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.