Evidently to meet this rule, the GE joint venture with Fanuc was announced. Fanuc Automation, a Japanese CNC and robotics pioneer, was headed up by Dr. Seiuemon Inaba, compared at the time to Dr. No in the James Bond film because of the flashy trappings that surrounded him. Dr. Inaba (in his early 60's at the time) was much admired by Jack Welch, a sucker for ostentation.

To my recollection, the joint-venture was oddly structured: GE owned 55% of GE-Fanuc-N. America, Fanuc owned 55% in the Far East (including Japan), and in Europe it was 50/50.

In my opinion, the linkup was a strategic mistake, caused by Jack Welch's lack of understanding of the fragmented automation business. Fanuc was primarily in machine tool CNC (Computer Numerical Control) and robotics, while GE was focused on factory and process automation.

Well, the strategy was flawed and the marriage never quite melded. Dr. Inaba is now in his eighties and Jack Welch has departed.

GE and Fanuc announced (mid-August '09) that they will dissolve their partnership by the end of this year. This reflects the reality that automation and CNC/robotics technologies and markets have continued to diverge.

Under the terms of the breakup, Fanuc retains the global CNC business, while GE retains the software, services, embedded and control systems businesses worldwide. On the automation side, Fanuc is dropped from the name and the company becomes "GE Intelligent Platforms".

GE shares fell some 58% over the past year, largely because of GE Capital which generated 50% of GE profits before the downturn. CEO Jeffrey Immelt publicly admits the mistakes; he recently stated that the US should now aim for manufacturing jobs to be at least 20% of total employment, about twice what it is now. That gives some indication of change in direction. In my view, the GE de-linking from Fanuc will fuel new growth through automation acquisitions.

The candidates are Invensys and Rockwell, both struggling to stay afloat. Also, ruthless Honeywell CEO Dave Cote may be ready to sell Honeywell Process Solutions, which remains disorganized and unfocused. GE came close to acquiring all of Honeywell almost a decade ago, but "welched" on the deal - long story, see weblink below.

Aside from GE, only ABB, Siemens, Emerson and Schneider are big enough to make acquisitions of this size. Clearly they are all examining alternatives and getting down to the short-strokes.

GE is well-organized, with huge resources and expertise in making acquisitions work. In the automation business, it has been constrained through its Fanuc link. Now, the giant is ready to pounce.

Stay tuned for BIG re-shuffles of the automation majors. It's long overdue.