On 15 February 2012 Adroit Technologies and Mitsubishi Electric Europe announced that Adroit had been appointed as an Authorised Distributor of the Mitsubishi Electric range of automation products for Sub-Saharan Africa.
Following this announcement Technews was privileged to be granted an exclusive interview with Hartmut Puetz, head of Mitsubishi Electric Europe, Dave Wibberley, MD of Adroit Technologies and key members of the Adroit team.
Focus on Adroit and Mitsubishi
Technews: How does this change affect the relationship between Adroit and CBI?
Wibberley: We still have some joint projects on the go and we have strong personal friendships, but inevitably change is painful.
The overwhelming majority of Mitsubishi customers that we have spoken to about the change have reacted very positively and perhaps our DNA is better suited to the representation of automation products than CBI’s whose excellence lies in the design and manufacture of protection devices.
Technews: The logistics of storing and moving around large volumes of hardware is challenging. Would it not make sense to have a relationship with a logistics company?
Wibberley: We may very well outsource the warehousing. It is too early to say exactly how we are going to handle this aspect. In terms of logistics we are partnering with Kintetsu World Express which is the organisation that looks after Mitsubishi worldwide.
We can view the European inventory online and can get stock here within three days.
Crain: We have also arranged for some inventory to be held within our expanded complex and we will be supplying directly in the interim.
Technews: What will the impact be on Adroit’s balance sheet as clients put pressure on Adroit to hold stock locally?
Wibberley: We estimate that we will be holding between R3m and R5m of stock locally and Mitsubishi have really come to the party on this. We will be holding consignment stock and also have very favourable payment terms so we do not see any significant impact on our balance sheet and working capital.
Over the last two years we have also been very prudent in terms of cash flow and dividends, choosing to build up capital reserves and we are in a position where we would not have any difficulty accessing short-term bank funding.
Technews: 35% of the turnover of Mitsubishi Electric in the EMEA region is from drives, how do you see that panning out in Sub-Saharan Africa, and does Adroit have the skill set to handle that product line from both sales and commissioning perspectives?
Puetz: From a sales point of view and from the technical expertise point, with the people Adroit has recently taken on board, Adroit clearly has the skill set to handle the sales of drives. However, we are also working with specialised system integrators like Megadrive and partners who really are experts on drive technology and we can expand the drives business by adding more drive-specific partners.
One of the big advantages of some of our upcoming technologies like auto-tuning is that it simplifies the commissioning of drives and really increases the performance of the motors, fans, pumps or whatever.
Technews: In your announcement you covered the representation of the automation products. What about Mitsubishi’s robotic products?
Puetz: The key differentiators for Mitsubishi robots are their high speed, precision and real-time control. The maximum lifting capacity is 20 kg so we excel in applications like packaging where we can exploit those differentiators. Application of robotics is a specialist area. We will be exploring possible relationships with vendors and SIs with experience in these fields. However, Adroit is also actively addressing a challenging enquiry in this field.
Technews: Dave, your previous relationship with LG, embedding your software system in there, was not particularly successful. What is different here other than the ownership?
Crain: Ouch! That was not a very nice question. In my office I have a photo of the original PQ advert to remind me to think before I do something bad. The reason it became a headache for us was that it was not our own PLC and every second client wanted a different version of it. Our profit margin was not sufficient to cover the support that the product required. The difference here is that it is our hardware, so we have a margin on the hardware, a margin on the software and we can supply the panel PCs all ourselves.
Focus on Mitsubishi Europe
Technews: How big is the existing user base of Mitsubishi automation products in Sub-Saharan Africa in terms of customer base and revenue?
Puetz: The annual turnover in automation products from that existing user base is in the order of R20m to R30m and I would guess that that is from 300 to 400 customers.
Technews: Hartmut, in November 2011 Mitsubishi in Japan announced that it had bought a 19,9% stake in Iconics. It almost appears that Mitsubishi Europe under your management and Mitsubishi in Japan are following two different strategies. Can you provide our readers with some insight into this?
Puetz: These actions are both based on a common strategic goal of Mitsubishi of entering into the process automation market through providing complete solutions. The execution of that single strategy differs. The European operation initiated that strategy and started its execution based on a partnership and subsequent acquisition of a minority stake in Adroit.
Overall Mitsubishi is risk averse – especially when entering into new fields of business. Corporate management in Tokyo did not want to put all its eggs in one basket. There is a high level of coordination between the global process automation team in Japan supporting Iconics and the European team relying 100% on Adroit.
In Europe we will not sell Iconics, so regardless of what is going to happen in terms of the global PA strategy, in Europe, Middle East, and Africa, we are entirely committed to Adroit and MAPS and we are not going to change that focus. In a relatively short period of time we have been very successful in selling MAPS projects, even outside of Africa. We have already sold 10 or 12 MAPS-based projects in Europe and at the end of the day success will breed success. Of course, there is some internal competition and that is a healthy driver for us to achieve more.
Wibberley: You should also remember that from a geographic perspective Adroit has no presence in North America and Iconics is a North American product. Similarly Iconics really has nothing here in Sub-Saharan Africa and very little in Europe.
Technews: When we last met in June 2011 you told us that the water and waste water industry is a key focus for Mitsubishi Europe and your goal was to grow that market from €8m to €80m over five years. In Europe you have developed a strong relationship with KH-Automation Projects and their Water Management package is fully integrated with Mitsubishi Electric’s GX IEC Developer and iQ Works control platform. Adroit also has a strong user base in water and waste water. Will the intellectual property from KH-Automation Projects be built into Adroit in future?
Puetz: As far KH-Automation is concerned, we need to be very specific. We have not invested into KH-Automation like we have into Adroit. We have a very strong partnership with KH-Automation which has been very successful for many years. Our strategic products and solution for target markets in particular water base water and mining is clearly Adroit. If the strategic relationship with KH-Automation becomes closer at some stage, then we will make sure that some of the very specifics of KH-Automation will be incorporated into the Adroit product.
Technews: In June 2011 you also listed some aggressive financial goals for Mitsubishi Europe. Economically things have been tough in Europe, and especially Greece. As you approach year end, how are your goals holding up?
Puetz: We still have about six weeks to go to the end of our fiscal year, and on a year to date basis, we are within about 98 or 99% of our budget. We had very little business in Greece, but as their difficulties increased our business has sky-rocketed there, albeit off a small base.
Technews: You also spoke about opening an App-Store. What is the progress on that and will it form part of the eF@ctory Alliance site?
Puetz: We are planning to take our App-Store live at the beginning of April. We have pretty much got the technical infrastructure in place. We have the legal framework in place. We still have one or two boxes to tick which are more related to minor terms and conditions.
It is going to be a separate site because the eF@ctory site is a marketing site whereas the App-Store is more like a trading site where participants can trade between themselves either sort of on a free of charge basis or on a billable basis.
Technews: Mitsubishi Europe BV’s shareholding agreement with Adroit allows it to take a larger share in Adroit. What would motivate it to grow its current shareholding?
Puetz: I think the key for us is success. Assuming that it is successful, at some stage we will want to be represented in South Africa directly and formally through our own legal entity. There are different ways to do this. One way is to continue building on the relationship with Adroit, and at some stage having a discussion with the Adroit shareholders about increasing our stake in Adroit. But this is a discussion we will have sometime in the future.
Technews: Many multinational organisations have mechanisms where skilled staff can move between countries while remaining in their employ. Do you see any opportunity for say German staff to work in Adroit?
Wibberley: Sadly the pressure is often the other way, but that is not off the table, I think it makes sense, you know right now we are obviously a bit resource stretched and skilled technical staff are not easily available. So you know we need to just manage the resources and train the trainers.
Puetz: If one of our technical guys were to approach me and tell me that he would really like to stay with Mitsubishi, but is tired of living in Germany, Poland, Belarus or wherever, and would like to live in South Africa, I am 100% sure that there are ways for us to entertain that solution.
About the author
Andrew Ashton has electrical, mechanical and business qualifications and has been active in automation and process control since the early 1980s. Since 1991 he has headed up a company that has developed formulation management systems for the food, pharmaceutical and chemical manufacturing industries and manufacturing solutions involving the integration of various communication technologies and databases. Developed systems address issues around traceability, systems integration, manufacturing efficiency and effectiveness. Andrew is a contributing editor for SA Instrumentation and Control.
For more information contact Jan Hendrik Rust, Adroit Technologies, +27 (0)11 658 8100, [email protected], www.adroit.co.za
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