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Connectivity is Emerging Theme at Jefferies Industrial Conference

Posted By David Brousell, August 16, 2016 at 11:20 AM, in Category: Factories of the Future

I traveled to New York City last week to attend the 12th Jefferies Industrial Conference, an annual investment gathering that drew 140 participating manufacturing companies from sectors such as aerospace and defense, transportation, chemicals, diversified industrials, and paper and packaging.

The mood at the conference this year was mixed. General Dynamics, optimistic on the strength of its military ship building and aircraft businesses, nevertheless is facing challenges in the business jet market with its Gulfstream brand. AGCO Corp., a $7 billion manufacturer of agricultural equipment, is trying to manage through a “cyclical downturn” in its market. And Meritor, the $3 billion manufacturer of drivetrain systems and components, is “shifting the pendulum to growth” through a strategy of new product launches and planned expansions in adjacent markets and new geographic territories.

Without mentioning global terrorism or other threats by name, several speakers called for greater defense spending. “There is an imperative to invest in defense,” said Phebe Novakovic, chairman and chief executive of General Dynamics, on the first day of the conference. “The world is not getting to be a happier place.”

On the technology front, one trend that a number of manufacturing company executives see as increasingly influential for growing their businesses in new ways is connectivity, and the resulting information that is generated from it.

At Honeywell International, Inc., for example, a system called JetWave is being installed in a number of Airbus and Boeing aircraft Honeywell is working on, providing operational feedback that Carl Esposito, vice president of marketing and product management, said has been “transformational..

Honeywell’s JetWave system enables connectivity via Inmarsat Aviation’s Global Xpress (GX) Ka-band network. The system provides broadband connectivity at speeds of up to 50 Mbps. In June, GX was certified by the European Aviation Safety Agency for the Airbus A320 family of aircraft. Earlier this year, the Federal Aviation Administration in the U.S. approved the system for use in the Boeing 757.  

“We’re just at the forefront of these kinds of innovations,” Esposito said. “There won’t be one product not affected by connectivity. Connectivity will transform aviation.”

Kelly Ortberg, chairman, president, and chief executive of $5 billion avionics supplier Rockwell Collins, said that, now that progress has been made in implementing private networks in the front areas of aircraft such as the cockpit, attention is turning to networking the back portions of airplanes. He said that Rockwell Collins is just at the “tip of the iceberg” in broadband and intends to participate strongly in the emerging back end area.

“We’re looking at ways to monetize the connected airplane,” said Ortberg. “In some cases, we will pack up data and sell it to others who will do something with it. In other cases, Collins will hold the IP.”

Two other companies seeking to take advantage of the connectivity opportunity – a market which Jefferies managing director Howard Rubel characterized as the “wild west” – are Tenant Company and AGCO.

At 146-year old Tenant, an $800 million manufacturer of cleaning equipment, the mission is to “reinvent the future of cleaning.. Tom Paulson, senior vice president and chief financial officer, said that in order to reach this goal, Tenant is putting “telemetry” on its cleaning equipment to provide for remote monitoring; plans to move to lithium-ion batteries, from lead acid batteries currently in use; is looking into using robotics to allow its cleaning machines to operate without human intervention; and is trying to come up with ways to recycle water used in the machines.

And at AGCO chief financial officer Andy Beck said his company is also working on “telemetry-type products” for its equipment “to connect and optimize the farm”.

Despite these developments in the so-called connectivity market, luncheon keynote speaker Dawne S. Hickton, former chief executive officer and president of RTI International Metals, Inc., emphasized that newer technologies such as 3D printing and collaborative robotics will be important for future growth.

“Digitization hasn’t reached its potential yet,” she added.


Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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