The last domestic motor manufacturer is now in foreign hands. On top of it, imported motors are not meeting energy-efficiency requirements here in the land where such design considerations first emerged.
Just what’s going on?
These thoughts—and the consequences for green engineering and U.S. manufacturing—hit me recently when I visited Baldor motors in Fort Smith, Ark.
Baldor hosted a meeting for publishers of the magazines they advertise in, and Design News—one of our newly acquired titles—has worked with Baldor for many years. It was the first such meeting since 2006 when they hosted 50 publishers, this year they invited 30, this in itself may be reflection of the woes in traditional business to business media or perhaps Baldor is being more discriminating.
The event was graciously hosted by Randy Breaux, Baldor’s VP of Marketing who has a disarming Cajun charm but anyone driving marketing for a billion dollar-plus company is one smart guy. Randy kicked off the meeting with an overview of Baldor which was fascinating for me because I have spent my media career in the electronics market and all this motor stuff is brand new to me.
Randy kicked off with details on how Baldor was just purchased by the Swiss engineering giant ABB for $4.3 billion. This means the last domestic motor manufacturer is now in foreign hands.
This is not a nationalistic rant but more a question of why? In other industries, the U.S. has maintained a presence; think cars, semiconductors, aerospace, and software and heavy equipment. So why did the U.S. electric motor business become foreign controlled?
Motors are heavy and are essential to every domestic industry and application you can possibly think of; conveyors, escalators, elevators, farms, mining, water and waste treatment, food and chemical processing, car washes, auto dealerships even theme parks. In the average commercial building , 40% of the energy budget goes to lighting but another 40% goes to electric motors in the elevators and HVAC systems. So, given the potential for energy savings in motor control, why hasn’t the U.S. maintained a presence in this market?
John Malinowski talked to us about newly implemented motor energy efficiency legislation (EISA) that was started here in the U.S. and now leads the world but is unfortunately very poorly enforced. This means that thousands of motors are coming into the country through loopholes or lack of oversight that aren’t meeting levels of efficiency set back in 2007. It’s always interesting to see how these innovation vs. just good-enough-but-cheap tech battles play out.
What's the future hold?
I think Baldor will win in the long run because energy costs are constantly rising and the cost of a motor is only 2% of total lifetime cost, on average energy costs are 11x the purchase price to run a motor for a year.
I also learned that the controllers for motors are called “drives” and this is where the semiconductor content comes in because intelligent controllers can save 40% in energy costs and 32 bit microcontrollers have the processing power to save a lot of energy. Motor drives are also a major product for ABB so it explains why the Baldor acquisition is strategic for ABB.
I missed the factory tour but would have loved to see the winding and fabrication of these huge motors. Michael Faraday would be proud!
Also worth noting is that Randy told us that orders were up 30% in January over last year and that is a very clear indicator of a jump in economic activity in the U.S. Two major drivers of growth are agriculture (have you been following the price of corn?) and the environmental controls industry, going green sometimes needs a big motor.
Baldor has been making electric motors for 91 years and as we saw there is continuous innovation and improvement in the motor market. They’re now foreign-owned. Any idea, where the next new motor start-ups will be coming from?
David Blaza is senior vice president of UBM Electronics (the company that publishes EE Times and EDN). David has over 20 years of sales, marketing, and publishing experience in the technology sector working for companies as diverse as IBM, Motorola, Mars Electronics, CMP and now United Business Media. He is a graduate of the University of Bradford, England (BS, Materials Science) and the University of Stirling, Scotland (MS in Economics & Technology).
The article reminded me of Pittman electric motors, which used to power slot cars back in the 1960s before the Japanese Mabuchis took over. I looked them up. They're still available and seem to be offered from a US firm named Ametek. Perhaps Pittmans are no longer manufactured in the US, but it looks like they might still be manufactured in the US.
Like many things change in our life time the business owners also change. It also means again many new motor manufactures will come in future.Probably i guess that copper less motors will come from Americans.
Let's say a CEO sells a division, and the new owner modernizes and makes it profitable. Does the BOD of the selling company ever look and see how it did, and realize their CEO is incompetent and making bad decisions. Never happens does it.
That is what it all comes down to, the mighty payoff. Our short term markets where a company that is viable can be made a penny stock in a day is just plain crazy.
Unless a motor company is willing and able to completely modernize their manufacturing with less US workers and more CNC, Robotics, etc. then they really don't stand a chance against a chinese company.
Sure the product is going to be junk but the stockholders have spoken.
What a F*****g pity.
Maybe the question isn't why are all the motor manufacturers foreign, but why are the American motor companies for sale? Sounds to me like these American companies are only thinking about lining their stockholder's pockets for a quick buck.
After reading this I went and checked on Emerson Electric, a US company I used to work for, which also manufactures electric motors. I just read that they are selling their motor division to Nidec, a Japanese company. Oh well.
ABB is a good company and you don't indicate that they have plans to move production offshore. So it could be worse?
Presumably Baldor's motors DO meet the energy efficiency requirements noted in your first paragraph, so they'll be in a good position to continue the expansion noted in your second-last paragraph?
I wonder if the next innovation in motors will be around greater customization in smaller volumes with reasonable costs. I don't know much about the industrial motor market, but I assume that there is already quite a bit of custom work. I also assume that it's expensive, highly volume dependent and very slow. (Anyone feel free to correct me if you know otherwise)
Many other market segments in the electronics / electrical industry, such as PCB fab and prototype assembly, have taken this path. The mega-volumes go off shore and the domestic industry has learned how to deliver quick-turns at low volumes without blowing price constraints out of the water.
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