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Rockwell aims for 9% growth in Europe

01 January, 2006

Rockwell Automation has set itself the ambitious target of boosting its European sales by 9-10% this year in a market that is growing by just 2-3%. Achieving the target growth will also require a substantial improvement in the company`s recent performance. In 2004, its European sales grew by 2%, and last year growth slipped to just 1%.

But Keith Nosbusch, Rockwell`s chief executive (above), is confident that the 9% figure is attainable. Speaking in London recently, he said that the projection is based on investments that Rockwell has been making to boost its business with European OEMs and in vertical markets. "Our aim is to invest more in customer-facing people and to remove costs from the back-office" he said.

Although the European market has been suffering from "sluggish conditions", Nosbusch is optimistic that the investments will bear fruit. Rockwell`s European president Jordi Andreu adds that all countries, including the UK, are benefiting from the investment programme, which includes recruiting extra staff.

Andreu argues that Rockwell`s share of the European automation business is not big enough to be affected by the slow underlying growth of the market. "There`s a lot of business that we can win," he says. Part of the growth will come from offering existing customers more items from the Rockwell portfolio.

Outside Europe, Rockwell had a successful 2005 with an 11% growth in global revenues, much of this coming from newer activities such as safety, Ethernet/IP, and the batch/hybrid market (which recorded a 42% surge last year, and offers the biggest opportunity for growth in the coming years, according to Nosbusch).

Last year Rockwell, invested around $40m to accelerate its organic growth. Part of the money went on extra staffing for vertical markets such as food and beverages, and life sciences. Funds were also allocated to boost Rockwell`s presence in emerging economies and to enhance specific technologies such as plant-wide information systems, safe networked I/O, and the company`s Logix control architecture.

Rockwell`s safety activities are expanding by around 19% per year and Nosbusch expects this business to achieve sales of around $100m this year. He predicts that the recently launched GuardLogix safety controller will make a significant contribution to this figure.

Another success story is Rockwell`s integrated control architecture which has been hitting a CAGR of around 25% and should achieve close to $600m of sales this year. OEM sales of the CompactLogix range have been going particularly well, with a CAGR of some 50%. According to Nosbusch, more than a third of this business is being cannibalised from PLC sales.

Growth in the motor control business has been less spectacular, with a CAGR of 11%. Nosbusch predicts that this actrivity will bring in around $1,600m of revenue during 2006. Intelligent motor controls, which account for almost half of the business, expanded by 15% last year, with sales of the PowerFlex drives range soaring by 40%. MV drives are also doing well.

Another promising growth area is in linking factory and office information systems. Although this has long been a goal of automation suppliers, Nosbusch concedes that such links are still costly, difficult to operate and maintain, and are often not properly integrated. But he believes that this is changing and that Rockwell and its customers are poised to reap the benefits.

"It`s no longer just about the plant floor - it`s what we can do to connect the automation systems to the commercial systems," he says. "The next level will come from using information from the plant floor to take real-time business decisions."

Rockwell`s other foreign markets have been doing far better than Europe, with Asia, in particular, showing some spectacular growth. Sales in India and China have been growing at around 27% and Rockwell took on about 250 new staff in China last year. Latin America has been performing almost as well.

Nosbusch has set a goal of having half of Rockwell`s business coming from outside North America by 2009 (compared to just over 30% at present). This will mean shifting more production outside the US. "We have to be closer to our customers," Nosbusch says.

Part of Rockwell`s planned expansion in the next few years will come from acquisitions, especially in growth areas such as software. After a few quiet years, Rockwell is back on the acquisition trail. "We need more acquisitions," says Nosbusch, which he describes as "the catalyst to drive organic growth".

"We have to continue to change as a company," Nosbusch concludes. "It`s no longer just hardware - it`s the software, services and consulting we can offer. It`s not just about what we make, it`s about what we know."




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