Sunday, 20 November 2011

Episode Three - Reverse Engineering

Brazilian electric motor giant WEG is in the process of acquiring Austrian gearbox manufacturer Watt Drive Antriebstechnik GmbH, for an as yet undisclosed sum.  Watt Drive turns over €30M per year and the purchase represents the first in a series of movements by WEG into the gearing and power transmission business.

Watt Drive is represented in Australia by Southern Engineering Services and it will be interesting to see how this purchase will affect existing distribution relationships and agreements.

$3.6B WEG has also entered into a joint venture with Brazilian gearing manufacturer Cestari Industrial, with a view to develop and market an entirely new range of complete geared motors.

It would appear that WEG’s view to continued growth lies outside its traditional spheres of electricity generation, transmission and control.  The linkup with Cestari will probably see WEG coming out with compact modular gear units, much in the same mould as Bonfiglioli’s compact range, SEW and Nord.  Australian electric efficiency standards - known as MEPS - make it mandatory for all motors to meet IE3 premium efficiency in 2013, unless the motor is attached to a gearbox and removal would render it inoperable.  The WEG / Cestari joint venture could take advantage of this loophole. 

The Watt Drive acquisition and Cestari joint venture deal are WEG’s first foray into the gearing world and signify a medium-level investment without the need for infrastructure spending.  WEG itself might be immune from a retaliatory response from any of the gearing manufacturers that these recent movements challenge, as an entry into the electric motor manufacturing world is far less lucrative.

The ink is still drying on a deal which sees Altra Industrial Motion add Bauer Gear Motor to its list of brands.  German-based Bauer has been in operation since 1927 and has an impressive list of OEM customers and applications.

Bauer joins other Altra gearing brands such as Boston Gear and Nuttall Gear, as well as a comprehensive range of power transmission equipment including Warner and Wichita.

Altra Industrial Motion is based in Braintree, Massachusetts, and has a turnover of more the $600M per annum with a staff of 3000.

SEW is in the process of expanding its Melbourne assembly workshop, buying the site next door to their current Tullamarine facility as it gears up for an expected increase in demand from the mining sector. 

The $10M capital investment by the geared motor goliath will be gobbled up quickly, with the purchase of a 50 tonne crane and the implementation of a new painting facility.

Gear Expo 2011 was held in early November in Cincinnati, Ohio.  4600 attendees filtered past 180 gearing-related exhibitors, with visitors hailing from 28 countries.  Reviews of the event have been mostly positive, and the 2013 Gear Expo is planned to be held in Indianapolis in September 2013.

After both New South Wales and Australian governments announced new innovation taskforces to help source manufacturing opportunities, the South Australian government has formed a whole department.  The departments of Primary Industry and Trade have been merged to form the Department of Manufacturing, Innovation, Trade, Resources and Energy and putting the word Manufacturing’ first is an indication of the department’s primary function.

I received a tweet after episode two of the Australian PT Podcast from the Australian Carbon Expo, advising me that entry to the trade show was $300.00 for three days, but only $100.00 for a single day entry.  Sorry about that, I said that it was $300.00 to get in. 

It looks like the Melbourne event was a success, coming fresh off the heels of Australia’s new Carbon Tax legislation passing through parliament and being attended by some major players, both in politics and industry.

It has been called many things; from reverse engineering to outright knock off.  The geared motor industry is in the midst of a rush of cheap imported product, where the designs are passed off as those of major brands.

A significant portion of the knock offs are coming to western shores on capital machinery imported from China, utilising geared motors sourced domestically.  Issues are found when a premature equipment failure hits the end user and when replacement time comes, sizing and fitment problems come to the fore.  It is usually only then that the copy is identified.

Pass offs are an issue for many manufacturers, with the main victim of choice being SEW because they have the most easily-recognisable product range.  SEWs R series of in-line helical gearboxes comes in for the biggest hiding.  Motovario’s range of wormboxes also seems to be a copier’s favourite, as are Var-Spe, Flender and Sumitomo.  Even though a lot of the SEW product in the world is actually manufactured in China, the SEW hierarchy is quick to point out that this is to an exacting standard that doesn’t do anything to lessen their brand.

Clean room design is a useful defence against charges of copyright infringement, but these offending articles aren’t even concerned about defending themselves.  Clean room design is a reference to enough components of a reverse engineered article being different enough from the item it is copied from to be considered a new design.

Last year we had one of these copies apart in our workshop after it had failed after less than three months in action.  In addition to none of the gears being hardened or ground, a spacer for the output gear was hand cut by a hacksaw from a piece of water pipe.  Whoever assembled it actually had two goes at cutting this bit of pipe as it had an extra slice in it, not square of course.

The real victim of counterfeit gearboxes entering the marketplace is unquestionably the end user, who may or may not be suspecting to get a cheap copy of a name brand.  I’m positive that anyone who knowingly buys a knock-off with a view to saving money on an application will not be replacing it with another knock-off when replacement time comes, normally within 24 months.

Does this unfettered counterfeit behaviour signify the start of something bigger between Chinese manufacturers and the companies whose products are being copied?  Many gearing companies have at one stage or another had dalliances with outsourcing components to other countries; it would seem that many are only now starting to see some hidden costs that don’t come up on the profit and loss statement.

Just as an aside, probably the most famous reverse engineered product in recent history was the Soviet Tupolev TU-4 strategic bomber, which was ripped straight from some commandeered American Boeing B29s immediately after the Second World War.  If nothing else, at least the Soviets had the good sense to change everything from imperial to metric!

Time for a quick product update.

Nord have released a range of bevel-helical geared motors aimed at the washdown market – primarily food manufacturing.  The range features a die-cast aluminium housing that has open sections to aid cleaning, and a torque output range of 90 to 660Nm across five sizes.

In my opinion, the openings around the bevel output make the gearboxes look spinely and a little out of place.  I suppose the goal is to make them look very different to the SEW profile, which is nearly ubiquitous in food manufacturing.  Time will tell how popular they become.

The big news as we put the last episode of the Australian Power Transmission Podcast to bed was that car manufacturer Holden was looking to ship the design of the iconic Commodore offshore and close the local design facility, a claim that was vehemently denied by the Holden top brass.

Australia has three car manufacturers; Holden, Ford and Toyota, all subsidiaries of overseas parent companies and who have all received government funding to keep their doors open at one time or another.  Toyota used its assistance package to begin local production of the Hybrid Camry, while Ford and Holden have both used the money to get their latest product offerings to market.  Even so, retrenchments abound.  The federal government originally planned to fund automotive innovation until 2020 but cut it short when the money was needed to rebuild Queensland after natural disasters in 2010.

Domestic car production has basically halved in the last six years, to now be under 200,000 cars per year.  This slump has had a major impact in the outlook of not only the auto manufacturers themselves, but also the significant Australian automotive component industry.  It is this component industry that stands to lose the most if the number of vehicles produced falls below the viable critical mass.  Already, the Commodore sports a number of imported components and this is only going to keep increasing with each new model, the same goes with new Fords and Toyotas.

It goes against all sound economic theory to have either any tariff or any subsidy for industries in which an economy is not globally competitive.  The problem is, the car industry in Australia does not stand alone; it supports the component industry which serves them but also does a fair bit of the rest of manufacturing in Australia.

Car manufacturing processes utilise a lot of power transmission equipment, both in consumables and new projects.  If one of the three manufacturers were to pull up stumps and become a sole-importer a la Mitsubishi and Nissan, there will be a significant reduction in PT requirements right across the manufacturing base. 

There is no denying that costs in Australia are high, across the board.  Car manufacturers have implemented automation processes where possible to reduce the labour content of each product in an attempt to limit variable costs, but there is only so much that can be done.  Design, engineering, production: three very important, high level skill sets that we are told repeatedly are important to Australia’s manufacturing future.