Tuesday, 2 July 2013

Episode 31 - The Knives Are Out in Canberra

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Episode 31 of the Australian Power Transmission Podcast

In this episode

                It’s been a while – AGAIN – so I’ll try to catch up with the latest news in power transmission
Thank you for tuning in to episode 31 of the Australian Power Transmission Podcast, where it is Monday, July 1st, 2013.  You are listening to Damian Harris - who is absolutely freezing – coming to you from Melbourne, Victoria.

Before we get started, if you would like to contact the show, send me an email at feedback@australianptpodcast.com.  Also, follow on twitter, @ozptpodcast.  I’ve got the world’s WORST facebook page, I just have to get it ratified by the Guinness Book of Records to make it official.  If you would like to check it out before it gets any better, be my guest.

Well, the name of the show is the Australian Power Transmission Podcast, so let’s see what’s been going on in the last little while.

*Australian government ministries have had a full switcheroo, following the leadership spill that saw Prime Minister Juilia Gillard finally ousted by former Prime Minister Kevin Rudd, who had been agitating around the edges for a while. 

Prime Minister Rudd has his favourites who have made their make their way back into senior portfolios, with supporters of former Prime Minister Gillard finding new seats on the backbench.  Most of them have already tendered their resignations and a couple of major players have stated they are quitting politics entirely at the coming federal election.  In this list, include Greg Combet, the former minister for everything to do with the carbon tax and industry.   
Senator Kim Carr has thrown the innovation and industry cape back on, and takes science, research and higher education with him.  Mark Butler in the minister for climate change and Richard Marles is the new minister for trade.

Treasurer and Deputy Leader Wayne Swan is also gone, with Chris Bowen taking over as Treasurer, whilst Craig Emerson’s time is also over.  No matter who takes over what role, all ministries will be in more-or-less ‘caretaker mode’ until the election.

*The ABB board has been quick to replace outgoing CEO Joe Hogan, announcing Ulrich Spiesshofer as the new person in charge.  Spiesshofer will take up his new post on September 15th, and comes to the top position from ABB’s Discrete Automation and Motion division, being primarily responsible for the synergisation of Baldor into the ABB fold.

ABB Chairman Hubertus von Grünberg is on the record as always looking to promote from within.  The press release announcing the Speisshofer appointment quotes von Grünberg... “ABB has developed a strong bench of talent: I am extremely pleased that the new CEO comes from within the company, and brings a solid track record and deep knowledge of the portfolio.”  Although, I’m guessing he said it with a Swiss-German accent.

Spiesshofer is well-credentialed, having spent 11 years at AT Kearney as a consultant and a fair bit of time at the University of Stuttgart along the way, gaining an MBA and PhD in Economics.

*On the Mergers and Acquisitions front, ABB has agreed to buy Dynamotive, of Coalville, in the Midlands of the UK, adding its 40 staff to the Drives and Controls strategic business unit. 

Dynamotive was founded in 1998, focusing on value-added engineering services to the automotive, industrial and marine sectors.  The purchase will add strength to the total offering ABB has in the sector.

From the ‘about us’ on the Dynamotive website, I can tell you that their slogan is “Technology, People and Processes = High Value Low risk solutions”.  Well, you guys will be dropping that one soon enough, to be replaced by ABB’s “Power and productivity for a better world”.  I think I need to come up with a motto for the Australian Power Transmission Podcast.

*And finally, whilst I’m still talking about ABB, they have come up with a new app and website tool that allows users to identify the differing requirements for minimum energy performance standards in electric motors from different international jurisdictions.  It’s not bad on the iPad, having given it a try, so full kudos to any company that not only keeps up with technology but uses it to advantage.

*The Timken Company has been in the news a fair bit over the past month or so, for a variety of reasons.  Probably most significant is the fall in revenue for the first quarter of 2013, by a staggering 23% year-on-year.  The reductions reflect a softening in demand in oil and gas and industrial distribution.

The second reason Timken has been in the news is because of the acquisition of Standard Machine, a gearbox manufacturer from Saskatoon.  Standard Machine has 125 on its payroll and recorded revenues of $31 million in 2012.  The main product lines are open gears and large reducers for the mining industry.
Standard Machine started in 1967, got into gear manufacturing in 1981, and purchased Hamilton Gear in 1985, a founding member of the American Gear Manufacturers Association.   

Timken has also earned a position on Ethisphere Institute's World's Most Ethical Companies list, the third such nod since 2010.  Ethispehere named 145 on the list for 2013, which honours consistent demonstration of integrity in business practices and initiatives. 

 *The president of Boeing Australia & South Pacific, Ian Thomas, has spoken in defence of automotive industry protection in his role as the head of the Prime Minister’s Manufacturing Leaders Group.  Speaking back in April – before the decision by Ford Australia to cease its local operations in 2016 – Thomas pointed to the fact that many of the technologies, suppliers, capital and ecosystem of the automotive industry are shared with the aviation industry, and its perceived connection with innovation.

The Ford decision obviously took a bit of wind out of the sails of Thomas’ statement, but since making it and the references to the Australian dollar trading at 105 US cents, the dollar has lessened in value by 15 percent and now hovers around the 90 cent mark, with more to come.

In almost the same breath, Boeing is investing $1 billion in South Carolina, establishing an ICT hub that will employ 1000 and expanding 787 production facilities, where another 1000 will pick up a pay cheque.  My guess is a fair swag of them will be employed in battery inspection roles.

As usual, there is a small amount of state government seeding money, which is rumoured to run at around 10% of the total investment.

*Taking a quick journey up the I-95 – see, who says I don’t pay attention – from South Carolina to Virginia, and the home of Sumitomo, where president and CEO Ron Smith opened the doors a couple of months ago to show everyone how good their expansion efforts have been.

I think it’s worth quoting the press release directly for the next bit.  “Sumitomo has invested nearly $6 million in brand new state-of-the-art machine tools.  For the first time in over 14 years, we are cutting gears right here in Chesapeake, Virginia!  I mean no disrespect when I say this, but let China make stuff for China.  The Bevel Buddybox is now made in the United States of America!”

I can only ask, where were they made before?  It’s probably not smart business to go caning your own older models.

*Brevini booked the Park Royal in Parramatta for a two day junket over May 14 and 15, disguised as the Brevini Heavy Duty Mining and Global Customers Conference.  Noteworthy attendees included Renato Brevini, president and CEO of the worldwide Brevini Group and company director Nazarro Paroli, as well as a host of Brevini sales people from across the globe.

Brevini has been in Australia for 20 years.

*Tsubaki has announced a new range of Troi Drive and Worm Power Drive reducers, which utilise the company’s design philosophy of economy and ecology.  The under-driven (and some would argue, ugly) units go all the way to 3600:1 in double-reduction form, with capacities up to 5700Nm for Worm Power Drive.

The Troi Drive series is for bigger units, with the name coming from the design’s usage of troidal drum-style worm gearing.  Output torques range from 1,100Nm up to 47,000Nm, and Tsubaki claims that the troidal design enable smaller units to be specced in to higher-capacity applications.

*GAM Gear has announced the release of the 2013 GAM catalogue; 102 pages long and featuring the entire product range of the Mount Prospect, Illinois gear reducer manufacturer.

New inclusions in the 2013 edition are the EPL-A which is an inline planetary gear reducer with metric outputs and the EPL-F which has a compact flange output.  Check out www.gamweb.com for more information.

*Mid-April saw the purchase of Barnes Distribution by MSC Industrial, for $550 million.  MSC and Barnes are players in the MRO space, with Barnes specialising in lean inventory management, which I’m sure will have been of interest to the MSC management.  Probably also just as interesting is a $16.5 million tax bill from a decade ago that the US Tax Court says is now due.

Barnes turned over $300 million in 2012, with 1400 employees.

*Moog has paid $34 million to Pentair to acquire Aspen Motion Technologies, manufacturers of brushless DC motors and controls.  Aspen Motion Technologies, originally from Aspen and now based in Radford, Virginia, manufactures units that integrate its technology with OEM designs.

The purchase is coming from Moog’s bank balance, with Aspen turning over $36 million a year.  The reason I mention this figure is the fact that the Aspen website looks like something that the work experience kid did back in 1999.  Come on guys, $36 million a year. 

Former Aspen owners Pentair enjoy revenues of $8 billion, whilst new owners Moog expect 2013 turnover to be $2.6 billion.

*Following on from recent writedowns and impairments by European steel manufacturing giants ArcelorMittal, ThyssenKrupp, Indian firm Tata has also recorded an impairment against its European steel operations, of $1.6 billion.  Tata paid $13.1 billion for the business in 2008, purchasing it from Corus, and making a steady set of losses since the GFC.

*The Australian Industry Group has announced the formation of a new business group, the Australian Advanced Manufacturing Council, which will include industry heavy-hitters Cochlear and Dow Chemical.  They can battle it out with the Prime Minister’s Manufacturing Taskforce for supremacy, just like the People’s Front of Judea and the Judean People’s Front.

I’m sure other names will be announced to the Council in due course, although I think there will be short odds that one of the key objectives for the AAMC will be a reduction in pricing of LNG for Australian manufacturers.

*The board of the freshly-minted Manufacturing Precinct initiative met at Monash University, ahead of its actual opening in July.  The board is chaired by Albert Goller, formerly of Siemens, whilst the precinct network’s chair is John Grill, formerly of WorleyParsons.

The full board is as follows:
• Christine Bridges Taylor, General Manager and Director, B&R Enclosures
• Paul Bastian, National Secretary, Australian Manufacturing Workers’ Union
• Dr Fred Davis, Vice President of Business Development, Universal Biosensors
• John Dixon, Managing Director, Silk Logistics Group
• Dr Calum Drummond, Group Executive, Manufacturing, Materials and Minerals, CSIRO
• Mike Edwards, General Manager, Boeing Research & Technology Australia
• Professor Paul Greenfield AO, Chair, Australian Nuclear Science and Technology Organisation
• Michael Heard, member of South Australian Premier's Science and Industry Council and former CEO of Codan Ltd
• Dr Frank Koentgen, Director and Chief Executive Officer, Ozgene
• Rhett Morson, General Manager, Morson Engineering, and
• Mike Rausa, Executive Director Corporate Services, Toyota Motor Corporation Australia

According to former Industry Minister Greg Combet’s press release, the board will meet to “enable firms to collaborate and build scale with each other and researchers both at home and abroad to improve knowledge and skills, deploy technology and develop a cohort of growth-oriented businesses.” 

Well, they’ve got $500 million to play with so we’ll see what the come up with.

*That brings episode 31 of the Australian Power Transmission Podcast to a close.  There haven’t been any calls for a leadership spill in this podcast, so I’ll be back soon for the next episode.  Even if there was a vote, I’m sure I’d have the numbers.

Wednesday, 29 May 2013

Episode 30 - Ford Pulls the Pin

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Episode 30 of the Australian Power Transmission Podcast

In this episode

                Have you driven a Ford, lately?

Thanks for joining me for the 30th episode of the Australian Power Transmission Podcast.  It is Monday, May 27, 2013 and my name is Damian Harris, coming to you from Melbourne. 

*National Manufacturing Week 2013 in Melbourne has just run its course, and it was, as far as I’m concerned, a total waste of time.  The place was filled with 3D printing mobs who were mostly looking for investors, a few very anxious-looking capital equipment manufacturers and a whole host of peripheral supply businesses.  Reed Exhibitions says that over 11,000 pairs of feet lapped Jeff’s Shed for NMW 2013, which presents a 20% reduction on the 2011 attendance.

Not one of the geared motor manufacturers who normally make this event their own was present.  I talked with Reed Exhibitions about what seemed to be a boycott from the likes of Nord, SEW and Bonfiglioli, and was told that they were all exhibiting at AIMEX in Sydney in August.  AIMEX is the Asia-Pacific’s International Mining Exhibition, and the move would suggest a shift in thinking by the major power transmission players.  I’m sure they’re thinking of the old adage; if you want to get rich in a mining boom, be the one selling picks and shovels.

Without being a conspiracy theorist, I was amazed that not one of the geared motor manufacturers had a stand at NMW.  It definitely presented an opportunity for a savvy MD who wanted the show exclusively to themselves. 

Anyway, AIMEX is where the action is at.  The manufacturers think that moving stuff into the mining game is the way forward – and they may be correct, based on recent PMI results.  Altra Industrial Motion, Bonfiglioli, Brevini, Gates, Naismith, Nord, Sew Eurodrive, WEG, SES and SKF have all booked slots for what they think is their future.  I’ll have more on AIMEX as the date rolls closer.

*The pace of development in electric motor efficiency continues to climb, with Bauer Gear Motors unveiling the world`s first Ex-rated, IE4 super-premium efficiency geared motor at Hannover.  The efficiency arms race hasn’t normally extended into increased-protection motors, where exemptions exist because regulators deem it more important to not have explosions than run with maximum efficiency.

Bauer calls their new range the ‘S Series’, and offer a range that starts at 0.55kW and extends to 15kW.  They achieve the higher efficiency levels by utilising Permanent Magnet Synchronous Motors, which deliver efficiency advantages across the range at full or partial load.

*Bonfiglioli has also released a new range of Permanent Magnet Synchronous Motors, which it calls the BMD range.  Designed for 230 and 400 volt AC three-phase, the BMD range covers torques from 1.7 Nm to 37 Nm. 

*Regal Beloit’s Durst division has recently announced the retirement of Bernie Nielsen, vice president and general manager, to be succeeded by Terry McCormick, who comes in as vice president business leader.  He was previously based at Regal HQ and was in charge of customer quality.  McCormick will now make the short trip down Milwaukee Road to Clinton, and will take charge of daily operations and financial performance at the agricultural gearing manufacturer.

McCormick’s background includes stints as manager of manufacturing engineering in a hydraulics firm and manager of manufacturing engineering and quality assurance at a linear bearings company.  He also has a degree in Mechanical Engineering from Michigan Technological University.

*In senior appointment announcements, ABB CEO Joe Hogan has called it quits, citing private reasons.  Hogan joined ABB as CEO in 2008, just in time for the GFC.  In other ABB C Suite news, Chief Technology Officer Prith Banerjee is bringing his lengthy stint of 12 months in the role to an end, heading Stateside in a new role with another firm.

*A little while ago I highlighted Amazon Supply as a further avenue that B2B commodities are being channelled through, and its progress is going to track the ICT literacy of generational change.  This theme continues, as Google has also predicted B2B commodities as a distinct business opportunity.

Google Shopping For Suppliers is the name given to the new platform – which is still in ‘beta’ testing – and at the moment it is only in the US and only for electronics equipment.  It stands to become the real online version of trade directories, where Yellow Pages and White Pages once dominated in offline form and alibaba.com has crafted a sizeable niche for itself online.

Suppliers will need to pay an annual fee for inclusion in Google Shopping For Suppliers, but it is significantly less than an Adwords spend for a couple of months.

*Specialist gear manufacturer SP Gears of Kent, UK has been purchased by The Precision Technology Group.  The Precision Technology Group currently owns Precision Technology USA Inc, Hypac Pty Ltd, and Seaway Powell Marine Ltd, and the purchase is said to complement the existing businesses.

SP Gears manufactures products for the marine, rail, automotive and nuclear power industries.

*ITW is looking to divest six underperforming businesses in the interests of shareholder value.  The six businesses are involved in construction, distribution and transportation and have a combined revenue of $600 million.  Overall margin for ITW runs at over 16%, whilst the businesses listed for divestment have been running at 7%. 

Acquisitions have long been the MO of ITW strategic planning, so intermittent divestments are only to be as expected if the business is to maintain strong growth.

*Without doubt the biggest news in the history of the Australian Power Transmission Podcast was announced last week, with Ford Australia CEO Bob Graziano telling throngs of assembled media that the company is pulling the pin on manufacturing cars in Australia.  Of course, there are no shocks there, as the locally-produced Falcon is a competent, well-made car that nobody buys, and the Territory is a competent, well-made SUV that not many people buy either.  Technicalities meant that neither vehicle was available in left hand drive, which seriously inhibited any chance of exporting the family of orphans.

Racking up combined losses of over $600 million in the past five years, Ford’s hierarchy knows when it’s flogging a dead horse, and the horse in Broadmeadows has been on life support for a long time.  The Victorian government was in last-minute talks with Ford management right up to the announcement, trying to offer incentives to avoid losing another 1200 workers in the manufacturing industry, but alas, no deal was possible.

Ford will continue with the loss-making local operation until 2016, during which time it will transition into an import-only marquee, mostly from increased production in South-East Asia.  One thing that has been floated is a possible increase in Australia’s automotive design input for the international market, much in the same way that Holden’s influence in design it utilised by global GM brands.  Ford isn’t renowned for having a powerhouse design studio in Australia, so to be honest I think it’s a bit of a stretch to replicate GM’s efforts.

An ambiguous response from Manufacturing Australia reads thusly: “For Australian manufacturing to be competitively sustainable over the long term we need to review and rethink the way that this sector is supported.  A productive manufacturing sector is a critical component of a thriving economy.  Manufacturing is not like other sectors. It is a highly strategic industry that generates and meets demand for skilled employment, adds value to other domestic industries, and whose importance to society is measured in more than just its economic value.”  That says everything and nothing all at once.

The automotive components industry has just lost one-third of its local customer base, which is going to make things pretty difficult for them in the medium term.  It sounds like the Automotive Envoy and Automotive Supplier Advocate, William Angove, is going to have his work cut out for him.  More than $1.5 billion worth of automotive components are exported annually, and the reduction in domestic demand is going to put pressure on finding more markets.  Australian vehicle sales continue to run at record levels, so the demand is there, but good luck getting stuff into Korea, where the bulk of the growth is coming from.  At least the Australian dollar is starting to play ball after the last interest rate cut by the RBA.

Innovation is floated as being the key to Australia’s manufacturing future, alongside adaptability, sustainability and finding niches in the global market.  Well, next to the engine and stamping plants, all Ford really did was bolt together a whole heap of parts that were made by suppliers, many of these came from overseas.  A lot of the production line function was already fully automated, which is supposedly what Australia should be looking to extend.

Tariffs on imported cars have come back onto the agenda from some short-sighted politicians as a possible remedy.  Wow.  It was tariffs and protectionism post World War Two that kept Australia’s industries relatively isolated and arguably underproductive.  If nothing else, R&D was definitely lacking.  Plus, all undergrad economics students will ask politicians to google deadweight loss.

There are a whole host of success stories where Australian manufacturers have found niche industries and markets, but we are talking about a major industry here.  My original assessment was that Australia’s automotive infrastructure could support either three, two or zero car makers.  Well, from 2016, we’ll be down to two. 

That wraps up episode number 30 of the Australian Power Transmission Podcast.  If you would like to contact the show, send me an email at feedback@australianptpodcast.com or twitter @ozptpodcast.

Episode 30 - Browser Play

Tuesday, 7 May 2013

Episode 29 - Mergers, acquisitions, failures, investments and trade shows

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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.

Episode 29 - Play it in the browser - if you dare...

Tuesday, 9 April 2013

Episode 28 - Sue Morphett at Manufacturing Australia and Belt Drives Overview

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Episode 28 of the Australian Power Transmission Podcast

In this episode

                Belt Drives Overview

Thanks for tuning in yet again to the Australian Power Transmission Podcast, or maybe for the first time.  If it is the first time, thank you for going out of your way and listening in.  My name is Damian Harris, I work in the mechanical power transmission industry and I have an interest in our field; not just in Australia but across the globe.  It is Monday, April 8th, 2013.

I’m looking forward to National Manufacturing Week, which is coming up in May – from the 7th to the 10th to be exact – in Melbourne, and even though it is probably going to be a subdued affair, I’ll bring you the best in show with regards the power transmission exhibitors.  To those of you who are listening in that will be there, be prepared to answer some on-the-record questions.

So, what’s been happening that we should care about?

*Sue Morphett is the new Chairman of Manufacturing Australia, having been appointed in March.  I say ‘Chairman’, as this is how she is described on the Manufacturing Australia website.  She replaces Dick Warburton, who is hanging up his soapbox.

Morphett is an interesting choice, if not controversial, thanks to her historical management of Australian manufacturing firms.  She is best known for trying to reverse the fortunes of former Australian clothing manufacturer Pacific Brands, accepting taxpayer funds to assist, before offshoring a major portion of production to China in the interests of shareholder value.  Along the way, she was in the sights of unions, who were responding to her multi-million dollar annual salary.  If nothing else, Sue Morphett is courageous.

Although not long in the role, Morphett has come out swinging.  First cab off the rank is the Manufacturing Australia list of priorities, which they call the ‘three pillars of manufacturing reform for 2013’.  These three pillars are cheaper energy prices for local manufacturers, issues with trade liberalisation and product dumping, and investment for manufacturing growth.  Energy prices are going to feature prominently in Sue Morphett’s future, as is, undoubtedly, the carbon tax.

So far, Morphett’s role has been overshadowed by her offshoring past at clothing manufacturer Pacific Brands, which she has defended, saying she did what was necessary at the time.  What was necessary included accepting conditional taxpayer funds for local manufacturing and then shutting down operations, with production filled by Chinese third-parties.

Just to recap, Manufacturing Australia is a lobby group that is funded by – in alphabetical order – Allied Mills, Amcor, Bluescope Steel, Boral, Brickworks, Capral, CSR, Incitec Pivot and Rheem.  When founded two years ago, it’s primary function (and, it could be argued, sole function) was to oppose any introduction of the Australian carbon tax.

*Kimberley-Clark Australia and New Zealand CFO, Tony MacMahon, recently told the Fin Review that Australian manufacturers needed to innovate to succeed, rather than looking to taxpayer funding.  MacMahon was obviously trying to distance the local operation from its UK counterpart, which is still suffering from the backlash of putting off hundreds of workers at its Barton-upon-Humber factory, which was originally set-up with a £12 million government grant.

*Disagreeing somewhat with Kimberly-Clark’s MacMahon is Australian Industry Group’s Victorian Director Tim Piper, who has welcomed a $52 million co-investment by the Victorian government with Mars Confectionery, $2 million coming from the government.  The money is going towards an expansion at Mars’ Ballarat manufacturing plant, so they can churn out more Maltesers.  Mmmmm, Maltesers.

*While I’m having a bit of a rant about CEOs and recent comments, Dow Chemical’s Andrew Liveris has suggested that Australians should think less about being an entitlement society and more about helping manufacturers.  He suggested to Sky that Dow would up its investment spend in Australia if it was entitled to subsidised energy, rather than letting it go for the international market price.

*Federal money has also been set aside for the Industrial Transformation Research Program, with $236 million allocated to food research, in bringing manufacturers and researches together.  Industrial Transformation Research Hubs will reportedly provide the opportunity for universities and industrial partners to focus on significant collaborative R&D projects with outcomes beyond their independent endeavours.  The Government will invest up to $1 million per year in each hub along with investment by industry partners.

Industrial Transformation Training Centres will foster close partnerships between university-based researchers and industry to provide innovative training for young researchers vital to Australia’s future industry.

*The race to the bottom in the Australian car manufacturing industry continues, with Holden accused of taking the money and running.  In a week when it was revealed that Holden has received a lazy couple of billion in government co-investment money in the past ten years, the firm has decided to trim its workforce by 500.  South Australian Premier Jay Wetherill is ropable, especially with his state poised to chip in another $50 million in the near future as a further co-investment sweetener. 

People simply aren’t buying Australian-made cars, just ask Ford.  Are we making the wrong ones?  Has world’s best practice passed us by?  Is the dollar killing exports?  Is our individual worker production ratio poor?  The answer is yes.

*Mitsubishi Electric has acquired a 100% share of KH-Automation - a long-term strategic partner – from Koop Holding Group.  The 50-strong KH-Automation specialises in process automation in the European market and the acquisition is expected to yield collaborations for both existing projects and an expansion into new business areas.  Mitsubishi Electric recorded sales of $44.4 billion last year.

*The recent attempted failed non-putsch in the federal government by supporters of former Prime Minister Kevin Rudd has left a battlefield strewn with ministerial casualties.  Most relevant to listeners of the Australian Power Transmission Podcast is the demise of Kim Carr, former Industry Minister and Minister for Manufacturing; important not so much on a personal level for Kim Carr but because there is no longer anyone responsible for Manufacturing as a portfolio.  Having said that, the Ministry was originally created for Mr Carr after the last failed Kevin Rudd putsch, which he also supported.

*In non-Australian automotive investment news, Renault-Nissan will invest $320 million to expand a complex in India that will churn out Datsuns, 600,000 of them per year.  I hope they use the money wisely and resurrect the 180B. 

The decision to spend in India rather than China may have had something to do with some recent antagonism between China and Japan, which has seen a few investment decisions by Japanese multinationals postponed.

Meanwhile GM is injecting $6oo million into its assembly plant in Kansas City, where there’s no place like home.  The money will go towards a new paint shop and presses as well as other manufacturing infrastructure, at a plant which has churned out over 12 million cars since the end of World War 2.

*The American Bearing Manufacturers Associaiton’s Essentials Course is gearing up, with locations right across the US and the newly-minted version in Phoenix on April 9-11. 

The Essentials Concepts of Bearings Course covers everything from Basic Bearing Types, Bearing Standards, Bearing Mounting and Lubrication Methods, Internal Loads, Surface and Subsurface Stresses, Bearing Failure Modes and a whole lot of group work.

It’s obviously too late to get on board for this one, but the next one is in Durham, North Carolina on September 10-12.

*Second-hand news but news nonetheless from IMS Research is that compact AC drive profit margins were down in 2012 but have been forecast to improve.  Quantities actually grew by over 2% in the Japanese and European markets, as manufacturers used compact drive units as market placeholders to maintain a foothold with otherwise profitable customers.

The low end of the market has seen the most competition, with IMS Research citing entries from both Delta and INVT, which has driven demand as prices have tumbled.

*The battles of the electorates are currently underway in South Australia, as MPs Tony Zappia and Nick Champion want a new manufacturing and innovation hub built in Technology Park, which just happens to benefit them politically.  Port Adelaide MP Mark Butler is fighting to have the development built in his electorate.

Adelaide will play host to one of ten manufacturing and innovation hubs across Australia, which are designed to provide a shot in the arm to a sickly manufacturing sector, mirroring efforts currently underway in the United States.

We’ll see who wins out later this year.

*Ohio Transmission Corp. of Columbus, OH has acquired Industrial Process Equipment Group.  Ohio Transmission Corp’s strategic business units include OTP Industrial Solutions with its power transmission focus and Air Technologies.

The acquisition will see OTP add IPEG’s offices in St. Louis, Decatur, Calvert City to its existing roster of 18 offices.



*The ways that designers of machinery have transmitted power has evolved in line with the technology that has underpinned design in total, since well before the industrial revolution.  We’ve all seen black and white photos of line shafts running long transmission belts, which were progressively replaced by individual belt drives as electric motors became task-focused.

In industrial applications, belt drives fall into various categories, designed for varying tasks.  Classical V, Special Profile V, Banded or Joined V, Multi-Rib, Flat, Synchronous and Variable Speed all serve their purpose, and are surprisingly efficient in doing so, when designed correctly.

Maintaining the friction developed between the belt and pulley contact surface is at the heart of belt drive design.  Things to consider in getting this right include the belt type and material, the speeds of the driving and driven pulleys and their diameters, pulley centre distance and of course the overall power to be transmitted.

Getting tension right in vee belt drives is done in a whole host of ways, some technical and some not.  Probably the least complicated test is known as the touch test, where the pulley is touched after operation and the drive has come to a stop.  If the tester’s finger isn’t burned, the tension is in the ballpark of being correct.  When it is too hot, implications are that the belt is slipping more than the 0.5% that is known as creep, which is a natural function of the drive operating.

In all honesty, vee belt drives are fantastic.  They perform in a whole host of applications and do it relatively inexpensively.  In becoming ubiquitous, sizing has standardised, with Z, A, B, C, D and E sizes available, although D and E are relatively rare.  Sizes for classical vee belts are measured on the inner circumference in inches.

As old as vee belts are, evolution has continued to increase load-carrying capacity, with the development of narrow section or special profile belts.  In Australia, we know these as SPZ, SPA, SPB etc, whilst the Americans have them designated 3V, 5V and so on.  Add to this the serendipitous discovery that raw edge cogged belts have an even higher load-carrying capacity due to more carry cords, and the range continues to be the first choice for mechanical power transmission.

Positive drives, where input and output shafts must be synchronised, have taken different forms over the years as they have developed.  Starting out as a trapezoidal shaped tooth design in imperial sizing, graduating through metric equivalents before arriving at the circular-tooth high torque drive design that we have today, timing drives give many of the benefits of chain drives and can work at higher speeds.

The high torque drive design like Gates Polychain and Eagle PD offers uniform load distribution, a smoother and quieter action, and most importantly a much higher load-carrying capacity, even under quickly varying loads.  Top of the pile in HTD belt technology in my opinion is Gates, but there are many brands that do the job, with a near equivalent.