gain traction when they can prove that they've just saved $1 million dollars with a $50,000 investment—that they avoided 20 breakdowns worth $50K each because of the initial investment. But the financial teams sometimes just don't want to hear about the avoided costs.

JR: Yes, and that is very sad that they don't want to hear it. I think you have even more cases where (maintenance teams) cannot even quantify the costs they have avoided. I think that's more the case, and I think that is more of a tragedy.

Here's another Catch-22, which goes back to what we were talking about with manufacturing not being attractive to the younger generations. So you will go to a lot of places where the control systems equipment has been there for 20-plus years. Of course the technology of way-back-when is very foreign to a lot of the engineers coming out of schools, and it's not very attractive, to be totally honest. They will be much more drawn to join the IT crowds, the Google, Apple, and others because they have the newer technology. It will be harder for manufacturing to attract this capital if the people they bring in from the engineering side have to deal with equipment that they have very little respect for.

PS: I rode the plane home from a conference this spring with system integrator who's in his late 20s. He started his own business in system integration consulting out of Indianapolis, and was very confident and he said, look, I'm going to retire on this work, and I'm going to retire early, and I'm going to retire well. (He said) this is the area of industry where IT professionals should really focus their efforts, because it's a growth industry, it's interesting, and every day something new is coming up—either a new challenge or a new technology. That enthusiasm I think picks up on what you're saying, which is that we need to get that enthusiasm up for (individuals in their) early 20s and late teens as well and help them understand that there is opportunity here.

JR: Yes. You have a lot of technology—there's all this buzz around smart manufacturing, but there is real activity that is happening behind there. There are a lot of things that were not called smart manufacturing or Internet of Things before, but they were happening. You're collecting data, sharing data on the go—it is Internet of Things, if you want. It's good we have that buzz, getting people to get on the bandwagon. But you will have a lot of new technology taking place, and sometimes technology happens because of a combination of things that existed before, but because of a new driver, it just happens. You can see it from the hybrid car—the battery has been around forever, you have had the car for 100 years or so. It was because somebody thought of leveraging those things through a small computer on the car that switches between charging and not charging. Or today with drones—what has made the difference with drones is the sensors that provide the input to a logic controller to stabilize by themselves so you don't have to be that great of a pilot, and then connectivity to GPS that also helps you go from Point A to Point B without having to be this expert pilot either. It's technology that has become cheap enough because now all of this technology has been built into smartphones. A lot of these things now will start coming up at the plant level, too, so you need to integrate those things to be able to make full use of it and not just continue to have islands of automation.

That's where we come in, because it's not just like "do a quick patch," it's "do it from the best-practices perspective," that this is a solid project that you can build on for years to come. There is a manufacturer of machines that presented at a conference recently, and they were sharing the fact that when they sell one of these machines and they set up the network, they try to size it for the next 25 years, which I think is unbelievable. These are fiber-optic networks inside the factory. This is all of the machines sharing all of the information.

PS: We know that beyond having the ability for a plant's machines to talk to each other, it's critically important for teams to talk to each other, too. From a best-practices perspective, how is the CSIA involved in making sure that everyone who needs to be collaborating with each other actually is?

JR: The way we do that is at the level of project execution. That is where we have that take place. But I think that the need for having different teams collaborate goes way beyond that. So if I remove myself from my immediate role with CSIA and take a look at it from a manufacturing plant's perspective, and you want to have things done differently, then you have to have these teams that represent finance, because you may want to capture the data in a slightly different way; you need to have teams that represent operations and maintenance; and you have to have a collaborative effort. If we go back to all of the work being done on lean, on quality circles, things like that—they all advocate the team approach. And sometimes when you do things that make sense, like lean, oftentimes you have to revisit the way information is gathered. Your financials get wacky for the transition phase into lean, so what you were used to seeing as healthy numbers will look weird, and you may stop (the initiative) if you don't understand what's going on. That's why it needs to be a broad team initiative.

Even things like ratios related to inventories and ratios related to turnaround times—it becomes very specific to accounting, but (all of the metrics) take a beating, and if you are not knowledgeable about what you are going to be doing with lean, you may stop the initiative because it doesn't seem to make sense financially. But it does, eventually.

PS: Do you see the volatility in the price of oil having an impact on the automation industry?

JR: Even before the first big drop in the price of oil, you are seeing that the first wave of shale deployment in the U.S. was moving into a phase beyond gaining the land into efforts to get more efficiency and extract more with what they had. That is actually a good move for the automation industry because it requires deployment of automation equipment and measurement to be able to better track and diagnose what you have over there. I think that will continue, because the investment made is a little bit of a sunk-cost story, so now you will continue to have the investment to maximize what you have and lower your production cost.

PS: Tell me a little about CSIA's work with MESA.

JR: MESA and CSIA, we have been collaborating, and what we have been seeing happening with smart manufacturing is that a lot of technology will be generated and deployed and on a much broader scale. There are important elements—one about being able to integrate all of this technology that will be coming a lot of times without set standards, but if you follow certain best-practice procedures, you're more likely to deploy it correctly. This is where we come into play. MESA will be coming in from the perspective of, there is a huge element of human retraining and re-education around technology to adopt it. That's where we see each other complementing our jobs and trying to make smart manufacturing efforts successful by guaranteeing a broad deployment of them.

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