Episode 29 of the Australian Power Transmission Podcast
In this episode:
Mergers, acquisitions, failures,
investments and trade shows
Once again, thanks for joining me for episode 29 of the
Australian Power Transmission Podcast, the only
power transmission podcast according to iTunes.
My name is Damian Harris and I offer my heartfelt greetings from
Melbourne, Victoria.
There are some other podcasts that have the manufacturing
industry at its core; Manufacturing Revival Radio comes to mind, but to be
honest I’m surprised that no manufacturers have really got on board with doing
their own podcasts. I love them, and by
the fact that you’re listening to me now I’m guessing you do too. Each episode I put out gets hundreds of
downloads, and the Australian Power Transmission Podcast website has had tens
of thousands of page views. Bosch
Rexroth has got a podcast which focuses on Lean manufacturing, and there are a
couple of others, but that really is it.
We hear all the time that content is king and B2B engagement is key and
blah, blah, blah. Well come on
manufacturers who have a marketing department, demand more from these kids and
get them to do some work.
I scripted that last bit and it still sounds like a rant,
but what are you going to do! Anyway,
what has been happening in our world?
*GE chairman and CEO Jeff Immelt has mentioned Australia in
Dispatches, on his way to discussing GE’s industrial internet and how it could
benefit the world. According to Immelt
who was speaking at a breakfast for daily broadsheet The Australian, Australia
should be looking to repurpose its labour to benefit from high-level
engineering possibilities and look less to natural resources projects.
Back onto the industrial internet, Immelt claims that there
is $10-15 trillion per year just waiting to be created, from technologies such
as smart machines, utilising extensive sensing and creating optimal asset
performance. You know, it sounds like
SCADA to me - supervisory control and data acquisition - and $15 trillion is a
fair whack; like the annual GDP of the US.
In fact, we’re missing a whole heap of acronyms on this one... HMIs,
RTUs, PLCs, PACs, all running over TCP/IP.
Staying with the Fairfield, Connecticut conglomerate, GE has
scrounged around the bottom of its car's ashtray to find $3.3 billion in loose
change to acquire Lufkin Industries and its oil and gas pumping expertise.
Lufkin Industries has an existing total workforce of 4500
across 40 countries, specialising in the power transmission equipment required
for deep energy extraction.
The move represents an unofficial nod by GE management that
the shale gas industry is set to feature significantly in future plans for the
GE Oil and Gas division, and comes on the back of similar acquisitions that
bring the total M&A spend by the division to $11 billion since 2007.
*The PriceWaterhouseCoopers, Australian Industry Group,
Performance of Manufacturing Index for April has been released... and things
are bad, very bad. So bad, that the last
time a result this low was reported was at the height of the Global Financial
Crisis. Well, we’ve moved from a Global
Financial Crisis to an Australian Manufacturing Crisis. The result for April was 36.7. 50 means we’re treading water. Victoria recorded a 29.1.
The strength of the mining industry has driven a wrecking
ball right through the heart of the Australian manufacturing sector. The dollar has remained high, exports have
dried up and now prices for resources have also cooled, yet the currency is
stuck. A long lead time federal election
has meant investment in manufacturing is non-existent, and won’t be increased
until the election takes place.
American manufacturers are slowly clawing back ground lost
during the GFC and to offshoring, but they enjoy a large, diverse economy, with
a multi-faceted manufacturing sector.
Australian economists are all too aware of Dutch Disease; the problems
associated with an economy that becomes too reliant upon one natural resource,
to the detriment of all others. Well,
we’ve got Australian disease, and hopefully it’s a good warning to the rest of
the world.
*In appointment news, Nord Drivesystems has welcomed John
Thain to its growing roster as Regional Sales Manager for New South Wales and
the ACT. Nord MD Mark Alexander is quoted
as saying that Mr Thain was highly regarded in the helical geared motor
industry, and brought a lifetime of experience and product application
knowledge to his new role.
Thain has 30 years in the power transmission game.
*Back in episode 11 I talked about the woes that had
befallen electric sports car manufacturer Fisker. From legal battles with competitor Tesla
about the Karma’s series hybrid transmission through to the failure of battery
supplier A123 Systems, Fisker has had an uphill battle on its hands, not least
of which is a $193 million Department of Energy seeding loan which remains
outstanding.
At $100,000 a piece, the Fisker Karma had started to find a
steady following, with 1800 finding their way to owners across the US, although
the A123 Systems collapse brought production to a halt last year; production
which has not yet restarted. In light of
the pressing financial issues, the company has been forced to make redundant
three quarters of its workforce of 220.
There is little doubt that in light of no new investors
coming in – and considering that $1.2 billion has already been raised – a buyer
for the whole business is the only feasible option on Fisker’s horizon. I can’t see an automotive partner wanting to
come in on this one, but I would love to be proved wrong. Electric and hybrid vehicles will require
subsidies for the foreseeable future.
*According to the very busy administrator PPB Advisory,
Hastie Group Ltd directors may have breached their duties amid poor strategic,
operational and financial decisions on their way to overseeing the collapse of
the multi-faceted engineering firm last year, as I reported in episode 15.
The Australian Securities and Investment Commission has been
advised of the possible breaches, implicating Hastie's auditor, Deloitte, and
is considering whether action is pursuable.
Hastie went on a prolonged buying spree of engineering
businesses at the peak of the market and exposed itself to extreme levels of
debt, debt which it couldn’t service. A
failed attempt to raise more cash through a seasoned equity offering and more
debt was the final straw, with nearly 2000 workers affected.
With some business units being subject to management buyout,
PPB Advisory has suggested that the balance of the Hastie businesses be placed
in liquidation.
*Packaging company Visy has expanded its operations in
Queensland, opening a new $86 million beverage can facility alongside its
existing Stayplton corrugated cardboard box plant. The investment allows the firm to maintain
its stranglehold on the Australian market in the sector and is expended to have
an annual output of 1.6 million aluminium beverage cans and 600,000 steel food
cans.
The Stayplton site has a combined investment of $150
million, and the new beverage can plant is the first to open in Australia for
20 years. Details of financial specifics
about the opening have not been revealed, although the local council does have
an Investment Attraction Program which will have had some bearing on the Visy
decision to further its Queensland investment.
*Whilst we’re
talking about the electric vehicle market, Siemens has bought electronic
components and systems developer VePoint from Nuremburg, Germany technology
firm Semikron International. The two
companies have agreed to collaborate further on electric vehicle power
electronics, which comes under Siemens’ existing Inside e-Car business of the Siemens
Drive Technologies unit.
Siemens already has
a significant investment in electric vehicle technologies, and the acquisition
of Semikron should dovetail nicely with its ongoing work on its DC to DC
converter.
The amount of money
that changed hands as part of the purchase has not been revealed.
*As I have stated in the last couple of episodes, National
Manufacturing Week is nearly upon us. It
is being conducted at the Melbourne Convention Centre (which will always be
known as Jeff’s Shed after former Premier Jeff Kennett) on the 7th
to 10th of May. I’m going to
have to be honest here, but it looks like we might have a fizzer on our hands.
A run down the list of exhibitors reveals a mere two
businesses directly involved in the power transmission industry. I’m hoping there are some other companies who
haven’t been listed but will be attending, but I’m not holding my breath. Of everyone I’ve talked to about exhibiting,
most are giving it a miss. If things are
tight in the Australian manufacturing sector, then the squeeze is well and truly
on in the power transmission game.
National Manufacturing Week has been delighted to announce
there will be 300 exhibitors for the event.
I’ll be going – I wouldn’t miss it – but it looks like one hour is all
it will take to see what I want to see, in a city of 4.1 million, in a country
that bemoans the erosion of its manufacturing base.
*Contrast this with the recent Hannover Messe in April. It’s massive.
Sure enough, it’s basically the de facto world trade show, but in the
Motion, Drives and Automation category alone there were 1,370 stands. Mark my words, I’m going to the next one, and
that way you won’t have to hear me whinge.
The 2013 Hannover Messe also saw the introduction of
numerous new products in the power transmission field. One of the nicer ones is Lenze’s Smart Motor,
which is an IMD that can be both programmed and operated via smartphone.
Competing with existing offerings from SEW, ABB and Bauer
among others, the Smart Motor can be direct-coupled to a range of Lenze
gearboxes for increased drive flexibility.
The motor is operable by a smartphone app incorporating near field
communication wireless communications, and features many of the parameters of
high-function variable speed drives.
Fans of this design point to the relative ease of installation.
Lenze’s initial marketplace contributions are a 7Nm maximum
torque version and a 20Nm maximum torque version.
*Get your gondolas out and practice your Italian, because
the European Power Transmission Distributors Association has announced that its
annual convention is going to be in Venice this year, from September 18 to 20.
It’s the EPTDA’s 15th anniversary this year and Executive
Vice President Hans Hanegreefs reckons 350 or so will attend. Keynotes for 2013 include Kjell Nordstöm, Stéphane
Garelli and Alan Beaulieu. Three
economists go into a bar... Actually, they’ll go into the Hilton Molino Stucky
Hotel.
Registrations are open now, to EPTDA members and what they
call ‘qualified’ non-members, so check out eptdaconvention.org for further
information.
*The G8, the G20, the OECD, ASEAN, the OAU, the OAS, NATO,
OPEC and I’m sure a whole host of other acronyms of international alliances
have just been joined by one that may have more significance in the coming few
decades than any of the others, and that is BRICS. Standing for Brazil, Russia, India, China and
South Africa, the group all feature a strong manufacturing focus and because of
this, business goals that are more or less aligned.
The CEO of Brazilian electric motor manufacturer WEG, Harry
Schmelzer Jr., was an attendee at the recent BRICS Summit in Durban, South
Africa, as one of the representatives of Brazil on the BRICS Business
Council. The main agreement to come from
the Summit was for the creation of an in-house development bank to aid BRICS
initiatives, in something akin to the World Bank.
*That brings episode 29 of the Australian Power Transmission
Podcast to a close. I know this one was
a bit negative, but the news is the news.
If you would like to contact the show, go to www.australianptpodcast.com and
have a dig around. Also, if you’re on
twitter, so is the show; @ozptpodcast.
Thanks for joining me and let’s speak again soon.
