Episodes 1 -5 Transcripts

24th October 2011

Timken has been very active in the field of acquisitions of late, expanding its domestic American

power transmission presence. After picking up Philadelphia Gear for $200M in June and QM

Bearings last year, Timken has added Drives LLC to its Process Industries stable for $92M. This

recent activity by the $4.1B company increases its capacity in power transmission as it diversifies

from its traditional bearings and steel portfolios.

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Former Reserve Bank board member Dick Warburton has been appointed as the first executive

chairman of Manufacturing Australia, a new industry group which will act as a voice for the

manufacturing industry on issues relating to Australia’s new highly-controversial Carbon Tax.

Manufacturing Australia was formed by those companies likely to suffer most from the Carbon Tax,

namely Amcor, BlueScope Steel and Boral among others and have a stated aim of deferring any

Carbon Tax in Australia until the rest of the world moves first.

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Nord Drivesystems Australia held its grand opening on the 6th of October at its Derrimut factory in

Melbourne. Flown out for the event were NORD founder Gustav Adolf Küchenmeister and head of

International Sales Gernot Zarp.

Nord has been represented in Australia for nearly twenty years, originally using recent Regal-Beloit

acquisition CMG as its main distributor before coming in direct to the market at the start of 2010.

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The Australian Parliament has just approved the Clean Energy Bill, 2011, which puts a price on

carbon. After an aborted attempt by former Prime Minister Kevin Rudd at a cap and trade system

known as the Carbon Pollution Reduction Scheme, a new parliament with a minority government

has its own political expediencies.

Well, politics aside, what does the Clean Energy Bill, 2011 mean for the Australian manufacturing

sector?

The scheduled start date is the 1st of July, 2012. Starting at $23 a tonne, raising 2.5% each year to

2015. There will be an Emissions trading scheme taking over from 2015, and 500 of Australia’s

biggest polluters will pay.

Companies that produce 25,000 tonnes of carbon dioxide per year or more will be penalised

2,000 megawatts of worst power generators to close by 2020

More information about the new tax and how it will affect industry can be found at

climatechange.com.au.

As you would expect with a new tax of this nature, opposition from the manufacturing industry has

been pretty vocal. An ad campaign based on deferring any carbon tax implementation has been

seized upon by the opposition who have stated they will repeal it if elected. In order to sweeten the

deal for the manufacturing sector, exemptions and assistance packages abound, with over $9B

expected to be spent to compensate losses over the short term of the next three years. In addition,

this amount again is expected to be spent on investment in new technologies to help reduce CO2

output by local manufacturers.

Having perused the 343 page Bill exposure draft, I can also tell you that the Clean Energy Bill is quite

complex. The companies affected by it will undoubtedly have to employ resources to ensure

compliance and I’m sure we will soon see Carbon Tax compliance specialists popping up, much in the

same way that Six Sigma Black Belts seem to be super dooper in every manufacturing firm.

As far as the world of mechanical power transmission is concerned, overall possible new investment

in technology such as carbon sequestration may be offset by a reduction in Long Run Aggregate

Supply. It really is a Watch This Space.

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Trade shows have been around since the year dot, and the mechanical power transmission industry

is normally front and centre as exhibitors. In Australia, National Manufacturing Week, AIMEX,

Bulkex, Materials Handling Expo, FedEx, oops not FedEx, but you probably get the picture of a wide

variety of shows, all with varying visiting demographics and aims. So, what does a company do with

so many options and (for most), only a finite marketing resource.

To be honest, Australian trade shows are small affairs, when compared with the big ones in Hanover

and Shanghai and some in the US as well, but attendance per capita is usually higher and exhibitor

lists run long. So my question is... are they getting value for money?

Let’s take National Manufacturing Week as our example. NMW is held every year, alternating

between Melbourne and Sydney and incorporates the Australian Industrial Engineering Exhibition

and Austech (for machine tools and equipment manufacturers).

So how do the numbers play out? The smallest stand will set you back three grand for the floor

space over four days, while the better spots are about four times this amount. This is only the start

of the real spend...

Consider everything else that has to be accounted for...

The costs of a display such as banners, hardware and special stuff like giant plasma screens is pretty

high. Many shows won’t let you use your own big screens, but make you rent them from them for

the same price as what you can buy one with. Actually, the whole renting gig also covers tables,

chairs and the electronic swipey thing for following up sales leads with.

Getting everything to the exhibition and unpacked also costs a bit. This means renting either a

trailer or truck, depending on the size of your display.

Servicing the stand will normally take a couple of staff members at a minimum and their costs have

to be accounted for.

Extra promotional activities, catalogues, entertainment et cetera all adds up pretty quickly and

before too long you’re out of pocket at least ten grand, probably closer to twenty if you’re doing it

well.

So, what are the benefits for this sort of outlay?

Well, straight up, a whole heap of existing and potential customers are in the one place and coming

to you. The problem is, they are seeing all of your competition at the same time as well. Still,

20,000 odd visitors is definitely a big number and even though only a small percentage will be

interested in your product offering, the sheer scale alone will keep the reps on the stand busy.

I’ve been to a few trade shows over the years both as an exhibitor and a visitor. One thing that

nobody talks about is that there is a certain type of person that goes to them. After a trade show, I’d

go around seeing customers in their place of business and ask how they enjoyed it. Less than half

would even know it was on, and the half that did know could probably be halved again for actual

attendance. I’m not saying it’s a good thing or a bad thing, but it’s a certain type of person that goes

in.

There are always going to be leads from trade shows, and following them up is where the real

benefits are. You can’t expect an immediate sales spike as a result of exhibiting at a trade show, but

immediate sales isn’t normally the desired outcome. Companies are mainly trying to look good – put

simply. It’s the fourth P of the marketing mix – Promotion. Actually, I’ll take that one step further

and call it Promotion through Positioning.

There is no doubt that in Australia, if there is a trade show, SEW-Eurodrive will have the biggest

stand of all gearing companies, in the best spot, with the shiniest display. Bonfiglioli, Nord,

Sumitomo, and Radicon all normally have a presence, while Queensland firm TEA is a staple for PT

consumables.

The benefits obviously outweigh the costs for these firms, otherwise they wouldn’t keep rocking up

year after year.

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The high value of the Australian dollar continues to wreak havoc with the manufacturing sector, as

BlueScope Steel, Heinz and SPC – who are both canned food manufacturers – and Ford have shed

staff and decided to limit output in the short term.

BlueScope has decided to lose 1000 workers across the nation as demand for Australian steel

plummets, flying in the face of growing OECD requirements which are being nicely handled by China.

Last year, BlueScope recorded a $1B loss and with high fixed costs in the steel manufacturing

industry was left with no real option but to mothball its Port Kembla furnace and Hastings Hot Strip

Mill.

Heinz is trimming its workforce by 20% in a radical shakeup that closes one Victorian plant, reduces

production at its Queensland cannery and will see 342 jobs go overall. Most of the production will

shift to sister plants in New Zealand, who doesn’t have an astronomical currency to contend with.

SPC in Victoria’s Goulburn Valley is also right-sizing to suit current demand, by retrenching 150

across three plants. Imported fruit is the culprit here, along with flagging domestic consumption.

SPC parent company Coca-Cola Amatil is looking to lighten the load on individuals retrenched by

offering them positions within the company where possible, however the local area will see those

positions lost for the foreseeable future.

Ford Australia is also lightening its wage bill to the tune of 240 employees at its Broadmeadows and

Geelong plants, as demand for their product also wanes.

There is little doubt that the current mining boom in Australia is causing some headaches for

Australian manufacturers, especially those who rely on imports for whole or part of their income.

Sure enough, the price of imported materials has come down accordingly but it isn’t really enough to

offset the pressure that a high currency puts on local product.

Tariffs are basically a thing of the past for many Australian industries and paper, steel, textiles and

cars are all vulnerable whilst the Australian Dollar sits above parity with the Greenback.

7th November 2011

The New South Wales government has established a Taskforce to develop an action plan for the next

ten years to help combat its shrinking manufacturing base.

The Manufacturing Industry Action Plan will take 12 months to get ready and will focus on specific

sectors that the New South Wales government thinks it can gain an advantage in, namely food,

metals, machinery, biomedical, defence and renewables.

Not content with having a state lead the way, Australian Prime Minister Julia Gillard will chair a

taskforce of her own. Tasked with getting to the bottom of the employment woes in manufacturing

on a national basis, this task force will feature 23 individuals, representing manufacturers, unions

and the government.

Well, Australian states have been at each other’s throats for decades in trying to secure major

manufacturing contracts. Whenever defence contracts come up, governments bend over backwards

with assistance packages to help get jobs in their jurisdictions. 10 years ago Victoria wouldn’t stump

up with some cash to keep Arnotts biscuits in Melbourne so Sydney, Brisbane and Adelaide facilities

were expanded and Melbourne was closed. This scenario plays out all the time, so it will be

interesting to see how both the New South Wales Action Plan and the federal version will look at

generating new business rather than shifting existing business between states.

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BHP Billiton has received approval from the Australian Federal Government to expand its Olympic

Dam mining operations. Copper, uranium, gold and silver are extracted from Olympic Dam in South

Australia, and the expansion will make it the world’s largest open cut mine.

It is projected that the expansion will deliver $8B of benefit to the South Australian economy, whilst

mining engineering and infrastructure spending also stands to benefit the mechanical power

transmission world.

Regardless of the philosophical objections to a mine that looks set to exploit around one quarter of

the world’s known uranium reserves, there is little doubting the scale of the benefit from the

expansion. The uranium bubble of 2007 is long over, where prices peaked at $300 per kilogram. The

current price of around $100 per kilogram will still reap major rewards, although the bulk of the

revenue will come from copper and gold.

Australian smallgoods manufacturer Primo continues its capital investment program in Queensland,

spending $131M in consolidating its existing operations and expanding Wacol’s production facilities.

This flies in the face of some recent reversals in the food sector and is welcome news for

Queensland.

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United Dairy Power has bought the Murray Bridge and Jervois cheese-manufacturing assets of Lion

and is looking to add milk production to the South Australian production facilities for the local

market.

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Japanese-owned Lion is consolidating its dairy production with a renewed focus on Tasmania, in light

of posting financial reverses resulting from the loss-leading milk war being fought by supermarket

oligarchs Coles and Woolworths.

The news of the purchase by Victorian-based UDP is a relief for the more than 100 staff at the two

plants, who only a few months ago had an uncertain future.

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Electrical measurement company Fluke is conducting a series of workshops in Brisbane, Melbourne

and Perth starting on November 10.

The main focus of the workshops will be looking to understand the diagnostic fault process of three

phase electric motors.

The practical demonstration and troubleshooting sessions are aimed at maintenance staff and will

set each attendee back $199.00. Find the link in the show notes to episode two.

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Well, from once being the tome of advertising to “I think we have a Yellow Pages but I couldn’t tell

you where it is”, Sensis-owned Yellow Pages has been an Australian staple for over 80 years. As

business directories go, the Yellow Pages is pretty much synonymous.

As you can guess, people still let their fingers do the walking to hunt down what they are looking for,

but are moving away from the book to the computer – as well as tablets and mobile phones. The

real question now becomes, does Yellow Pages still offer value for Business to Business customers?

The power transmission, electric motor and bearings categories have long been numerous pages

each in past editions of the Yellow Pages, but each of these now has under one page of listings. The

size of the individual advertisements has also decreased. This must surely dent the revenue stream

of what once was a very sizeable cash cow.

Sensis hasn’t had its head in the sand during this digital evolutionary period. It has increased its

value to advertisers by belatedly linking up with Google and going mainstream with their own

website and search engine. The Google linkup is with adwords and other Google products such as

Google Earth and Streetview. Paid advertisers get premium consideration on Google searches as

well, above standard Search Engine Optimisation techniques.

So, what is the definition of value in a B2B context? A medium sized, three-colour advertisement in

the Yellow Pages will set you back just over $10,000 per annum for a major market like Sydney or

Melbourne. For your money you also get a good presence online.

There’s no real way of measuring the effectiveness of the Yellow Pages in hardcopy form, short of

asking every new customer that calls how he or she found you. As with all things that require an

outlay, the money has to be made on the other side to cover it, so in effect we’re looking at 30 to 40

grand in sales to cover a 10 grand spend.

The best known off-line alternatives are trade magazines, trade shows and sponsorships, as well as

handling your own Search Engine Optimisation on-line. Each of these cost varying amounts, but

none of them are good enough to carry the full weight of a B2B marketing effort on its own.

In the power transmission world, any marketing effort is worthless unless it is backed up with a

skilled and motivated outside sales and supply team. The technical nature of the problems and

products in power transmission require more than what a purchasing officer or engineer can simply

type into a search engine. Of course, relationships are the key to understanding the exact details of

what is required, but this is a conversation for another day.

In answering the question I posed about the Yellow Pages being good value in a B2B environment, I

think that the days of the $40,000 annual spend are long gone, but some presence is still a must. It

still presents a way to come up pretty high on Google – always on the first page for your product

group – which is probably better value than adwords alone.

The Yellow Pages is always going to be around to find mechanics, floor sanders, panel shops and

adult services. It has not been a force for B2B customers for a few years and will need to keep

adapting its product as the digital environment evolves.

It’s time for a quick refresher for electric enclosure ingress protection – known in many countries as

IP ratings.

IP ratings are used to identify how protected electric motors are to the elements, both solids and

liquids, and are represented by two numbers. For example, IP54, which has a protection to level 5

solids and level 4 liquids.

The solids protection levels are from 0 to 6. 0 is no protection to solids, 1 is to over 50mm, 2 is to

over 12.5mm, level 3 is to over 2.5mm, 4 is to over 1mm, 5 is called dust protection and level 6 is

called dust tight. This is not to be confused with DIP or dust ignition proof, which is used in grain

handling.

The liquids protection levels are from 0 to 8. 0 means don’t get it wet, 1 is protection against vertical

dripping water, 2 is for vertical with a 15 degree tilt, 3 is against spraying water, 4 is against splashing

water, 5 is for water jets, 6 is protection against super water jets, 7 and 8 are for immersion in under

1m and over 1m of water.

The US has its own system of ratings which was originally prepared by NEMA or the National

Electrical Manufacturers Association. The NEMA ratings are actually more complex than the IEC’s IP

ratings and cover additional things such as corrosion protection, giving ratings that are linked to

specific environmental applications.

Most electric motors in Australia these days are TEFC or totally enclosed fan cooled and have an IP

rating of IP54 as standard. WEG has standardised its W22 electric motor range as IP66 and many

manufacturers are heading in this direction with their standard offerings.

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I thought I’d do a bit of further research on some of the ways businesses can reduce carbon

emissions – especially in a manufacturing sense. I was happy to see that Melbourne was hosting

Carbon Expo 2011 in early November and was about to register to attend, before finding out that

entry to the trade expo portion of the event on its own would set me back $300.00. If I wanted to

see a conference during the day, that would be $750.00.

I suppose the Carbon Market Institute and the Investor Group on Climate Change would like to keep

the riff-raff out of their Expo and make sure only genuine visitors come through the doors. I wonder

if they’ll have bouncers as well.

I have an interest in finding out ways companies are looking to innovate, especially when it comes to

global warming, but I think I’ll be doing my carbon emissions reduction research online.

21st November 2011

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.

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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.

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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.

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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.

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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.

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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!

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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.

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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.

5th December, 2011

The Power Transmission Distributors Association (PTDA) elected its 2012 Board of Directors and

Manufacturer Council in Washington, DC in October at their Industry Summit.

Mitch Bouchard of General Bearing Service succeeds David Mayer of Kaman Industrial Technologies.

The balance of the board comprises Christopher Bursack from Industrial Supply Co, Ken Miko from

BDI and Keith Nowak of NPT Drives.

The Directorship is made up of Harold Dunaway of Motion Industries, LeRoy Burcroff of Bearing

Service, Rick White of Flexco, Carlton Harvey of Jamaica Bearings, Ajay Bajaj of Rotator Products

Limited and Thomas Clawser of Brown Transmission and Bearing Co.

George Rizza – who is the President of Rossi Gearmotor Division, Habasit America – takes over from

Pamela Kan of Bishop-Wisecarver as PTDA Manufacturer Council chair.

The male-domination of the industry in general is directly reflected by the make-up the both the

board of the PTDA and the Manufacturer Council.

Representing 178 power transmission distributors across 11 countries, the Power Transmission

Distributors Association has a stated mission of advancing distribution and strengthening members

to be successful, profitable and competitive in a changing market environment.’

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Chief Executive of the Australian Industry Group – Heather Ridout – addressed the National Press

Club in Canberra on November 30th. Titled ‘Taking Charge of Our Future’, Ms. Ridout acknowledged

the high-cost and multi-speed economy as being burdensome to local manufacturing, before

offering some ideas for possible restructuring in the sector. After teeing off on some of the federal

government’s recent workplace relations decisions which she feels to be too heavily slanted to

favour unions, the biggest takeaway point was probably the support Ms. Ridout gave to the

government’s mining tax.

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The Canadian Manufacturing Technology Show 2011 was held in Toronto at the end of October,

proving to be a moderate success if the Twitter stream is anything to go by. Manufacturing accounts

for 13% of Canada’s GDP (Australian manufacturing represents 10% of GDP) and the two economies

are very similar, in that there is a large reliance on natural resources.

For the show itself, SEW-Eurodrive dominated power transmission proceedings and over six and a

half thousand people filtered through the Direct Energy Centre over four days.

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Brazil continues to offer a very attractive home for power transmission capital investment, with

Japan’s Sumitomo Heavy Industries investing $73M in a new gear reducer manufacturing plant.

Opened late November, the plant joins similar SHI facilities situated in developing economies – a

stated growth strategy of the organisation.

Brazil has been economically unstoppable for the past few years and I think we are going to see even

more announcements like this one from Sumitomo.

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The Victorian Minister for the Aviation Industry was front and centre for the recent announcement

that Melbourne would provide Boeing GoldCare maintenance services to the Asia-Pacific region.

Boeing chose John Holland Aviation Services to look after its B737NG fleet as well as the 787

Dreamliner.

John Holland is the new name of the former Ansett Engineering and although aviation engineering is

a specialist field, power transmission equipment features heavily throughout the maintenance

process.

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The Prime Minister’s Manufacturing Taskforce held its first meeting in late November. Tasked with

securing a working future for over one million Australian manufacturing workers, the Taskforce

concluded that there are many serious issues facing manufacturers and that something should be

done to help them.

In all seriousness, the Taskforce concluded that existing state and federal policies need to be better

co-ordinated and leveraged, science and technology were going to be the leading forces and

management of the entire process was critical.

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As reported in episode two of the Australian Power Transmission Podcast, BHP-Billiton was given the

green light to expand its Olympic Dam mining operations. Controversially, Olympic Dam sits atop

significant reserves of uranium.

It comes as little surprise that only weeks after the go ahead was given to exploit Olympic Dam, the

leader of the ruling Australian Labour Party and current Prime Minister, Julia Gillard, has announced

her intention to overturn the ALP’s 30-year ban on selling uranium to India.

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Said to account for 30% of electricity consumption in Australia, electric motors are the mainstay of

the industrial sector, performing every task from mixing and conveying to pumping and crushing.

For the most part, these motors have done their job with an efficiency in the 80-90% range, but

governments the world over are seeing what benefits are on offer by increasing this efficiency

percentage into the mid 90s.

Minimum Energy Performance Standards were introduced at the turn of the century by the

Australian and New Zealand governments for a wide range of electrical equipment. For electric

motors, a rating of MEPS 1 came into effect in October 2001, whilst the higher efficiency MEPS 2

superseded MEPS 1 in 2006.

All three phase electric motors that are either made in or imported into Australia must comply with

the minimum efficiencies as set out by the MEPS ratings. When I say all motors, the sizes covered

range from 0.73kW to 185kW in 2, 4, 6 and 8 pole configuration, which for all intents and purposes

may as well be all motors.

There are some exceptions to the MEPS rule. MEPS doesn’t apply to submersible motors, integral

motor-gear systems – like those available from Bonfiglioli, SEW and Nord – variable and multi-speed

motors or motors rated less than continuous duty. Motors that have been rewound are also not

required to comply with MEPS.

Motor manufacturers have not shied away from the responsibilities of meeting efficiency standards

around the world. The standard measure for increasing efficiency has been to use larger, lower-

resistance winding wire and higher quality steel for laminations. When coupled with total motor re-

designs, the efficiency standards have been able to be met on a consistent basis.

One of the benefits of the new, high-efficiency motor range is that they also have improved

performance at part load, making them extremely suitable for variable speed drive service. Many

major manufacturers are taking advantage of this fact by matching motors and drives in their

product offerings.

There have been many sets of figures bandied around by different groups – all with an agenda and

all relating to the savings from the introduction of MEPS. Regardless of the source, common wisdom

points to an overall cost / benefit ratio of 1.8.

California led the way with minimum efficiency standards, empowering the Californian Energy

Commission to regulate electric equipment over 30 years ago. Since this time, the US has led the

world in electrical energy efficiency and looks to continue in the same vain for a long time. This is in

stark contrast to the common assessment of American cars, colloquially labelled Gas Guzzlers and

Yank Tanks.

Further developments in efficiency standards for electric motors are always on the agenda and will

continue to keep manufacturers on their toes.

---

For all of the tribologists out there, here’s a quick overview of lubrication in the geared motor

industry.

The lubrication industry is probably worthy of its own fortnightly podcast. A lot is spent on research

and development and competition is fierce among the major players in the industry.

Lubrication in enclosed gear drives is a very explicit niche of lubrication, where four specific

parameters must be met, namely; gear wear protection, water separability, corrosion protection and

foaming resistance.

Geared motor manufacturers are continually pushing the envelope with their designs, trying to get

the highest input power and largest output shaft into the most compact unit possible. All of which

places greater demands on the lubrication used.

Gear wear protection is the primary function of lubricants in gearboxes, but the same oil must also

lubricate the bearings and rolling elements. This presents something of a compromise to some of

the properties of the lubricant and which additives can be added.

Extreme Pressure (or EP) additives are introduced when gearbox loads may overcome the viscosity

of standard oil and cause higher than normal gear and bearing wear. These additives create a film

on the metal surfaces to prevent direct contact and can be used in conjunction with solids such as

molybdenum disulphide to create a physical metal-to-metal contact barrier.

Water separability or demulsibility is a major requirement of gearbox lubricant, where liquids such

as coolant and condensation come into contact with the gearbox oil and must be easily removable.

Demilsifiers are added to ensure that water cannot emulsify with the gearbox oil, using some pretty

impressive chemistry in the process.

Corrosion protection is important in gearbox lubricant, due to the fact that many gear units utilise

yellow metals such as copper and brass as well as cast iron. This creates something of a problem, as

many features of rust protection for cast iron are chemically-aggressive to the softer yellow metals.

The ability to resist foaming is also extremely important in gear oils. Foaming results from the

natural movement of gears and is especially prevalent in high speed applications. Polymers are

added to change to surface tension of the lubricant, killing bubbles as they form.

Different loads and temperature effects require differing types of oil. For low load applications in

standard temperatures, a straight mineral oil is adequate. When the load increases, a mineral oil

with EP additives might be required. As the conditions become more demanding, synthetic

lubricants come into their own.

Once again, there are different types of synthetic lubricants for differing applications. Polyglycol

synthetic lubricants with EP additives such as Shell Tivella are a general synthetic lubricant for

wormboxes. Most off the shelf wormboxes like the Bonfiglioli W series run this type of lubricant and

are basically sealed for life in applications where running conditions are less than 40 degrees Celsius

above ambient.

Polyalphaolefin synthetic lubricants with EP additives like the very popular Shell Omala will give

approximately four times the working life of mineral oil in the same application. These are normally

specified in bevel-helical and in-line helical gearboxes.

Other things to be considered when specifying gearbox oils are whether there will be food contact or

bio-degradable qualities required. All of these properties are specified by the major manufacturers

to aid comparison.

I won’t go into too much more detail about oils and lubrication because it is a massive subject and I

want to do it justice by going further in a future episode.

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19th December, 2011

The Italian Bonfiglioli Group is looking to end 2011 with strength, recording net revenues of 680

million Euros across all strategic business units. There has been a major shift in sales distribution,

with sales from European markets dropping from 458 to 400 million Euros, while emerging markets

helped Bonfiglioli post a 13% sales jump from 2010. Bonfiglioli has identified consistent Research

and Development – even during the European financial downturn – as being a major factor in the

turnaround.

Strong demand in the wind energy sector has been beneficial to overall sales, as well as heavy

machinery and agricultural equipment – two traditional stalwarts of Bonfiglioli revenue.

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Dwarfing Bonfiglioli’s sales is the result by ZF Friedrichschafen AG, the German gearing engineering

and manufacturing firm that specialises in the automotive sector. ZF Group recently acquired

Hansen Transmissions of Belgium on its way to an overall result of 15.5 billion Euros for 2011.

ZF joins its major competition in identifying wind turbines, electric hybrid technology and an

increase in production capacity in developing nations as strategic growth initiatives. ZF should also

be commended for reaping the rewards of consistent investment in R&D.

---

The Australian government has had a cabinet reshuffle, with a few portfolios playing switcheroo.

Former Minister for Innovation Senator Kim Carr has been removed from this central role, to be put

in charge of the new Ministry for Manufacturing. Innovation now becomes part of a super ministry,

officially titled the Department of Industry, Innovation, Science, Research and Tertiary Education –

somehow implying all of these are linked. The large ministry will be handled jointly by Greg Combet

MP and Senator Chris Evans, while Mark Dreyfus MP will be appointed Parliamentary Secretary for

Industry and Innovation, supporting Minister Combet.

Various Australian state governments have ministers for manufacturing, which are normally lumped

in with innovation and trade. As a separate ministry, I’m not sure how Senator Carr is going to make

manufacturing his own. I’m certain that the Minister will have a significant role in the Prime

Minister’s newly-created taskforce on keeping the manufacturing sector employed, as well as a bit

of ribbon cutting, but a Minister of Manufacturing and a Minister of Industry will surely have too

much crossover to work effectively.

Already, Senator Carr has organised meetings in the US to see the bosses at GM and Ford to tee up

funding for the local subsidiaries. Both manufacturers are in a difficult position in Australia and will

probably require Senator Carr to turn up with an open wallet when he visits next month, and not

vice versa.

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Only a short time has elapsed since the announcement that Altra Industrial Motion had purchased

Bauer Gear Motor, but that hasn’t stopped the powers that be in Braintree from searching out

possible synergies with existing brands and technologies. Altra announced the 2000 series of helical

bevel gearboxes and integral gear motors, utilising experience and knowledge from both Bauer and

Boston Gear.

The 2000 series looks to be pitched at the food manufacturing industry, with many of its features

assisting washdown and corrosion resistance. Utilising both IEC and NEMA motor frames is a smart

move and should allow universal acceptance on both sides of the Atlantic. It isn’t clear if Australia

will be a recipient.

I am a little disconcerted that one of the key promotional points that Altra has chosen to run with is

the fact that the 2000 series is a direct ‘drop-in’ replacement for the SEW-Eurodrive KA series of

gearboxes. Some of Altra’s promotional material states that in designing the 2000 series, product

specialists asked customers what they wanted in a geared motor design. The answer was obviously

they wanted the KA series by SEW!

---

South Australian Harley-Davidson subsidiary New Castalloy has been given an 18 month death

sentence by its Milwaukee parent, as the motorcycle giant closes the plant in favour of having its

wheels made in the US and Japan.

212 staff will go from the North Plympton manufacturing facility and although profitable, the usual

issue of exchange rates has been put forward as a contributing factor for the close, as well as the

ending of a financial agreement between Harley-Davidson and the South Australian government.

Harley-Davidson had pretty much rescued Castalloy in 2006 when it was on the verge of going broke

and has had the bulk of its wheels produced there since.

---

The Chief Executive of the Australian Industry Group – Heather Ridout – is soon to be the former

Chief Executive of the Australian Industry Group as she resigns her post in favour of a position on the

board of the Reserve Bank of Australia. The Australian Industry Group represents all areas of

Australian business, with a focus on manufacturing and industry.

The role that Ms. Ridout has played in Canberra cannot be underestimated as the chief lobbyist for

the manufacturing sector and it will be interesting to see if her successor will come from within the

ranks of the 300 staff currently employed at AI Group or if someone from outside will be

headhunted.

---

As announced in the inaugural Australian Power Transmission Podcast, BlueScope Steel had decided

to reduce production in line with flagging demand at both Port Kembla and Hastings, laying off 1000

workers in the process. The same episode also had details of Australia’s new carbon tax, and how it

was going to affect business. Well, combine the two and you get the next news item.

BlueScope has applied to the federal government for $100M of industry assistance, under the Steel

Transformation Plan, which is aimed at helping to offset the carbon bills as they roll in but is in effect

a way to keep the doors open at a major employment source in disparate areas of the country.

---

The Thompson Coupling is the brainchild of Glenn Thompson, an Australian from rural New South

Wales who has rethought the constant velocity joint and invented a shorter and more efficient way

of joining high-misalignment shafts together.

To be more correct with Thompson’s invention, there are two products that his company markets

from its Orange, New South Wales premises; namely the Thompson Constant Velocity Joint and the

Alignment Eliminator pump coupling range. The Thompson Constant Velocity Joint would appear to

be the backbone of the design’s future, being used in high-torque applications for rail infrastructure

and miscellaneous industrial functions, whilst the Alignment Eliminator is an off-the-shelf offering

for high-misalignment pump applications up to 73kW. The Alignment Eliminator is more in keeping

with the purview of the Australian PT Podcast so I will focus my attention on it.

The Alignment Eliminator will handle up to six degrees of misalignment in axial, offset and angular

configuration and there are four sizes in the range, handling from up to 10kW through to up to

75kW. Like many gear couplings, the Alignment Eliminator must not be perfectly aligned and

requires some misalignment to function correctly. The fact that it can cope with higher

misalignment means that it can be fitted and set up in a much shorter time than couplings requiring

proper aligning with lasers.

The smart design of the Alignment Eliminator has patents on the go all across the world, and

Thompson is currently looking at licence agreements for manufacture and distribution, to

supplement what is produced locally. I know that this segment sounds like an advertisement for the

Thompson Coupling but I’m really impressed with what it can do. I’m not the only one, as Boeing

has signed a long-term development contract as they look for ongoing applications.

In Australia, the distributor of the Alignment Eliminator is Southern Engineering Services out of

Wollongong, New South Wales.

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As I say at the top and bottom of every show, you can contact the Australian Power Transmission

Podcast on twitter as well as through comments on the website or via email. It got me to thinking

how popular twitter is with marketers, so I thought I’d do a bit of research into its reach for the

Business to Business audience.

Twitter (and social media in general) is something of an unknown quantity in the B2B world, whilst

being almost invisible in the field of mechanical power transmission. There are a few bearing

retailers and electric motor rewinders who have a twitter profile and are fairly active, but none of

the world’s gearing manufacturers have bothered with the medium.

Taking the next step in the social media landscape, Facebook has business pages that offer a way for

consumers to deal directly with businesses and vice versa. In mechanical power transmission, it’s

almost a ghost town. SEW, WEG, Baldor, Sumitomo and Altra have pages, but the content is simply

a direct rip from their corresponding Wikipedia page. There are no site administrators for any of

these pages, by the looks of it, and there isn’t really a way to contact them.

From my investigation, no one else has put anything on their Facebook page, making searching for

them nigh on impossible and leaving a gaping hole of a marketing opportunity. I know I’m sort of

preaching to the converted because you are listening to this podcast and are probably aware of

everything to do with twitter, Facebook, Google+, YouTube and a myriad of other social media

platforms and even how they can be used for B2B dealings. It’s just funny that some of the big

multinationals will spend megabucks on advertising campaigns, tradeshows, classy websites and

more, yet social media – and its’ relatively little cost, sails through to the keeper.

Of all manufacturers using social media, Bishop-Wisecarver does one of the better jobs of engaging

with its community. The Pittsburg, California manufacturer of linear motion guide wheels is all over

twitter with close to 6000 tweets, has an active YouTube channel and of course actually has a

Facebook page. I wouldn’t call linear motion guide wheels the sexiest technology to be in, yet these

guys do a fantastic job that I’m sure creates more in sales than it costs per annum.

Business to Business customers aren’t looking at retail type social media marketing efforts, but I

think that the scope exists for manufacturers to at least get involved.