《歌唱祖国》

《歌唱祖国》 

五星红旗迎风飘扬, 
胜利歌声多么响亮; 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 

越过高山,越过平原, 
跨过奔腾的黄河长江; 
宽广美丽的土地, 
是我们亲爱的家乡, 
英雄的人民站起来了! 
我们团结友爱坚强如钢. 

五星红旗迎风飘扬, 
胜利歌声多么响亮; 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 
歌唱我们亲爱的祖国, 
从今走向繁荣富强 

我们勤劳,我们勇敢, 
独立自由是我们的理想; 
我们战胜了多少苦难, 
才得到今天的解放! 
我们爱和平,我们爱家乡, 
谁敢侵犯我们就叫他死亡! 

五星红旗迎风飘扬, 
胜利歌声多么响亮, 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 

东方太阳,正在升起, 
人民共和国正在成长; 
我们领袖毛泽东, 
指引着前进的方向. 
我们的生活天天向上, 
我们的前途万丈光芒. 

五星红旗迎风飘扬, 
胜利歌声多么响亮; 
歌唱我们亲爱的祖国, 
从今走向繁荣富强. 
歌唱我们亲爱的祖国, 
从今走向繁荣富强.

The collapse of manufacturing

The collapse of manufacturing

Feb 19th 2009
From The Economist print edition

The financial crisis has created an industrial crisis. What should governments do about it?

Alamy

$0.00, not counting fuel and handling: that is the cheapest quote right now if you want to ship a container from southern China to Europe. Back in the summer of 2007 the shipper would have charged $1,400. Half-empty freighters are just one sign of a worldwide collapse in manufacturing. In Germany December’s machine-tool orders were 40% lower than a year earlier. Half of China’s 9,000 or so toy exporters have gone bust. Taiwan’s shipments of notebook computers fell by a third in the month of January. The number of cars being assembled in America was 60% below January 2008.

The destructive global power of the financial crisis became clear last year. The immensity of the manufacturing crisis is still sinking in, largely because it is seen in national terms—indeed, often nationalistic ones. In fact manufacturing is also caught up in a global whirlwind.

Industrial production fell in the latest three months by 3.6% and 4.4% respectively in America and Britain (equivalent to annual declines of 13.8% and 16.4%). Some locals blame that on Wall Street and the City. But the collapse is much worse in countries more dependent on manufacturing exports, which have come to rely on consumers in debtor countries. Germany’s industrial production in the fourth quarter fell by 6.8%; Taiwan’s by 21.7%; Japan’s by 12%—which helps to explain why GDP is falling even faster there than it did in the early 1990s (see article). Industrial production is volatile, but the world has not seen a contraction like this since the first oil shock in the 1970s—and even that was not so widespread. Industry is collapsing in eastern Europe, as it is in Brazil, Malaysia and Turkey. Thousands of factories in southern China are now abandoned. Their workers went home to the countryside for the new year in January. Millions never came back (see article).

Factories floored

Having bailed out the financial system, governments are now being called on to save industry, too. Next to scheming bankers, factory workers look positively deserving. Manufacturing is still a big employer and it tends to be a very visible one, concentrated in places like Detroit, Stuttgart and Guangzhou. The failure of a famous manufacturer like General Motors (GM) would be a severe blow to people’s faith in their own prospects when a lack of confidence is already dragging down the economy. So surely it is right to give industry special support?

Despite manufacturing’s woes, the answer is no. There are no painless choices, but industrial aid suffers from two big drawbacks. One is that government programmes, which are slow to design and amend, are too cumbersome to deal with the varied, constantly changing difficulties of the world’s manufacturing industries. Part of the problem has been a drying-up of trade finance. Nobody knows how long that will last. Another part has come as firms have run down their inventories (in China some of these were stockpiles amassed before the Beijing Olympics). The inventory effect should be temporary, but, again, nobody knows how big or lasting it will be.

The other drawback is that sectoral aid does not address the underlying cause of the crisis—a fall in demand, not just for manufactured goods, but for everything. Because there is too much capacity (far too much in the car industry), some businesses must close however much aid the government pumps in. How can governments know which firms to save or the “right” size of any industry? That is for consumers to decide. Giving money to the industries with the loudest voices and cleverest lobbyists would be unjust and wasteful. Shifting demand to the fortunate sector that has won aid from the unfortunate one that has not will only exacerbate the upheaval. One country’s preference for a given industry risks provoking a protectionist backlash abroad and will slow the long-run growth rate at home by locking up resources in inefficient firms.

Nothing to lose but their supply chains

Some say that manufacturing is special, because the rest of the economy depends on it. In fact, the economy is more like a network in which everything is connected to everything else, and in which every producer is also a consumer. The important distinction is not between manufacturing and services, but between productive and unproductive jobs.

Some manufacturers accept that, but proceed immediately to another argument: that the current crisis is needlessly endangering productive, highly skilled manufacturing jobs. Nowadays each link in the supply chain depends on all the others. Carmakers cite GM’s new Camaro, threatened after a firm that makes moulded-plastic parts went bankrupt. The car industry argues that the loss of GM itself would permanently wreck the North American supply chain (see article). Aid, they say, can save good firms to fight another day.

Although some supply chains have choke points, that is a weak general argument for sectoral aid. As a rule, suppliers with several customers, and customers with several suppliers, should be more resilient than if they were a dependent captive of a large group. The evidence from China is that today’s lack of demand creates the spare capacity that allows customers to find a new supplier quickly if theirs goes out of business. When that is hard, because a parts supplier is highly specialised, say, good management is likely to be more effective than state aid. The best firms monitor their vital suppliers closely and buy parts from more than one source, even if it costs money. In the extreme, firms can support vulnerable suppliers by helping them raise cash or by investing in them.

If sectoral aid is wasteful, why then save the banking system? Not for the sake of the bankers, certainly; nor because state aid will create an efficient financial industry. Even flawed bank rescues and stimulus plans, like the one Barack Obama signed into law this week, are aimed at the roots of the economy’s problems: saving the banks, no matter how undeserving they are, is supposed to keep finance flowing to all firms; fiscal stimulus is supposed to lift demand across the board. As manufacturing collapses, governments should not fiddle with sectoral plans. Their proper task is broader but no less urgent: to get on with spending and with freeing up finance.

Air safety over the past decade

Accidental loss

Feb 19th 2009
From Economist.com

Air safety over the past decade

THERE were 109 commercial-jet “hull losses” in 2008, up from 100 in the previous year, according to an annual report by IATA, an airline-industry body. These serious accidents that result in the destruction of a plane have fallen steadily for decades, but have been on the rise again since 2006. But the increase in accidents has not resulted in a growing number of fatalities. Some 692 passengers lost their lives in 2007, but this fell to 502 last year, a rate of 0.13 deaths for every million passengers carried.

Shutterstock

February 21, 2009

With Cash to Spend, China Starts Investing Globally

By DAVID BARBOZA

SHANGHAI — With the world suffering through a tight credit market, China has suddenly gone shopping.

Beijing said on Friday that one of its big state-owned banks, the China Development Bank, agreed to lend the Brazilian oil giant Petrobras $10 billion in exchange for sending China a long-term supply of oil.

That investment came after similar deals were signed this week with Russia and Venezuela, bringing China’s total oil investments this month to $41 billion.

China’s biggest aluminum producer also agreed earlier this month to invest $19.5 billion in Australia’s Rio Tinto, one of the world’s biggest mining companies. And last Monday, the China Minmetals Corporation bid $1.7 billion to acquire Australia’s OZ Minerals, a huge zinc mining company.

Flush with cash and eager to take advantage of weak commodity prices, China is once again on the hunt for global energy and resources to power its growing economy. But this time, China is being welcomed as an investor overseas.

With President Hu Jintao of China traveling this week on his “Friendship and Cooperation Tour” in Africa, where China has substantial interests in resources and mining, Vice President Xi Jinping was visiting South America, meeting with the leaders of Brazil and Venezuela and signing cooperation agreements on oil and minerals.

Venezuela received a $6 billion loan from China and agreed to increase its oil exports to China, bringing China’s total investment in the country to $12 billion. In Brazil, China signed a $10 billion “loan-for-oil” deal that guarantees the country up to 160,000 barrels a day at market prices.

And in Beijing this week, Prime Minister Wen Jiabao met his Russian counterpart after China agreed to loan Russia’s struggling oil giant, Rosneft and Russia’s oil pipeline company, Transneft, $25 billion in exchange for 15 million tons of crude oil a year for 20 years.

“This is heavy energy diplomacy,” said Philip Andrews-Speed, director of the energy policy center at the University of Dundee in Scotland.

“If you need money you go to where the money is, and today, China’s the place.”

The investments are China’s biggest moves since 2005, when a Chinese state-owned oil company made an unsuccessful bid for Unocal, the American oil company, amid worries about whether fast-growing China was seeking to tie up global resources.

But the world has changed since then. Commodity prices have fallen sharply in recent months, after a long bull market that was partly fueled by China’s voracious demand for energy and resources. And China has built up nearly $2 trillion in foreign currency reserves, giving the country easy access to capital.

“What’s changed for China is that their key competitive strength has increased — and that’s capital,” said Andrew Driscoll, a resources analyst at C.L.S.A., the investment bank. “A lot of companies are begging for capital.”

China wants reliable supplies of crude oil, to fuel its growing transport sector; it needs iron ore for steel production, and copper and aluminum to build homes and consumer goods.

Analysts said there were still worries about whether China would compete with other nations, like the United States and India, for oil and other natural resources.

But some analysts said China’s investments were welcome because they would help finance much needed development, increasing the global supply of oil and natural resources at a time when many of the world’s biggest banks were reluctant to lend.

“It’s a good thing because a lot of projects have been postponed,” said Professor Andrews-Speed at the University of Dundee. “Oil companies may now have the money to produce oil. There’s going to be more oil produced.”

Analysts say China could continue to make deals for a variety of small oil and gas companies, mineral producers and mining firms.

This week, for instance, shares of the Australian miner Fortescue Metals Group rose after reports the company was in talks with China over a big investment to help the company expand.

In many cases, China has struck deals in countries that have access to large supplies of oil and minerals but where American and European countries are not well-positioned, like parts of Africa and the Middle East.

In one deal this week, China made an alliance with the government of Hugo Chávez, the president of Venezuela, who has denounced American leadership.

While the oil deals announced vary in terms, analysts say they ensure China a steady supply of oil for decades to come, sometimes at favorable prices.

In Brazil, the $10 billion loan is to be used to finance a deep water oil reserve that the government hopes will help turn the country into a major oil producer.

Bertelsmann enters China's logistics market

Bertelsmann enters China's logistics market

By Yu Hongyan (chinadaily.com.cn)
Updated: 2009-02-20 17:54

Bertelsmann Group, Europe's biggest media group, announced on Friday that it has established a joint venture in China with two leading local mobile phone distributors, its first foray into the country's booming logistics market.

The joint venture, to be based in Shenzhen, will distribute mobile phones to designated handset retailers.

Arvato Services, Bertelsmann's subsidiary, will take a 51 percent stake in the joint venture, and the rest will be held by Telling Group and Sinomaster Group, both of which are based in Shenzhen, the German media giant said.

The logistics company is expected to distribute at least 10 million mobile phones in 2009, according to Raoul Kuetemeier, president of the new venture.

The new firm will set its future sights on e-commerce, its management said.

It has signed up Taobao.com, China's largest online auction website, and Suning Appliance, the country's leading appliance retailer, as its customers.

Bertelsmann established its business in China in 1995 by introducing its world-renowned book clubs, which were closed in June last year due to poor performance.

The company has now shifted its attention to China's logistics market, according to Cui Juan, supervisor of its public relations department.

The Telling Group is a distributor of mobile communication products, as an agent for brands such as Motorola, Nokia, Samsung and Sony Ericsson.

The Sinomaster Group has 100,000 handset outlets in third- and fourth-tier cities.

It's time for a grand bargain between China and the U.S.

It's time for a grand bargain between China and the U.S.

February 20, 2009 at 7:25 AM EST

SHANGHAI — With her visit to Asia this week, Hillary Clinton becomes the first U.S. secretary of state since Dean Rusk in the 1960s to cross the Pacific instead of the Atlantic on her first overseas trip. Her most important stop, it almost goes without saying, will be in Beijing. China and the United States are the yin and yang of the global financial crisis, the opposite poles of an imbalanced financial system that has helped throw the world economy into chaos.

Tensions are inevitable between the two Pacific powers, one with the world's biggest economy, the other with the third biggest. Beijing reasonably fears that Washington will try to get out of its rut by choking off the flood of imports from China that has given the U.S. an enormous trade deficit with China. The U.S. rightly worries that China will try to export its way out of trouble by letting its currency depreciate and making the price of the goods it sells to Americans even cheaper, killing U.S. jobs and draining away the benefits of Washington's stimulus package.

Ms. Clinton will try to smooth over these tensions. She will say reassuring things about trade, trying to wipe out the memory of her China-bashing during last year's presidential nomination campaign (“we play by the rules and they manipulate their currency”). She will insist that “buy American” need not mean “don't buy Chinese.” She will soft-pedal human rights, even though she considers herself a rights champion. The Chinese, meanwhile, will make similarly calming noises about their currency (“Depreciate? Us?”) and insist they are doing their bit to lick the crisis by spending hundreds of billions to stimulate their own economy.

It is not enough. Yes, it is good that Ms. Clinton recognizes the centrality of the relationship with China. And, yes, it is good that the Chinese have seen the need to be reassuring and not to beat up on the Americans, even though they believe Washington and Wall Street are entirely to blame for the whole mess.

But what is required is a truly co-ordinated approach in which the two economic powers work hand in hand to overcome it. (Japan, the world's second biggest economy, is so tied up in political knots that it is almost a non-entity.) A U.S. China watcher, Eswar Prasad of Cornell University, calls for a “grand bargain” between the two. The Chinese would agree to allow their currency to seek its natural value on the market and reform their economy so it relies more on domestic consumption than on exports. The Americans would agree to accept the Chinese as partners in global economic management and also to control their own consumption and debt.

All this makes great sense. The Chinese have been seeking improved voting rights on the International Monetary Fund and a seat at the Financial Stability Forum, a club of finance ministers, central bankers and the like. Bringing them on board would encourage responsible behaviour.

Letting the Chinese currency float would cause it to rise over time, making Chinese exports more expensive for Americans and thus lowering the U.S. trade deficit. Encouraging Chinese domestic consumption would help normalize an economy that relies to an abnormal degree on savings and investment. Curbing American consumption and debt would help correct the profligacy that helped get us in this fix in the first place.

Making a grand bargain happen is another matter. The Chinese are in a tight spot. Collapsing exports mean that millions of migrant workers have been thrown out of work, their frustration a potential time bomb for an unelected regime such as China's. Letting the yuan rise would increase the pain at a time when Chinese authorities have been trying to lessen it (by easing taxes on exporters, for instance). The Americans, for their part, are in the process of adding to their debt, not taming it. Doing so will entail great pain and a long political struggle.

But it must be done. China and the U.S. need each other as never before. China needs Americans to go on buying Chinese goods and keep Chinese workers employed. The U.S. needs China to bankroll Washington's debt and provide a manufacturing platform for U.S. multinationals. The rest of the world needs them both to work together on the imbalances that have distorted the global financial system.

“Some believe that China on the rise is by definition an adversary,” Ms. Clinton said before she left for Asia. “To the contrary, we believe the United States and China benefit from, and contribute to, each other's successes.” Quite so. Now let's see them prove they know it.

BMW Factory Upgrades Include Complete Automation System, New Conveyor Systems.

BMW Factory Upgrades Include Complete Automation System, New Conveyor Systems

IndustryWeek (2/20, Selko) reports on the BMW factory in Spartanburg, SC, which "was completely converted into a state-of-the-art facility in less than three months." As part of the conversion, "a total of seven key solutions in the final assembly operations -- from the joining of the chassis and the engine through different conveyor systems and the complete automation system for the plant -- was accomplished with assistance from Siemens." According to the article, "one of the most interesting sub-projects was the marriage, which consists of 10 stations with one automatic assembly station and one automatic nut-running station – enabling a previously unknown precision and eliminating the non-ergonomic overhead work that had to be performed in this production area."

PLCs, PACs and DCSs Can Do Windows

ControlGlobal.com

The Capability of Today’s PC-Based Industrial Computers Are Overcoming Engineers’ Resistance to “the Wal-Mart of Operating Systems.”

By Rich Merritt

Whenever we ask instrument and control engineers what they think about the Windows OS, we get comments all the way from “It’s the Wal-Mart of operating systems,” to “I would never trust Windows with a process control system.” To many, only “real” controllers, such as a DCS or a PLC, can be trusted for the actual control functions.

As it turns out, PC-based hardware and Windows operating systems have crept into many types of “real” controllers, including PLCs, PACs and even—Gasp!—distributed control system (DCS) controllers. These bastions of reliability have succumbed to the lure of Windows-based connectivity and universal open software. Proprietary hardware and operating systems are nearly a thing of the past. Everything is “open” today.

Readers of Control magazine seem to be grudgingly accepting PC-based industrial computers (ICs) into their plants. Or maybe they are buying these devices because they are the best solutions available.

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PCs for Process Control? Horrors!

We found many applications for industrial computers (IC), but only a few ICs are actually being used for process control. Test, monitoring and human-machine interfaces (HMI) are the most common applications.

Figure 1. An industrial computer from Rockwell Automation is controlling this oil extraction process in New Zealand. Industrial computers are everywhere in your plant.

of New Zealand does use a PAC for process control—a Rockwell Automation ControlLogix PAC—to control an oil extraction process in the Cheal oil field in western New Zealand (Figure 1). According to Alan Hooker, instrument and electrical engineer with Independent Technology, the contractor that built the station, Austral needed an automated system that could control and monitor everything from oil temperature to equipment performance, while capturing data to comply with regulatory requirements.Austral Pacific Energy

“The complex nature of Cheal’s production and information needs demanded a system that could maximize uptime,” said Hooker. “The site can only handle around five hours of downtime before it begins to lose heat and, if all heat is lost, it takes up to two weeks to heat the wells up to the desired temperature.”

The ControlLogix PAC provides all the capabilities of a traditional DCS system and manages thousands of discrete, process and safety I/O points. “Using ControlLogix controllers helps lower the cost of ownership, provides better flexibility and offers more scalability than a traditional DCS system,” Hooker said.

Industrial computers and HMI/SCADA software are posing real competition to DCSs, and the Austral project illustrates that whatever a DCS can do, so can a PAC.

But wait! Isn’t a PAC a hybrid PLC? True, but another definition applies: A PAC is an industrial computer with PLC capabilities. Furthermore, many PLCs have adopted a PC-like architecture.

Andrew Craig, automation manager of FlavourCraft in South Africa, uses Beckhoff PLCs to control batches of flavorings and food formulations. “Beckhoff uses standard PC CPUs in their PLCs and I/O stations, which really brings the costs down,” says Craig. “This also means that their processing power jumps every year as the CPU speeds increase.”

So, is the Beckhoff PLC a PAC? It is getting harder to tell the difference, but it is certainly an industrial computer, and it is being used for process control.

What’s an Industrial Computer?

So what is an industrial computer? Why is it different from the $400 desktop PC at Best Buy or Circuit City?
Miko Grika of Beckhoff says, “Office PCs are designed for consumers and are almost never ‘industrial’ in any way. Consumer PCs are not designed for plant environments and are more susceptible to heat, vibration and general wear and tear. They’re designed for sitting on desks, not for mounting in control cabinets, and there’s no guarantee that the consumer PC will be capable of real-time computing, a necessity for many applications. ICs such as those from Beckhoff are designed for real-time computing and microsecond-level performance.”

What makes an industrial computer so rugged? Various vendors use sealed faceplates, tough enclosures, solid-state memories instead of rotating disks, low-power CPUs, industrial-grade power supplies and careful layout of components for heat dissipation and shock protection.

What some IC vendors do is replace some of the commercial, off-the-shelf (COTS) components with more rugged ones, such as the Intel SOC (system on a chip), AMD GX Series or the Advantech EVA SOC. In fact, you will probably find such SOCs embedded in devices all over your plant—in PLCs, PACs, Ethernet switches, field instruments, calibrators, I/O modules and DCS controllers. “Embedded systems have become ubiquitous,” says Mike Berryman of Advantech. “We find them literally everywhere, especially in the industrial environment.”

Most likely, you won’t use an office computer as an I/O module, but you might try to use it for a non-critical HMI or test-and-measurement application. Accessories such as shock mounts and air-conditioned enclosures make it possible to use an office PC on the plant floor. You have to be careful to allow sufficient air flow to the fans and keep electrically noisy components and vibration away from the PC, but this method works—probably not in a critical control application though.

ICs instead of PLCs?

Grika points out that an industrial computer offers an advantage over traditional controllers. “In contrast to more traditional controllers such as PLCs, ICs integrate the latest in powerful processors to accomplish more control with less hardware. Advances such as the Intel Core 2 Duo make it possible to bring more centralized control architectures to more applications. The old saying goes that you should never do in hardware what you can do in software and, as PC processor technology marches on, there is exponential growth in the percentage of industrial functions that can be carried out in software running on an IC.”

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The examples below—an adaptive control system and a handheld HMI—illustrate the powerful process available in an IC.

Since you can change out an IC in a matter of hours, one interesting tactic is to invest in high-quality industrial displays. Rick Tomfohrde, manager of HMI business development at Pepperl+Fuchs, says a “split architecture” approach is worth considering: “Regardless of consumer versus industrial grade computers, the processor engine technology is not particularly costly—less than $500 in some cases—meaning that total replacement is often a trivial maintenance expense.”

The same cannot be said of the operator display. These can get expensive—$1,000 or more for a high-quality, large-screen, ruggedized monitor that can survive industrial environments. “Keeping the display/touchscreen independent of the PC processor box allows the more costly piece of the architecture to outlast many changes of the less costly piece,” Tomfohrde advises.

Maybe you don’t want to upgrade that industrial computer at all. As Berryman points out, “Once the line or process is designed and built, industrial control applications often do not change for years. New capabilities for graphics, services and networking are simply unnecessary. In fact, many control applications could run very well on older x86 processors for decades.”

PAC, Panel PC or Portable IC?

It’s safe to say that most industrial computers are cut from the same PC-based hardware and software cloth. The point is, industrial computers (in whatever form) offer you a reliable, rugged and relatively inexpensive platform on which to perform control, test, measurement and data acquisition functions. Let’s look at some examples.

Semicore Equipment manufactures vacuum coating and etching systems. Matthew Hughes, president of Semicore, says his company abandoned PLCs in favor of PC-based control seven years ago and recently switched to Beckhoff industrial computers and TwinCAT software. The first application of the new Semicore control system was implemented on one of the most complex machines the company ever built. “It was really a trial by fire for the Beckhoff controls because the application was as demanding as it gets in our industry,” Hughes said. “The project was to develop a brand new coating system that applied diamond-like carbon, chromium carbide and titanium nitride coating on internal surfaces.”

Figure 2. Emerson’s DeltaV Mobile Worker uses a Panasonic Toughbook portable computer so operators can walk around the plant with a fully functional DeltaV operator station in their hands.

The project went well. “The new machines equipped with Beckhoff controls have been well-received and helped increase reorder rates,” says Hughes.

Impact Drilling’s Secure Drilling System uses a PAC and LabVIEW software from National Instruments to track the complete pressure profile of a well during the drilling process while dynamically adapting to well conditions to meet desired drilling parameters. With high-speed monitoring and advanced adaptive control technologies, the Secure Drilling system can automatically control the back pressure at the surface to maintain well control.

“This single HMI and logic development environment of LabVIEW makes deployment of the control system simple because the HMI is built in the same environment as the control system,” says Jason Hannam, controls engineer at Impact Drilling.

Emerson Process Management put a complete DeltaV operator station on a Panasonic Toughbook U1 handheld computer, rated as a Class 1 Division 2 device. The DeltaV Mobile Worker (Figure 2) permits operators to carry a fully-functioning, connected operator interface with them into the plant. Wi-Fi or cellular communications connect the handheld to the DeltaV control network via a DeltaV RAS Server and VPN firewall.

When a major DCS vendor uses an industrial computer for control, PC and Windows technology have arrived in the process control world.

Rich Merritt is a Control contributing editor.

Windows in the Plant

Many industrial computers use Windows XP, XP Embedded, or Windows CE—operating systems that are relatively solid. Windows CE is often used in embedded diskless systems, such as Panel PCs and PACs, and some HMI/SCADA software (not all!) will run on CE. HMI/SCADA software from almost every vendor will run in Windows XP systems, however. When you consider that some of the biggest vendors in process control use Windows CE and XP in their controllers, it is safe to assume that it must be reliable.

However, if you are really worried, just ask the industrial computer vendor what operating system is being used, and pick one that does not use Windows. One recent product—the Power PMAC motion computer from Delta Tau (http://www.deltatau.com/common/index.asp?connectionStr=release) —uses) — usesa PowerPC processor with a Linux operating system, so non-Microsoft industrial computer products certainly exist.

Six ways to make Web 2.0 work

The McKinsey Quarterly

Six ways to make Web 2.0 work

Web 2.0 tools present a vast array of opportunities—for companies that know how to use them.

February 2009 • Michael Chui, Andy Miller, and Roger P. Roberts

Technologies known collectively as Web 2.0 have spread widely among consumers over the past five years. Social-networking Web sites, such as Facebook and MySpace, now attract more than 100 million visitors a month. As the popularity of Web 2.0 has grown, companies have noted the intense consumer engagement and creativity surrounding these technologies. Many organizations, keen to harness Web 2.0 internally, are experimenting with the tools or deploying them on a trial basis.

Over the past two years, McKinsey has studied more than 50 early adopters to garner insights into successful efforts to use Web 2.0 as a way of unlocking participation. We have surveyed, independently, a range of executives on Web 2.0 adoption. Our work suggests the challenges that lie ahead. To date, as many survey respondents are dissatisfied with their use of Web 2.0 technologies as are satisfied. Many of the dissenters cite impediments such as organizational structure, the inability of managers to understand the new levers of change, and a lack of understanding about how value is created using Web 2.0 tools. We have found that, unless a number of success factors are present, Web 2.0 efforts often fail to launch or to reach expected heights of usage. Executives who are suspicious or uncomfortable with perceived changes or risks often call off these efforts. Others fail because managers simply don’t know how to encourage the type of participation that will produce meaningful results.

Some historical perspective is useful. Web 2.0, the latest wave in corporate technology adoptions, could have a more far-reaching organizational impact than technologies adopted in the 1990s—such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (Exhibit 1). The latest Web tools have a strong bottom-up element and engage a broad base of workers. They also demand a mind-set different from that of earlier IT programs, which were instituted primarily by edicts from senior managers.

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Web 2.0 covers a range of technologies. The most widely used are blogs, wikis, podcasts, information tagging, prediction markets, and social networks (Exhibit 2). New technologies constantly appear as the Internet continues to evolve. Of the companies we interviewed for our research, all were using at least one of these tools. What distinguishes them from previous technologies is the high degree of participation they require to be effective. Unlike ERP and CRM, where most users either simply process information in the form of reports or use the technology to execute transactions (such as issuing payments or entering customer orders), Web 2.0 technologies are interactive and require users to generate new information and content or to edit the work of other participants.

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Earlier technologies often required expensive and lengthy technical implementations, as well as the realignment of formal business processes. With such memories still fresh, some executives naturally remain wary of Web 2.0. But the new tools are different. While they are inherently disruptive and often challenge an organization and its culture, they are not technically complex to implement. Rather, they are a relatively lightweight overlay to the existing infrastructure and do not necessarily require complex technology integration.

Gains from participation

Clay Shirky, an adjunct professor at New York University, calls the underused human potential at companies an immense “cognitive surplus” and one that could be tapped by participatory tools. Corporate leaders are, of course, eager to find new ways to add value. Over the past 15 years, using a combination of technology investments and process reengineering, they have substantially raised the productivity of transactional processes. Web 2.0 promises further gains, although the capabilities differ from those of the past technologies (Exhibit 3).

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Research by our colleagues shows how differences in collaboration are correlated with large differences in corporate performance.¹ Our most recent Web 2.0 survey demonstrates that despite early frustrations, a growing number of companies remain committed to capturing the collaborative benefits of Web 2.0.² Since we first polled global executives two years ago, the adoption of these tools has continued. Spending on them is now a relatively modest $1 billion, but the level of investment is expected to grow by more than 15 percent annually over the next five years, despite the current recession.³

Management imperatives for unlocking participation

To help companies navigate the Web 2.0 landscape, we have identified six critical factors that determine the outcome of efforts to implement these technologies.

1. The transformation to a bottom-up culture needs help from the top.Web 2.0 projects often are seen as grassroots experiments, and leaders sometimes believe the technologies will be adopted without management intervention—a “build it and they will come” philosophy. These business leaders are correct in thinking that participatory technologies are founded upon bottom-up involvement from frontline staffers and that this pattern is fundamentally different from the rollout of ERP systems, for example, where compliance with rules is mandatory. Successful participation, however, requires not only grassroots activity but also a different leadership approach: senior executives often become role models and lead through informal channels.

At Lockheed Martin, for instance, a direct report to the CIO championed the use of blogs and wikis when they were introduced. The executive evangelized the benefits of Web 2.0 technologies to other senior leaders and acted as a role model by establishing his own blog. He set goals for adoption across the organization, as well as for the volume of contributions. The result was widespread acceptance and collaboration across the company’s divisions.

2. The best uses come from users—but they require help to scale. In earlier IT campaigns, identifying and prioritizing the applications that would generate the greatest business value was relatively easy. These applications focused primarily on improving the effectiveness and efficiency of known business processes within functional silos (for example, supply-chain-management software to improve coordination across the network). By contrast, our research shows the applications that drive the most value through participatory technologies often aren’t those that management expects.

Efforts go awry when organizations try to dictate their preferred uses of the technologies—a strategy that fits applications designed specifically to improve the performance of known processes—rather than observing what works and then scaling it up. When management chooses the wrong uses, organizations often don’t regroup by switching to applications that might be successful. One global technology player, for example, introduced a collection of participatory tools that management judged would help the company’s new hires quickly get up to speed in their jobs. The intended use never caught on, but people in the company’s recruiting staff began using the tools to share recruiting tips and pass along information about specific candidates and their qualifications. The company, however, has yet to scale up this successful, albeit unintended, use.

At AT&T, it was frontline staffers who found the best use for a participatory technology—in this case, using Web 2.0 for collaborative project management. Rather than dictating the use, management broadened participation by supporting an awareness campaign to seed further experimentation. Over a 12-month period, the use of the technology rose to 95 percent of employees, from 65 percent.

3. What’s in the workflow is what gets used. Perhaps because of the novelty of Web 2.0 initiatives, they’re often considered separate from mainstream work. Earlier generations of technologies, by contrast, often explicitly replaced the tools employees used to accomplish tasks. Thus, using Web 2.0 and participating in online work communities often becomes just another “to do” on an already crowded list of tasks.

Participatory technologies have the highest chance of success when incorporated into a user’s daily workflow. The importance of this principle is sometimes masked by short-term success when technologies are unveiled with great fanfare; with the excitement of the launch, contributions seem to flourish. As normal daily workloads pile up, however, the energy and attention surrounding the rollout decline, as does participation. One professional-services firm introduced a wiki-based knowledge-management system, to which employees were expected to contribute, in addition to their daily tasks. Immediately following the launch, a group of enthusiasts used the wikis vigorously, but as time passed they gave the effort less personal time—outside their daily workflow—and participation levels fell.

Google is an instructive case to the contrary. It has modified the way work is typically done and has made Web tools relevant to how employees actually do their jobs. The company’s engineers use blogs and wikis as core tools for reporting on the progress of their work. Managers stay abreast of their progress and provide direction by using tools that make it easy to mine data on workflows. Engineers are better able to coordinate work with one another and can request or provide backup help when needed. The easily accessible project data allows senior managers to allocate resources to the most important and time-sensitive projects.

Pixar moved in a similar direction when it upgraded a Web 2.0 tool that didn’t quite mesh with the way animators did their jobs. The company started with basic text-based wikis to share information about films in production and to document meeting notes. That was unsatisfactory, since collaborative problem solving at the studio works best when animators, software engineers, managers, and directors analyze and discuss real clips and frames from a movie.⁴ Once Pixar built video into the wikis, their quality improved as critiques became more relevant. The efficiency of the project groups increased as well.

4. Appeal to the participants’ egos and needs—not just their wallets. Traditional management incentives aren’t particularly useful for encouraging participation.⁵ Earlier technology adoptions could be guided readily with techniques such as management by objectives, as well as standardized bonus pay or individual feedback. The failure of employees to use a mandated application would affect their performance metrics and reviews. These methods tend to fall short when applied to unlocking participation. In one failed attempt, a leading Web company set performance evaluation criteria that included the frequency of postings on the company’s newly launched wiki. While individuals were posting enough entries to meet the benchmarks, the contributions were generally of low quality. Similarly, a professional-services firm tried to use steady management pressure to get individuals to post on wikis. Participation increased when managers doled out frequent feedback but never reached self-sustaining levels.

A more effective approach plays to the Web’s ethos and the participants’ desire for recognition: bolstering the reputation of participants in relevant communities, rewarding enthusiasm, or acknowledging the quality and usefulness of contributions. ArcelorMittal, for instance, found that when prizes for contributions were handed out at prominent company meetings, employees submitted many more ideas for business improvements than they did when the awards were given in less-public forums.

5. The right solution comes from the right participants. Targeting users who can create a critical mass for participation as well as add value is another key to success. With an ERP rollout, the process is straightforward: a company simply identifies the number of installations (or “seats”) it needs to buy for functions such as purchasing or finance and accounting. With participatory technologies, it’s far from obvious which individuals will be the best participants. Without the right base, efforts are often ineffective. A pharmaceutical company tried to generate new product ideas by tapping suggestions from visitors to its corporate Web site. It soon discovered that most of them had neither the skills nor the knowledge to make meaningful contributions, so the quality of the ideas was very low.

To select users who will help drive a self-sustaining effort (often enthusiastic early technology adopters who have rich personal networks and will thus share knowledge and exchange ideas), a thoughtful approach is required. When P&G introduced wikis and blogs to foster collaboration among its workgroups, the company targeted technology-savvy and respected opinion leaders within the organization. Some of these people ranked high in the corporate hierarchy, while others were influential scientists or employees to whom other colleagues would turn for advice or other assistance.

When Best Buy experimented with internal information markets, the goal was to ensure that participation helped to create value. In these markets, employees place bets on business outcomes, such as sales forecasts.⁶ To improve the chances of success, Best Buy cast its net widely, going beyond in-house forecasting experts; it also sought out participants with a more diverse base of operational knowledge who could apply independent judgment to the prediction markets. The resulting forecasts were more accurate than those produced by the company’s experts.

6. Balance the top-down and self-management of risk. A common reason for failed participation is discomfort with it, or even fear. In some cases, the lack of management control over the self-organizing nature and power of dissent is the issue. In others, it’s the potential repercussions of content—through blogs, social networks, and other venues—that is detrimental to the company. Numerous executives we interviewed said that participatory initiatives had been stalled by legal and HR concerns. These risks differ markedly from those of previous technology adoptions, where the chief downside was high costs and poor execution.

Companies often have difficulty maintaining the right balance of freedom and control. Some organizations, trying to accommodate new Web standards, have adopted total laissez-faire policies, eschewing even basic controls that screen out inappropriate postings. In some cases, these organizations have been burned.

Prudent managers should work with the legal, HR, and IT security functions to establish reasonable policies, such as prohibiting anonymous posting. Fears are often overblown, however, and the social norms enforced by users in the participating communities can be very effective at policing user exchanges and thus mitigating risks. The sites of some companies incorporate “flag as inappropriate” buttons, which temporarily remove suspect postings until they can be reviewed, though officials report that these functions are rarely used. Participatory technologies should include auditing functions, similar to those for e-mail, that track all contributions and their authors. Ultimately, however, companies must recognize that successful participation means engaging in authentic conversations with participants.

Next steps

Acceptance of Web 2.0 technologies in business is growing. Encouraging participation calls for new approaches that break with the methods used to deploy IT in the past. Company leaders first need to survey their current practices. Once they feel comfortable with some level of controlled disruption, they can begin testing the new participatory tools. The management imperatives we have outlined should improve the likelihood of success. 

Keep the conversation going on Twitter

Do our six recommendations agree with the successes and failures you’ve seen? Is the economic downturn affecting your perception and use of Web 2.0 tools? What organizations get the most out of Web 2.0, and why? Use the #web2.0work hashtag to respond to this article and these questions on Twitter. We’ll be following them and responding via our McKinsey Quarterly account, @McKQuarterly.

About the Authors

Michael Chui is a consultant in McKinsey’s San Francisco office; Andy Miller is an associate principal in the Silicon Valley office, where Roger Roberts is a principal.

The authors would like to acknowledge the contributions of their colleagues James Manyika, Yooki Park, Bryan Pate, and Kausik Rajgopal. •

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Notes

¹Scott C. Beardsley, Bradford C. Johnson, and James M. Manyika, “Competitive advantage from better interactions,” mckinseyquarterly.com, May 2006.

²Building the Web 2.0 Enterprise: McKinsey Global Survey Results,” mckinseyquarterly.com, July 2008.

³See G. Oliver Young et al., “Can enterprise Web 2.0 survive the recession?” forrester.com, January 6, 2009.

⁴See Hayagreeva Rao, Robert Sutton, and Allen P. Webb, “Innovation lessons from Pixar: An interview with Oscar-winning director Brad Bird,” mckinseyquarterly.com, April 2008.

⁵Exceptions exist for harnessing information markets and searching crowd expertise, where formal incentives are an essential part of the mechanism for participation.

⁶See Renée Dye, “The promise of prediction markets: A roundtable,” mckinseyquarterly.com, April 2008; and the video “Betting on prediction markets,” mckinseyquarterly.com, November 2007.

© Copyright 1992-2009 McKinsey & Company

 

City and Developer Spar Over Coney Island Visions

City of New York

The city’s plan for a 9.4-acre amusement district. The Municipal Art Society wants it much bigger. A developer wants time-share hotels and big retailers.

Coney Island was once known as the world’s largest playground, where millions of working- and middle-class New Yorkers prowled an anarchic, pulsating bazaar of bathhouses, freak shows, dance halls, carousels, roller coasters, chop suey parlors, hotels, hot dog stands and game booths tightly packed across two miles of beachfront.

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Bloomberg’s Vision for Coney Island’s Revamping

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A developer's plan for Coney Island includes hotels and big box stores.

But that was more than 45 years ago.

In the latest in a long line of efforts to revamp or revive the onetime resort, the Bloomberg administration recently introduced its plan to develop a year-round amusement and entertainment destination, with a special 9.4-acre amusement district, as well as new housing, shops and parks. And in keeping with the waterfront’s contentious history, a prominent civic organization and a developer, who has spent over $100 million buying up property in the area, have put forward competing visions of how to best preserve the soul and mythology of Coney Island.

The civic group, the Municipal Art Society, contends that the Bloomberg administration’s plan must be bigger and bolder to be successful, with three times as much land dedicated solely to outlandish amusements and an “eye-popping” attraction akin to the London Eye, a 443-foot high Ferris wheel.

“Coney Island will only be successful if we think big enough, with enough space for outdoor amusements to accommodate the potential attendance and to create a true economic engine,” said Vin Cipolla, president of the Municipal Art Society, who estimated that Coney Island could attract 3.4 million New Yorkers and tourists a year.

The developer, Joseph J. Sitt, whose own plan owes more to Disney World than to Coney Island’s tradition of inexpensive amusements, argues that both the city and civic proposals are “seriously flawed” and doomed. In order to be economically viable, he says, there need to be time-share hotels and large retail shops, which would be banned under the city’s zoning proposal.

“We want to create a 21st-century Coney Island,” said Jesse Masyr, a real-estate lawyer who represents Mr. Sitt. “We don’t believe it’s economically viable because of the restrictions imposed on development in the district.”

Mr. Sitt, who has wrestled with city officials over his plans for several years, has tried to put pressure on the Bloomberg administration by vowing to buy more land in the area and ousting some of his tenants, including Astroland amusement park, adding to the desolate and vacant lots on the waterfront.

The issues are only further complicated by the recession, sharply declining retail sales and the inability to get financing for any project, regardless of who the developer is. Many residents of Coney Island are more concerned with affordable housing, jobs and attracting grocery stores to the area than the nuances of rebuilding the amusement district, although no one wants it to close down. The beaches, a minor league ballpark and what’s left of the amusements still attract millions of summer visitors.

“We hope that there’ll be some sort of marriage of convenience so we don’t lose any summers, especially now with a depression, when more people may choose to come to Coney Island,” said Chuck Reichenthal, district manager for Community Board 13.

The city is pressing forward, expecting that Mr. Sitt will ultimately yield or sell his land. “The city’s plan will set the stage for the restoration of Coney Island’s world-renowned vibrancy,” said Robert C. Lieber, deputy mayor for economic development. The art society “has some compelling concepts that we are open to, but it’s also important to make sure that the final plan is economically feasible and is integrated with the Coney Island community.”

The Coney Island that is lodged in the public imagination dates back 100 years to a time when the playground spilled across more than 60 acres, with sandy beaches and three separate amusement parks: Dreamland, the most opulent; Luna Park, a blur of minarets, spires and swirling fountains; and Steeplechase Park. It is where some historians say the hot dog, the roller coaster and indoor amusements were invented.

But Coney Island declined rapidly after World War II, and the last of the great amusement parks, Steeplechase, closed in 1964. Over the decades, Robert Moses sought to demolish the remaining amusements, while the developer Fred Trump tried to build apartment towers along the boardwalk.

Today, the amusement district is a shrunken five acres with only the skeletal remains of Coney Island’s heyday: the 270-foot high Parachute Jump, the Cyclone roller coaster, the Wonder Wheel — all three are official city landmarks — and Nathan’s hot dog stand. Gone are the Thunderbolt, Mile Sky Chaser, Loop-o-Plane, the Half Moon Hotel and Feltman’s restaurant.

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An illustration by the Municipal Art Society imagines a boardwalk scene with a mechanical elephant.

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Bloomberg’s Vision for Coney Island’s Revamping

After years of study and many public meetings, the Bloomberg administration introduced its plan last month calling for a special L-shaped 9.4-acre amusement district, along the boardwalk south of Surf Avenue, between KeySpan Park and the New York Aquarium. The zoning also provides for indoor arcades, tattoo parlors, bowling alleys, theaters, laser games, breweries, bicycle shops, restaurants, gift shops and spas just to the north of the special district, as well as hotels on the south side of Surf Avenue, which parallels the waterfront.

Viewed as incompatible, apartment buildings are banned from the amusement district, but up to 5,000 units, including 900 set aside for low- and moderate-income tenants, can be built on the north side of Surf Avenue and west of the ballpark. The city also plans to upgrade the aquarium and build a new park to the west of Steeplechase Plaza.

The city’s plan entails buying the land for a permanent amusement park from local owners, including about half of Mr. Sitt’s 10 acres. Although city officials have said that they will not resort to eminent domain, the text of the proposal states that “the land could be acquired by condemnation.” The parkland west of the ballpark would, in turn, be converted to developable land.

The city’s differences with Mr. Sitt and the art society revolve not around whether to preserve Coney Island’s unique character, but around how big the amusement district should be and what uses should be allowed.

The art society concluded that at least 25 acres should be devoted exclusively to amusements, enough room for a half-dozen major rides and an iconic attraction, in order to create a district that would attract 3.5 million visitors and become an economic engine for the city.

The art society recommends that hotels and housing be built on the north side of Surf Avenue, but not in the amusement district south of Surf Avenue. In order to underwrite the costs, they say that there could be the kind of lucrative signage and corporate sponsorship deals that generate $63 million a year at the L.A. Live entertainment complex in Los Angeles. In the meantime, they say the city should hire an impresario and develop concerts, live theater and rides until developers are selected for the project.

The city views the art society’s recommendations as financially impractical, as do Mr. Sitt and even some longtime vendors in Coney Island. They cite the $300 million theme park, Hard Rock Park, which went bankrupt last year, nine months after opening in Myrtle Beach, S.C.

“The city’s plan practically doubles what we have now,” said Dennis Vourderis, who together with his brother, Steven, owns the one-acre Deno’s Amusement Park, consisting of 22 rides including the Wonder Wheel. “Based on a 100-day operating season, it’s tough to recoup the cost of these rides.”

Mr. Sitt has developed a $1.5 billion plan to revive the amusement district with high-tech rides, a glass-enclosed water park, arcades, restaurants, a shopping mall and now time-share hotels, instead of apartment towers. He has argued that time-shares and big-box retailers would help underwrite the cost of the amusements.

City officials counter that the commercial and residential development would soon overwhelm the amusements.

The two sides have been at loggerheads for over two years. Mr. Sitt had planned on waiting for Mr. Bloomberg to leave office. But after the mayor announced his bid for a third term, Mr. Sitt began negotiating with the city over a possible deal. The talks foundered around Thanksgiving.

The fear is that ultimately little or nothing will happen on Coney Island.

“We might be looking at vacant lots for a long time to come,” said Charles Denson, executive director of the Coney Island History Project. “Everybody’s broke. These massive plans, these visions, don’t usually work. But I hope for the best.”