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ReneCardenas
Work to Ride, RIde to Work
The Pacer was definitely the end of American Motors. :-)
The end of American motors
David Blaza
2/24/2011 7:59 AM EST
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).
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).
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Duane Benson
2/24/2011 4:33 PM EST
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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MLED
2/25/2011 12:33 PM EST
Low temp superconducting electric motors for initially, naval vessels. Look at American Superconductor, ticker AMSC!
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David Ashton
2/24/2011 4:35 PM EST
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?
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easy_eddie
2/24/2011 4:52 PM EST
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.
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JLS
2/24/2011 5:06 PM EST
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.
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fdunn
2/24/2011 7:30 PM EST
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.
Fred Dunn
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no clever name
2/25/2011 10:15 AM EST
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.
Rod
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cbbear
2/25/2011 10:42 AM EST
At least one of the main reasons for the buying of these US companies is more prosaic: cheap dollar.
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Clyde_rel
2/25/2011 2:30 PM EST
There is a small motor company here in Colorado, UQM (formerly Unique Mobility) that focuses mainly on automotive applications. Are they still American owned?
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agk
2/26/2011 9:47 AM EST
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.
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sleibson
2/28/2011 7:13 PM EST
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.
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David.Blaza_#1
3/1/2011 3:55 AM EST
in response to David Ashton and to be fair to ABB they have not indicated that they are moving any Baldor production overseas, in fact Randy Breaux said they are opening more capacity in the midwest as their business grows this year. Baldor is also one of the few companies making the EISA energy compliant motors which is also an advantage. Motors are heavy and highly customized so I think there is a future in US production.
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David Ashton
3/1/2011 5:54 AM EST
Sounds like the old shareholders who sold out have killed the goose that laid the golden egg then?? More fool them and good luck to ABB....
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Nic_Mokhoff
3/1/2011 3:49 PM EST
It's business my friends, plain old business. You manufacture where labor is cheap. Business has no nationality, no religion, just profit as a goal: http://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/index.htm
And with all the turmoil in the world today, it's still the better way.
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David Ashton
3/2/2011 4:51 AM EST
I'm afraid Nic is right. No nationality, no religion and (you should have added Nic)no morals either. But that does not mean Business is right. As employees, we are encouraged to have pride in our company, as citizens, we are encouraged to have pride in our country. Yet companies are almost encouraged to take jobs away from their employees, and profits away from their country.
The time is coming when voters are going to demand that business be legislated into moral conduct, if they won't do it voluntarily. As part of that, tax imports or offshoring that do not meet the internal standards of a country, in terms of minimum wages and rights and safety standards. Apart from anything else, this would force developing countries to lift their game, to their ultimate advantage.
On a wider scale, the Australian government is currently trying to implement a carbon tax. It's very much opposed, not least because if our iron ore and coal are exported, processed into steel in countries like China without a carbon tax, and the steel is imported back to Aussie then it has no carbon tax on it, to the disadvantage of Australian producers who do pay it.
Governments are just as bad as business in this respect - no respect for their citizens at all.
Sorry, this is a bit off the subject of the post - ABB don't look like they're going to move production offshore... sounds like they knew a good thing when they saw it and the shareholders of Baldor didn't. Or maybe ABB just wants to learn the technology and THEN move production offshore...
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WKetel
3/4/2011 11:29 PM EST
I am not aware of exactly how the sale of Baldor to ABB came about, but it is certain that when the board of directors decided to sell for some price, the only consideration was how much money it would provide for those individuals who decide the size of bonuses. The BOD has no concern at all for the value delivered to those who purchase a product, only for the ROI delivered.
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Neo1
3/5/2011 1:39 AM EST
When did moral start figuring in the business. Morals are good for individuals not for companies, because when it comes to rightness over money, everybody knows who wins in the end. I think these capitalists all have etched the Keynes thinking that ".., in the long term we are all dead". Well, it may not be wrong after all!
I know Baldor from my earlier years as an electrical maintenance engineer. A name which commanded respect and quality, we had their motor's in many critical process equipment.
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pcsalex
3/10/2011 10:47 AM EST
Question: if the drive is such one important device from the point of view of the operating costs of a motor, why Baldor never looked that issue?
they did not even responded to any discussion starting letters, [we have two US patents on power-factor correction, verified at the DOE's motor research center]
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RWatkins
3/10/2011 4:46 PM EST
In response to Neo1, when quarterly profits and short-term gain only drive business, only short-term success can be achieved. When long-term growth and investments drive a business, and employees are treated with an expectation that their performance will impact their long-term compensation, the company moves slowly and steadily towards long-term success. Sadly, this is a point brought to the forefront in several recent cases of recalls of drinking glasses with decorated with lead paint and children's toys cast of cadmium alloys, where the articles in question were made by employees of firms where employees must meet daily quotas to be fed. Morals are a cute excuse, and we will all die someday, but we may not die before the effects of what we have done, and our children and theirs will likely see the consequences.
On the other hand, if it must owned by a foreign company, ABB is not such a bad fit for Baldor, and has a long and relatively honorable record.
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Work to Ride, RIde to Work
4/18/2011 6:14 PM EDT
The Pacer was definitely the end of American Motors. :-)
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ReneCardenas
6/14/2011 4:09 PM EDT
W2R,R2W:
I do not blame you for the confusion regarding motor manufacturer vs. car manufacturer.
I am in the impression that this thread was on the topic of the first not that latter. Somewhat related but not quite.
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