This blog is an overview of the Electric Motor Drive Market.
By Eddie Mayfield, President, EMA Inc.
(to download this in PDF form, Click Here)
Despite a persistently sluggish U.S. economy, most electric motor drive manufacturers reported good sales in 2011, and are optimistic about 2012.
Here at EMA, we experienced a very good 2011, even with a slower 4th quarter than normal, and are experiencing an excellent 1st quarter in 2012.
A variety of sources predict sales of lower horsepower AC drives, which includes fractional horsepower drives, to grow by almost 8% , while high horsepower drives are expected to grow by over 9%.
DC Drive sales continue to be a factor, but there’s no question that the primary interest is in AC drives. DC drives are likely to sustain revenues however, primarily as customers buy newer drives to replace old DC drives. Almost all of our DC drive sales at EMA fit within this model. In fact, I can’t recall the last time we sold a DC drive on a new application. We continue to get requests for DC drive service, but many of these have been in operation for years.
Here at EMA, we think the AC drive growth rates are understated, especially the high horsepower predictions. For one thing, the oil and gas market continues to expand the use of electronic drives, and for many, if not most, drive suppliers, this market segment accounts for a significant portion of their sales. While the world-wide demand for oil is actually down due to slowing economies, concerns about supply have driven continued growth. Even if it slows, this is an industry that has embraced the efficiencies that motor drives bring to their processes, and a slowing market could actually fuel even higher interest in motor drives as cutting process costs become more important.
Much of the AC Drive market is driven by energy savings. This has been evident to even the most casual observer for years, especially in the HVAC marketplace. In addition, we are seeing increased interest in a much wider range of industries, and getting more and more inquiries on energy saving applications using higher horsepower drives. Since a significant portion of industrial drives are constant torque applications such as conveyors, energy savings, even on their variable torque loads, were not always considered. There, drives have been purchased, and continue to be purchased, for process control factors. But now, plants are increasingly looking at energy savings, by placing drives on all their centrifugal loads. Since many of these are high horsepower applications, the energy savings potentials can be substantial.
I have seen nothing to indicate lower electricity costs in the near future, and therefore nothing that will dampen the interest in energy savings. Along with the interest in drives, we’re seeing more inquiries on power quality issues. These can range from harmonic assessment and mitigation techniques, to preventing motor damage from VFD switching transients.
So the electric drive market looks to continue expansion, driven primarily by energy savings, and at least in dollar terms, heavily influenced by high horsepower and medium voltage applications.
Despite marketing claims to the contrary, we’ve seen little in the way of technology advancement in the last 12 months. Several manufacturers have new VFD models out. These have packaging innovations, added features, and improved software, but little in the way of the real advances. Motor drive quality has been consistently high for a number of years, and there are no significant technical failings to address. Drive manufacturers are working on making drives more linear in terms of loading, in order to combat power quality issues created by non-linear drive loads. That will likely be the next significant advance in motor drives.
Baldor was recently purchased by ABB, and that’s just another step in what has been for many years the migration of electronic motor drives manufacturing to either offshore or multi-national corporations. There are very few U.S. owned manufacturers of electronic drives remaining, and those are small players.
Mergers and strategic partnerships are widespread within the industry. It’s more common than ever to purchase a VFD from one drive manufacturer, that is actually designed and built by a different manufacturer. Even, if those two companies have historically been competitors.
Pricing has remained relatively stable, but customers should be careful to compare apples to apples when looking to purchase. Buying a less expensive and less featured drive, can actually cost more if you have to purchase ancillary control equipment. In those cases, it can actually be less expensive to purchase a more featured drive which has the ancillary functions included.
Most drive manufacturers do a good job at providing a stand alone drive unit. Our experience is that performance suffers when they’re asked to provide engineered or modified equipment. This is understandable; their primary focus is providing consistently high quality, and low cost units. Companies like EMA benefit because we are able to do integration and equipment modifications in a timely and cost effective manner. I expect that trend to continue and accelerate.
Medium voltage VFDs are one of the fastest growing segments of the industry, and every drive manufacturer is moving to capitalize. Until recently, there were a very limited number of players providing this equipment. Compared to the low voltage drive market, the number of participants is still relatively few, but it’s growing quickly.
EMA decided to begin performing service work on medium voltage VFD s a few years ago, and has been successful in penetrating this market. The demand is high. For one thing, the manufacturers, due to a lack of competition, got very lax in this area, and the resulting customer frustration opened a window of opportunity for EMA and a few other companies. (If you Google “Medium Voltage VFD repair” you’ll find us listed several times on the first page)
We begin selling medium voltage drives as well, and for a small company, are operating at the front of this curve. We are fully aware of the fact that this is a moving window, and other companies will evolve to fill the growing demand.
We mistakenly thought a few years ago, that the service side of the electronic motor drive market would decline. We observed the computer repair market, where as equipment pricing declined, people began to replace failed equipment rather than repair. This was of considerable concern to us, since EMA began as a service company, and depended on it for the majority of our revenues. While the market has certainly changed, our service business remains as strong as ever.
We trace this to a number of factors, some of them related to business decisions and practices by us, and some to external factors. There’s no question that low horsepower drives on simple applications are more likely than ever to be replaced rather than repaired. Our service business in those situations has declined.
We have seen however, a dramatic increase in service on both higher horsepower drives and complex applications. For one thing, the number of companies that can perform that level of service is considerably less than those that were doing the more simple service. We’ve been fortunate at EMA to retain and train service engineers skilled at this, and to have built a culture and reputation that is oriented toward this more difficult service.
It is one thing to have a service engineer look at a small drive on an air-handler, and another thing altogether to have a service engineer tune a complex coordinated drive system, or confidently work on a 3000 HP drive.
While we still perform for and value our HVAC service customers, we recognize the need for us in those routine services is less than it was years ago. That has been offset a bit by the growing need to have HVAC drives communicate via various protocols, and that complexity has been a niche where we’ve enjoyed growth. We began doing turnkey installations as well, and this has served us well. Removing an older drive, and installing a new one that will not only integrate with the existing control system, but has the capability to communicate with an upgraded control system has proven to be a valuable service to our customers.
For EMA, we see continued expansion, despite the uncertainty of both the U.S. and international economies. Historically, we’ve actually grown during down economies. Cost cutting by many companies can involve personnel reductions. As maintenance and engineering staffs are reduced, a portion of those functions are often outsourced to companies like EMA.
In the same way, even during times of growth, we see companies being reticent to add employees, choosing instead to rely on companies like EMA to help them service and apply motor drives.
EMA is a privately held corporation, founded in 1990, and headquartered in Norcross, Georgia. EMA has facilities in Cortland, NY and Hazleton, PA. EMA both sells and services electronic motor drives, provides training, and power quality assessments all over the United States and into several other countries. EMA has the highest measured customer satisfaction rating in the industry, with in excess of 98.5% of customers reporting they were “very satisfied” with their last EMA experience.