Australian Power Transmission Podcast Transcripts 11-20

Episodes 11-20 Transcripts

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Table of Contents

April 2nd 2012

3

April 23rd, 2012

9

May 7th, 2012

15

May 21st, 2012

21

June 25th, 2012

26

July 9th, 2012

33

July 23rd, 2012

39

August 20th, 2012

45

September 3rd, 2012

51

October 8th, 2012

58

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April 2nd, 2012 It is “co-investment” season again in the Australian automotive sector, with General Motorssubsidiary Holden announcing that it will keep its local manufacturing facilities open for a few more years at least. GM is spending $1 billion on Australian operations, with South Australian, Victorian and Federal governments rumoured to be tipping in up to $275 million to help sweeten the deal with the suits at the Renaissance Centre in Detroit.

GM’s sales have grown by half a million in the past two years after the worst of the Global Financial Crisis, yet are still only half of what they were back in 1999, when 5 million cars went off the lot worldwide. Rationalising model ranges and staff has been key to GM’s return to profitability, so it will be interesting to see how they will use the money spent this time around to make more future profits.

The domestic – indeed global – appetite for the full-sized Holden Commodore is starting to wane, even with a previous roll of the dice and major investment splurge didn’t really deliver. The new ‘world car’; the Cruze, is already produced here, so the smart money is on an Australian-made SUV to be tooled up. Holden has the Korean Captiva in its range, so a version of this to challenge the Australian-made Ford Territory SUV is the probable outcome.

I wonder how much Mark Reuss had to do with influencing the Australian decision. Reuss was Holden’s MD for 18 months a couple of years ago and gained an intimate knowledge of the local capability, before being promoted to President of GM North America.

--Ford is opening a new plant in Sanand, India, with the expectation of delivering 240,000 cars annually to the domestic Indian market. The investment is around the $2 billion dollar mark and provides a major boost to the local economy, as well as the relevant sibling supplier industries.

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Ford is also investing $1.3 billion at its plant in Hermosillo, Mexico, spending the money on its stamping and assembly plants where Fusions are produced, mainly for shipment across the Rio Grande.

--The manufacturer of Imperial Leather soap and Morning Fresh dishwashing liquid is closing its Dandenong manufacturing facility and Mulgrave HQ in Victoria, at a cost of 92 workers. PZ Cussons has been a staple in the Dandenong area for decades, but has made the economic decision to close Victorian operations in favour of rationalising existing plants in other states.

PZ Cussons has experienced a slide in sales as Australian consumers continue to favour genericbranded groceries, a trend which appears to continue thanks to the efforts of Woolworths and Coles.

--Proving that supply chain management is critical to manufacturers, DSI of Lavington, New South Wales has had to stand down 250 workers indefinitely because of faulty clutches imported from US supplier Alto. DSI, or Drives Systems International, makes gearboxes and obviously relies on a single supplier for a critical component, leaving itself open to circumstances such as this when something goes wrong.

Everybody laughs at continuous improvement and dismisses the pursuit of quality as unnecessary and overly bureaucratic, but I would think that there are 250 workers who would disagree.

DSI is looking to restart operations after the Easter break, hopefully with some better diagnostics in place and trouble-free equipment from its supply chain.

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Something I got from the wires that I find interesting is that the White House is looking to introduce a National Network for Manufacturing Innovation, kicking in $1 billion for a pilot program of up to 15 centres across the US. The centres are looking to take advantage of possible manufacturing ‘reshoring’, also known as ‘insourcing’, which is the process of industries that had previously ‘offshored’ to developing nations finding conditions favourable enough to return to Western economies.

--The mining juggernaut continues and so does supplier investment, with Sandvik Mining opening a 16 hectare, $50 million site in New South Wales’ Hunter Valley. Aimed at supporting the surface and underground coal mining industry, the Heatherbrae facility employs 600 and will contribute over $200 million of the $1 billion of business that Sandvik does in Australia.

--Following on from the story in episode six of the Australian Power Transmission Podcast about drivetrains in electric vehicles, news has come through of A123 Systems recalling defective batteries.

One of A123 Systems’ major customers is Fisker, whose Karma model has the battery specified as standard equipment. In addition, GM selected to partner with A123 for upcoming models.

The news has sent A123’s share price tumbling, and although the management claims they have enough cash to cover the roughly $55 million it will take to sort the defective battery issue, the company has not yet turned a profit in its existence. The only way around a problem like that is some form of inventive capital-raising.

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If you’ve got a spare $2500 a year burning a hole in your pocket ($2000 if you’re an AGMA member), you can subscribe to IHS Global Insight’s new quarterly report into the gearing industry, titled “The Gear Market Report”.

The Gear Market Report will give insights into the large US gearing industry, taking into consideration not only various economic factors but also end user markets.

--Australia’s Carbon Tax has been in the news again, with its passage through both Houses of Parliament confirmed. The proposed introduction of the Clean Energy Bill, 2011 was a topic in the first episode of the Australian Power Transmission Podcast as debate raged in both union and manufacturing sectors as to its efficacy. The Bill’s passage was a long and drawn out process and saw more than one Independent MP questioning his support.

I know I’m going over old ground, but it’s good to get an understanding of what the Carbon Tax actually is, and how it will affect Australian manufacturing.

The carbon tax can actually be defined as a ‘Pigouvian Tax’, that is one which supposedly puts an impost against the damage done by the activity being taxed to the point where the returns are only as favourable as the societal impact. Whew, what a mouthful! In short, think of the booze and smokes sin taxes, which seem to go up every year, and an excise on fuel.

500 of Australia’s biggest polluters will foot the bill in the first instance, which means that costs must eventually be borne by the consumer. According to the government website regarding climate change policy, of the 500 businesses: 

around 60 are primarily involved in electricity generation



around 100 are primarily involved in coal or other mining activities

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around 40 are natural gas retailers

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around 60 are primarily involved in industrial processes (cement, chemicals and metal processing)

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around 50 operate in a range of other fossil fuel intensive sectors; and

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a further 130 operate in the waste disposal sector

The carbon tax will be stepping up to the plate on the first of July, and the world is actually watching on to see what is going to happen. In a somewhat backhanded compliment, GE vice chairman John Rice is quoted by The Australian newspaper as saying that the carbon tax decision was ‘gutsy’ and ‘courageous’. I’m not sure if I should do that in the voice of Sir Humphrey from Yes, Minister. He did continue, saying that it was up to at least one country to take the lead on pricing pollution and that Australia should be applauded.

The threshold to get onto the favourite 500 list is 25,000 tonnes per annum of carbon dioxide emissions. I don’t know if that means if you’re producing 24,999 tonnes there’s no penalty, then you’re up for $575,000 when you pump out the extra tonne, or if there’s a phased increase. Either way, the $23 per tonne will be increasing by 2.5% per year for three years, before the real guts of the policy comes into effect in 2015, a carbon emissions trading scheme.

In order to ensure that Australia’s energy bills don’t go up – and cause heartache to millions of Australian voters – the Clean Energy Bill features energy security fund payments, which are basically cash payments to the coal-fired power stations in Victoria’s Latrobe Valley. Hazelwood power station will get $266 million, Yallourn will get $257 million, Loy Yang Power will get $240 million and Loy Yang B will get $117 million, all for the next financial year. The payments are provided on the condition that the stations move towards significantly reducing carbon emissions.

Initially, the payments were aimed at helping to close coal-fired plants, especially Hazelwood, but it would appear that this may have been overlooked. Overall, the goal is to find 2000MW of coal electricity for closure. Hazelwood contributes 1600MW of this.

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One of the ways they might just go about reducing emissions is the technology called Postcombustion Carbon dioxide Capture or PCC. The CSIRO has finished a pilot study in to the benefits of PCC and is about ready to release its findings, which may go some way to keeping the Australian coal-fired power stations (and the 80% of domestic electricity they produce) competitive into the future.

The Australian government has been riding the crest of the resources boom wave, but it has caught up with them. Every other sector, primarily manufacturing, has suffered as a result of reduced international competitiveness and now Treasury is looking into a raft of belt-tightening measures.

Add to this, the need to provide personal tax cuts and welfare to offset the rise in the cost of living because of the carbon tax, and the overall financial situation gets a little cloudier.

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April 23rd, 2012 Bauer Gear Motor is opening an assembly plant in China, solely to service the domestic market.

Now part of Altra Industrial Motion, Bauer is quick to point out that design and manufacture is still carried out in Germany and Slovakia, with the Chinese facility being opened to service its clientele which has uprooted manufacturing from Europe and the United States, as well as new business.

Bauer almost tripped over itself in making clear they are not moving production to China, whilst pointing the finger at those who have. China remains a dirty word, still, in the mechanical power transmission world.

--Without trying to have the Australian Power Transmission Podcast dominated by the Australian car industry, it is nonetheless well worth reporting that Toyota has gone through with the redundancies it flagged back in January for its Altona manufacturing plant. 350 positions are gone, which comes after Toyota refused a proposed bail-out from state and federal governments.

The main reasons given for the closure by Toyota are... you guessed it... the continued strength of the Australian dollar, as well as a reduction in domestic demand. The new Camry is in showrooms now but it looks like there is no going back to work for those shown the door.

--Wednesday, May 9 will see the National Manufacturing Week 2012 Conference take place, with innovation, sustainability and productivity gains the stated – if somewhat predictable – goals. Held during Sydney’s turn for National Manufacturing Week, May 8 to 11, the Conference features some of Australia’s manufacturing heavyweights.

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Entry to the event will set you back $550.00 and for your money you will get to hear representatives from Boeing, Bluescope, Ontera Carpets, Siemens, Manufacturing Skills Australia and the CSIRO. Oh yeah, you will also get lunch.

AGMA’s Board of Directors has a few new appointees. Joining the Board are Steve Janke, President of Brelie Gear Co; Dean Burrows, President of Nixon Gear; Mark Michaud, President of REM Surface Engineering and Jan Klingenberg, Chief Executive Officer of the Klingenberg Group.

Outgoing Board members are Robert Phillips of Gleason Cutting Tools; Kyle Seymour of Xtek and Jim Bregi of Doppler Gear.

--One thing I find intriguing about the US political system is the weight that lobbyists carry; undoubtedly backed up by the finance that supports them. Political Action Committees or PACs become the face of the lobby, arguing for particular issues with political candidates. In short, money equals speech.

The National Association of Manufacturers has applied to start its own PAC, with a view to furthering its four-point plan for economic growth and jobs, namely: 

The United States will be the best place in the world to manufacture and attract foreign direct investment



The United States will expand access to global markets to enable manufacturers to reach the 95 percent of consumers who live outside our borders



Manufacturers in the United States will have the workforce that the 21st-century economy requires, and



Manufacturers in the United States will be the world’s leading innovators

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These four points are, I’m sure, the goals of every developed, manufacturing nation on the planet.

As we all know, a goal without a plan is just a dream. I suppose having representatives in Congress who support manufacturing is one step closer to reaching this goal, but how many political candidates are opposed to manufacturing?

The NAM understands that business also foots the bill for health care costs in many cases and is one of the most difficult challenges facing manufacturers.

Structural issues like this are where

manufacturer PAC money is inevitably bound to find itself.

Semi-related is the news that The Manufacturing Institute (which is the 501(c) affiliate of the NAM), has announced that it has named Jennifer McNelly president, beginning in April.

--The ink is still drying on the rubber stamp that the Australian Competition and Consumer Commission gave to Amcor’s purchase of Aperio, but Amcor remains restless in the M&A field.

Amcor has bought into the Mexican packaging market, spending $40 million for Aluprint, a specialist in the tobacco-packaging field.

--Meanwhile Huhtamaki has picked up Hong Kong food service packaging manufacturer Josco for 67 million Euros. Josco’s two manufacturing plants in China are well-positioned for Finnish Huhtamaki to continue expansion efforts in the region.

--While the dust settles on recent General Motors investment decisions both in Australia and Europe, Mitsubishi Motors has decided to quit the European manufacturing landscape altogether.

Mitsubishi currently produces the Colt and Outlander in the Netherlands at its Born facility, but low

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sales have forced management to consider the loss-making enterprise’s future. 2012 will see the last cars roll off the production line.

What to do with the plant once Mitsubishi production comes to an end is probably the biggest question mark to be decided. When Mitsubishi closed its Tonsley Park assembly plant in Adelaide, it was left with a similar dilemma. Eventually selling the site to the South Australian government, it is currently in the process of being turned into residential housing. The Born factory may offer a Korean auto manufacturer a walk up start, considering Mitsubishi took it over from Volvo in the mid 90s.

The month of May in Indiana is famous for only one thing, the Indianapolis 500. 2012 will be the 96th running of the event.

The people at Reliable Plant 2012 would like Indiana in May to be famous for two things now, as their 13th conference is taking place on the first to the third.

Okay, a pretty weak segue, I’ll grant you, but this conference looks like it’s worth attending. The conference itself is fully loaded with key-notes and there is a good depth in the exhibition list.

Plus, I suppose you can hang around until Memorial Day. --Next, I have a brief round-up of some staff movements that have been brought to my attention. I’ll probably do this once every couple of episodes, so please send me information if you would like me to tell the world. feedback@australianptpodcast.com.

Parvalux has announced that it has promoted its Sales Director, Nick Spetch, to Managing Director.

He was also formerly Sales Director for RS Components.

Parvalux is based in UK’s Bournemouth, with agents and distributors across the globe, marketing a full range of AC and DC geared motors.

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From Europe to America, and Regal Beloit-owned Durst of Clinton Wisconsin has appointed Scott Filzen to the role of Engineering Manager. With an MBA and a degree in mechanical engineering, Durst’s press release is glowing of Filzen and the increase in scope he will bring to the role.

--Electronic variable speed drives continue to get more and more sophisticated, with multiple I/O functionality, theoretical full torque at low RPM capability, immediate feedback and data logging all becoming available in lower-priced versions as new models are introduced. It has been interesting to see developments in the field and I am certain that the learning curve is going to continue, mirroring Moore’s Law, where computing capacity doubles every 18 months or so.

--Yet while electronic VSDs look to upscale the smarts, mechanical speed variation still has a role to play in the power transmission landscape. Mechanical VSDs such as the Reeves belt variator or the SEW version can deliver full load torque all the way down to – in many cases – zero RPM, and full horsepower all the way from midpoint speed through to maximum drive RPM. They really are an intriguing piece of hardware that has been around for many decades and whilst replacing them has been straightforward in many cases, in others there are some things that must be considered.

When replacing a mechanical variable speed drive with an electronic version, it is not enough to simply replace the unit with a similar capacity motor and gearbox, because the electronics cannot deliver the low end torque that a belt variator can. Instead, an idea of the actual load must be gathered at its lowest speed, and work backwards from there.

I have done a few of these mechanical to electronic VSD retrofittings and each time, the size of the electric motor input has had to basically double to achieve an outcome similar to what was there before. A lot of the issues arise due to the starting torque capacity of mechanical belt variators,

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which are similarly matched to the motor capacity at 225%. Electronic VSDs usually have a starting torque capacity of only 150%, creating problems.

Mechanical belt variators continue to do the heavy lifting in applications such as wastewater treatment, the cement industry and bulk food mixing. In many cases electronics can assist, with ease of operability and functional repeatability the main drawcards. Obvious negatives such as cost are continually being negated as the technology filters through, making electronic VSDs the first choice for new applications but also forcing users to look at replacing belt variators as the need arises.

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May 7, 2012 The ownership of Australian and New Zealand SKF Distributorship has changed hands, with Ohiobased Applied Industrial Technologies purchasing the business from SKF direct.

Applied is a specialist in MRO industrial supply, with four and a half thousand employees and turnover of $2.2 billion.

In Australia, SKF has operated with a hub and spoke distributorship philosophy. Many of the branches carry the bare minimum of stock and the main distribution centre carries the bulk. I wonder if there will be any change in business model with the purchase.

--The 2012 Hannover Fair saw ABB launching what they claim to be the world’s first IE4 efficiency motors, in a size range of 75kW to 375kW. ABB is using the term ‘super-premium’ for this new range of 3 phase motors, claiming they are best suited to S1 duty, where a reduction in CO2 results from higher efficiency.

--Modest by comparison with Hannover but still substantial nonetheless, Mach 2012 at the Birmingham NEC took place in mid-April and received positive reviews. Manufacturing in the UK is in the same boat as many of the world’s developed nations, struggling with high wages, decreasing exports and an ageing workforce. I am a strong believer in conferences of this nature having a constructive outcome.

--Japanese motor manufacturer Nidec is digging deep into its pockets to purchase the Italian motors and drives manufacturer, Ansaldo Sistemi Industriali, or (ASI). The money involved for the purchase is thought to be in the region of $400M - $500M. 15

Among Nidec Corporation's primary products are ultra-high-precision spindle motors for hard disk drives, whilst ASI boasts a full suite of industrial motor manufacturing technology, making it an attractive acquisition for Nidec.

The purchase moves Nidec into new markets and product ranges, with ASI manufacturing motors right up to 25,000kW, in low and medium voltage.

--Meanwhile, Ametek Corporation is purchasing the German motion control outfit, Dunkermotoren GmbH, subject to German government approval. Dunkermotoren is presently owned by the venture capitalists Triton, whose industrial investment stable includes Dematic and Stabilus.

Amatek has an annual turnover of more than $3 billion, and while the Dunkermotoren acquisition is for an undisclosed sum, the Bonndorf firm is on track for 2012 revenue of $200 million.

Dunkermotoren, who last July themselves acquired London’s Copley Motor Systems, is a specialist in automation using servo equipment.

The failure of Australian car components manufacturer CMI Industrial has resulted in Ford having to shut its production lines and send workers home for a week.

CMI – who manufacture a range of components including suspension and exhaust parts - appointed McgrathNicol as administrators last week, as the firm struggled to pay its debts as and when they fell due.

The Toyota Production System and Just In Time have become universal in the automotive manufacturing world, as evidenced by the announcement by CMI, which was followed the next day by the announcement of Ford’s shutdown. Only one day, how LEAN can you get?

For the purposes of full disclosure, one of the CMI businesses is a customer of mine in my day job.

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Brazilian electric motor manufacturer WEG markets the W22 IP65 and W21 IP55 series of motors the world over, and has added to this with the W22X range of flameproofs. Aimed at the mining industry with a range starting at 160kW and going through to 1500kW, the W22X has been dual ATEX/IECEx certified for suitability in all markets.

--A recent report by market analyst Frost & Sullivan claims that the European market for integrated motors and drives will expand at a compounded annual growth rate of 12.1% over the seven years 2010 to 2017, from $285 million to $633 million.

This analysis makes sense, especially when you consider that governments the world over are looking to mandate increased motor efficiency levels and yet leave loopholes open for integrated units. WEG’s recent Cestari purchase, combined with SEW-Eurodrive, NORD, Bauer and a whole host of American manufacturers will look to continue the push for integral units as planned redundancy also results in greater returns.

--Operating in a sales firm, orders come through in many ways and via many channels. Obviously the telephone still constitutes the bulk of B2B communication, although email has standardised with the new generation of workers. It is important that customers can find you in the way they want to, which constantly changes.

Email and faxes are used for ordering, quotes, a wealth of standard communication and placing your footy tips. They serve as a way of creating a hardcopy confirmation of things already said, much in the same way that the postal service used to. But how did we get to the current state of play?

Many of the old technical catalogues from power transmission and gearing manufacturers feature contact information with something called a telex on it. The telex predates the fax, looks like a

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typewriter and works like a typewriter mixed with a pianola. The telex service in Australia was made fully automatic in 1966 and became the de facto standard for hardcopy B2B communication, holding sway for around 20 years, before the fax took over.

Electronic Data Interchange (or EDI) has also become a standard ordering system in major businesses, streamlining two-way information flow and limiting the scope for error.

All of which leads me to a new business, amazonsupply.com. The Seattle-based e-commerce business, famous primarily for book sales and its Kindle e-book reader, purchased Small Parts back in 2005. Small Parts supplies medical and scientific components, and is being used as the springboard of the amazonsupply.com business.

As far as the majority of listeners of the podcast are concerned, amazonsupply.com features a dedicated power transmission section, with Bearings, Springs, Sprockets, Belts, Couplings, Unis, Pulleys, Gears, Shafting, Linear Motion, Gearboxes, Chains, Vibration Control, Lubricants as well as Brakes & Clutches all covered under their own heading.

Key features of amazonsupply.com are a product listing of over 500,000 items, a free 365-day returns policy, free two day shipping for orders over $50.00 and a dedicated customer service centre. My American friends will have to tell me how good their customer service centre performs. eBay stores have existed for a while, without radically changing the face of industrial supply. Web 2.0 has facilitated greater business on the internet, but by necessity this only applies to equipment which can be considered commodities. Specialist power transmission equipment requires specific knowledge of design requirements, with its inherent subtleties. Amazon is a little more aggressive with its outlook and will be looking to control as much of the vertical supply chain as possible.

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Gears in industrial geared motors go through a few processes before being ready for action. After being cut and heat treated, added life and strength is gained from finishing. It is this gear finishing that I am interested in.

Most manufacturers have arrived at precision grinding as the best way to add strength in a costeffective manner for volume applications. The process basically involves using an abrasive to reduce high points on the tooth face. Overcoming friction is one of the key requirements of the tooth finishing process, ensuring lubricant is given enough scope to do its job properly.

Critical or high-performance applications such as aerospace, motor racing and power generation require gears that can handle the required torque, but do it with higher efficiency and less heat.

There is one finishing technique called isotropic superfinishing that is well worth following up on.

The best way to summarise the process is to read verbatim an article by Lane Winkelmann, Paul W. Niskanen & Bruce D. Hansen, which is courtesy Gear Solutions magazine, June 2008.

“The isotropic superfinish is produced in vibratory finishing bowls or tubs. An active chemistry is used in the vibratory machine in conjunction with high-density, nonabrasive ceramic media. When introduced into the machine this active chemistry produces a stable, soft conversion coating on the surface of the metal gears being processed. The rubbing motion across the gears developed by the machine and media effectively wipes the conversion coating off the “peaks” of the gears’ surfaces, but leaves the “valleys” untouched.

No finishing occurs where media is unable to contact or rub. The conversion coating is continually reformed and rubbed off during this stage, producing a surface smoothing mechanism. This process is continued in the vibratory machine until the surfaces of the gears are free of asperities or until the surface attains the desired level of finish. At this point the active chemistry is rinsed from the part and the gears are dipped in rust preventive.”

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Isotropic superfinishing carries the claim by its proponents that it can increase gear capacity by 30 percent, whilst simultaneously increasing durability by a factor of 3.

Superfinishing is not a cheap undertaking and is not suitable for everyday manufactured gearboxes, however it would appear that it is getting more popular and may become standardised as manufacturers look to squeeze more performance out of smaller applications.

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May 21st, 2012 Germany has long attracted the best engineers in the world for its industrial manufacturing efforts, coming from different places at different times. For the past half-decade, it is China who has provided a bevy of industrial engineering talent, trained domestically, aware of Western manufacturing demands and very attractive to the best companies. Well, more and more, China wants them back.

Hanover Messe’s recent occurrence brought into sharp focus just how quickly Chinese manufacturers are catching the West, not so much in quality but definitely in ingenuity. Many of these manufacturers happen to be subsidiaries of Western multinationals, but many aren’t.

Increasingly, the wages earned for engineers in China is climbing, with the gap to Europe steadily closing. The Germans know that its status at the top of the industrial engineering tree is reliant upon maintaining the cream of the engineering human resource. How much more will it cost each year to retain this supremacy?

--Timken’s earnings climbed 38% for Q1, citing an increase in demand for its four core product offerings: process industries, mobile industries, aerospace and defence, and steel. Sales for the quarter were $1.42 billion, with net income $155 million.

A significant portion of the growth in revenue can also be attributed to Timken’s strategic acquisition policy, which has added numerous businesses to the process industries portfolio and we are beginning to see the benefits realised.

--As predicted by the Australian Power Transmission Podcast – as well as every media outlet in Australia – QANTAS has announced the closure of its Melbourne maintenance facility, consolidating

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both Brisbane and Melbourne’s Avalon workshops. Efforts by unions to limit the impact have eventually come to nought, although even they were probably aware they were on a hiding to nothing.

Overall job losses from the closure at Tullamarine amount to 422. Some positions have been made available at the other facilities but there seems to be limited take-up.

--Hansen Industrial Transmissions is set to incorporate maintenance activities for the Paramax range of gearboxes from new parent Sumitomo into its European assembly centre in Antwerp. Sumitomo Heavy Industries acquired Hansen last year, and the rationalisation of resources such as this is an obvious move. Sumitomo and Hansen also have service centre overlap in other jurisdictions and product ranges that are somewhat complimentary. It would make sense if further rationalisation efforts were on the agenda.

--Something from South Africa is the fifth annual PneuDrive Challenge, aimed at bridging the gap between businesses and engineering students.

Sponsored by Festo and SEW, the PneuDrive

Challenge is a travelling road show which will visit universities throughout the republic and put students through their paces.

The theme for competitors for 2012 is ‘Engineering a Better Life for Communities in South Africa’, which tests students across a range of disciplines and with a number of specific outcomes, from economic viability and energy efficiency right through to relevance to South Africa’s broader community demands.

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If nothing else, for their investment Festo and SEW get their products in the heads and hands of South Africa’s next generation of design engineers, as well as scout some of the talent that will soon be in the employment pool.

--Like it or loathe it, junk mail is a fact of life. Direct marketers love it, and it comes as a shock to hear that printing and distribution company PMP has issued profit warnings, sending its share price tumbling, only to see it take off again after rumours of an acquisition hit the market.

PMP’s main revenue stream is junk mail, and direct marketing companies have all experienced the same downturn in demand experienced by advertisers operating in other markets.

--CSR’s new Gyprock facility in Yarraville was opened by Victorian Premier Ted Baillieu on the 9th of May. The total investment by CSR is $160M, and employs 160 in the manufacture of plaster sheeting used domestically in the housing construction sector.

--SKF has opened its first Solution Factory in Australia, with Perth selected because it is the closest capital city to the heart of the mining industry. It is the 18th such Solution Factory in the world and implies that other SKF sites cannot solve problems, but actually refers to the broad range of products and services offered; bearings, seals, services, lubrication systems and mechatronics.

--ABB Australia has acquired Bob White Electrix and LE Jarvis, both electric motor rewinders and manufacturers, for an undisclosed sum in a deal is expected to be completed in July.

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The Geelong-based Bob White Electrix started in 1946 and has grown to handle a capacity of 85 tonne rotors in its balancing pit. LE Jarvis opened its doors in 1967 in Perth and now boasts 25 staff, handling a broad range of applications itself.

ABB is serious about increasing its capacity, with growth through acquisitions dominating their last 24 months, so much so that consistent purchases in the US now make that market ABB’s biggest.

One potential conflict from the acquisition of LE Jarvis that will need to be addressed in the fact that Jarvis is a WEG distributor and test/repair facility. I’m not sure how WEG sits with the ABB purchase.

The maker of Devondale butter has already had some layoffs this year, but unfortunately is due for another round. Murray Goulburn is matching its business with the demands of the market, which has seen global prices drop on the back of significant milk oversupply.

300 staff will be made redundant, with around 60 coming from head office and the balance in processing and distribution, in a move that represents a further 12% of the total Murray Goulburn workforce.

--Development in materials technology will always be the way forward in pushing for more performance out of existing designs. The alloying of metals for gears, shafts and rolling elements has always lead the way, with composites also becoming more important for larger components. In a vicious circle, the more performance derived from a design, the more that is demanded by future applications.

In extreme applications (such as bearings in gas turbines and for man’s adventures into space… the final frontier), ceramics have become increasingly popular, mainly because they are the only thing that can do the job. Known as hybrid bearings because the rolling elements are ceramic whilst the

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bearing retainer, inner ring and outer ring are made out of metal, they can withstand the extremes of temperature generated by high speeds.

Further to high speed applications and the thermals involved in turbines (which frequently average more than 30,000 RPM and 600 degrees Celcius, the gases themselves are very hot - we are talking temperatures over 1100 degrees Celcius.

For the most part, it is the demands of jet engine development that have driven development of ceramics, with engineers looking to capitalise on their temperature characteristics and low weight when used in bearing form. There is an obvious drawback in ceramic material which has been the focus of development, in that it can be considered weak and brittle when compared with some specialist alloys that can perform a similar role but just can’t handle the temperature. Additionally, ceramics are not readily receptive to secondary-process machining.

Bearing grade silicon nitride, Si3N4, is the current standard material for ceramic rolling bearings, which enables design engineers and manufacturers across the globe to specify a known quantity with confidence. This also assists global R&D efforts. Hot Isostatic Pressed silicon nitride features self-reinforcing properties, where its two ceramic phases; alpha-silicon nitride and beta-silicon nitride, have different crystal shapes. R&D has focused on matching alpha and beta to increase strength and toughness.

The elevated temperatures that silicon bearings are asked to operate in naturally call upon special lubrication. In most cases, the lubricant used is solid, with a very high melting point, not unlike the moulded oil bearings marketed by NSK. There are no other issues with the lubricant affecting the silicon.

Ceramic hybrid bearings are going to feature more prominently in high-value and high-performance applications, as development and increased usage bring about higher quantities in operation.

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June 25th, 2012 Business is booming for Australia’s administration and receivership firms, with PPB and McGrathNicol called in to pick through the carcass of mixed electrical engineering firm Hastie Group.

Hastie has failed; groaning under the weight of debt used to leverage acquisitions in the electrical engineering sector and temporarily leaving more than 2000 electricians out of work in Australia’s eastern states. The failure is massive. Over $500M owed to banks looks unrecoverable, and this comes on the back of a recent Seasoned Equity Offering which raised $160M and claimed everything was rosy. In addition, another $100M owed to suppliers and unsecured creditors also looks to be gone.

The administrators have decided to sell off many of the businesses previously acquired by Hastie, which has also managed to secure the jobs of 1200 of the 2700 employees who have been left idle by the collapse. This is not to discount the role of the Electrical Trades Union, which was immediately front and centre after the original Hastie announcement and the administrator “stood down” workers as it was conducting its financial forensics. This act left employees with no income and no ability to register as unemployed.

The Hastie Group failure will play out in the coming months as more of the individual businesses are divested from the core, but a failure of this magnitude – where the debt to equity ratio is extremely high – will undoubtedly draw the attention of the regulatory authorities.

--I’m not trying to sound too pessimistic about the high level of job losses in Australian manufacturing, but they continue almost unabated. After the QANTAS announcement from last episode, Norsk Hydro has announced it is meeting with staff at its Kurri Kurri Newcastle aluminium smelter, prior to closing the plant later in the year.

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After constantly reducing output over the last couple of years, the Norsk Hydro facility shed 50 positions in November 2011, with the balance of 344 staff maintaining operations at about half to two thirds of plant capacity. Low demand, low metal prices and guess what, the impending introduction of the carbon tax, have been cited by Norsk Hydro’s Oslo hierarchy as the reasons for the closure.

--In the printing game, with its high reliance on bearings, power transmission equipment and gearing such as PIV drives, the news is also bad. Fairfax, publishers of The Sydney Morning Herald, Melbourne’s The Age and the Canberra Times, as well as the Brisbane Times and WA Today in digital format, has announced that 1900 jobs will go, mostly in the printing side of the business. Printing will now take place in regional centres, as the main focus switches to online and iPad versions, which are going to become paid subscriber only.

It was only 10 years ago that Farifax was investing in new printing works in Melbourne and upgrading those in Sydney, having spent hundreds of millions of dollars in the process. One can only speculate as to what will happen with these state of the art facilities. Will they be upended and shipped to the regional centres? One thing’s for sure, I’d hate to be in the printing press industry in these times.

The same thing goes for the printers at News Corp and its publications Sydney’s Daily Telegraph, Melbourne’s Herald-Sun and national daily newspaper The Australian. In a fanfare of “good news” for the business, it looks like digital is king once again and the paper form of the paper suffers another blow, with 1000 staff cuts on the horizon.

--With information about closures and retrenchments coming thick and fast, it comes as no shock that Australian manufacturing contracted significantly during May. The Australian Industry Group / Price 27

Waterhouse Coopers Performance of Manufacturing Index revealed a result of 42.4, with 50 being the marker for stagnation.

There seems to be nothing that can be done about the Australian dollar when compared with the US dollar and the currency formerly known as the Euro. A movement of a reduction of 50 basis points followed by a further 25 basis points to Australia’s official interest rated initially dampened interest in the Aussie, and gave a ray of light to non-mining Australia, but those hopes were short lived. The dollar took off again and now sits, once more, above parity with the US. --Regal Beloit is no more, as management has dropped the second part of their name and would like to be known now as simply Regal. Is this a case of taking time and motion studies to the extreme, saving six letters every time their name is written? Probably not, but Regal Beloit, sorry, Regal, have been buying businesses like they are playing a game of monopoly, so full integration is being included with a new name, and it has to be said, a new logo that someone designed in Microsoft paint. At least they’re saving money. If you want to see the rationale behind the changes, including how the new logo came about, go to www.1regal.com.

In Australia, Regal purchased CMG and its PT spinoff Transmission Australia in April 2010.

Regal is still using www.regailbeloit.com as their website, and I can hazard a guess to why they went for Regal and not Beloit. I see that www.beloit.com is taken, although the original owner went bankrupt twelve years ago. I’m sure that the website was available but, in light of the whole logo saga... www.regal.com takes you straight to the Buick Regal website and I’ve gotta tell ya, that’s one ugly car.

A little more seriously, along with the announcement of a new group structure, Regal is now about simplifying the many brands they have, some by accident.

A case in point is the fact that

Transmission Australia – picked up during the purchase of CMG - is not included as one of the brands 28

in the numeric ‘1’ made up of brands on the new Regal website. Are they trying to tell us something?

--Timken is going to close its St. Thomas, Ontario plant next year, which makes tapered rollers for the automotive and industrial sectors. According to the press release, 160 staff at the plant will have the opportunity to apply for jobs at other Timken facilities. St. Thomas also had Ford close its assembly plant in 2011, costing 800 jobs and possibly providing a great portion of Timken’s demand, along with Sterling Trucks, another manufacturer that closed in the town.

--Back in Australia, 8,500 people trundled around Homebush with showbags for Sydney’s turn at National Manufacturing Week back in May, making it an acceptable event considering the times, with many exhibitors reporting positive reviews. Over 80% of visitors were from New South Wales, which is a little disappointing but also points to the belt-tightening currently underway right across non-mining Australia.

The 2013 National Manufacturing Week will be held in Melbourne in May at the Melbourne Convention and Exhibition Centre, which will always be lovingly referred to as Jeff’s Shed after former Victorian Premier Jeff Kennett.

--Hot on the heels of international announcements regarding Sumitomo and Hansen seeking synergies in their maintenance, repair and service centres, a press release from the Australian divisions of both brands extends the partnership locally. Getting the nod in the role of Hansen Transmissions Managing Director for Australian Operations is Steve Wightman, whilst succeeding him in his newlyvacated role as Managing Director of SM Cyclo is Robert Proietti.

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Hansen will maintain its head office operations in Rowville, Melbourne and SM Cyclo will continue out of its Arndell Park, Western Sydney office.

--The Prime Minister’s Manufacturing Taskforce continues with its regular meetings, syncing the voices of government departments and science organisations, manufacturing firms from the private sector, union leadership, university professors and the like. They all seem to keep agreeing that the meetings are important and that value-adding through innovation is the way forward for Australian manufacturing, especially in the face of the continually-strong Australian dollar. I reckon we will hear the same sentence at the end of every Manufacturing Taskforce meeting forever.

Almost flying in the face of the rhetoric coming from the Manufacturing Taskforce comes the announcement by the Victorian state government that $300 million in funding is being withdrawn from the TAFE system, which is the local version of community college. TAFEs are renowned for supplying the majority of the trades skills that have been identified as being in short supply in the coming decades, and they are where apprentices do the formal part of their training.

It is fair to say that the TAFE funding model does need examining with a view to a possible overhaul, but gutting it to such an extent will see many business and teaching streams coming to such an abrupt end that reviving them in future years will cost many times the amount saved.

--There have been some major management changes that have taken place in the last month, the most major of which is Mark Bulanda succeeding the retiring Jean-Paul Montupet as executive vicepresident of Emerson, whilst also taking over leadership of their industrial automation businesses.

Bulanda has been with Emerson for more than 25 years.

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Another movement in the HR stakes is that of IDEX Corporation, appointing Fenton Challgren to the position of president of Chemical, Food & Process, which basically means Viking Pumps but also includes Richter Chemie-Technik and Wright Flow Technologies. Challgren comes to the role from the position of vice-president, after joining Viking in 2006.

--Alex Sohler, the Marketing, Projects & Technical Director of WEG Australia, will be presenting Technological Developments in the Design of Electric Motors for Hazardous Areas at the 2012 Hazardous Areas Conference for manufacturing, mining, processing & utilities. This event, to be held in Brisbane on June 27th, will focus – funnily enough - on the design of electric devices in hazardous areas.

Sohler is looking to give attendees a background into the design and technological developments of Ex electric motors, so if you’re in Brisbane on the 27th, check it out.

--In the bearing world, Bearing Distributors Inc. or BDI in the US has purchased Brown Bearing Co. for an undisclosed sum. With corporate headquarters in Ohio and branches the world over already for BDI, the pick-up of Brown will add strength in the Pacific Northwest for a company that is undoubtedly growing through acquisitions, but also adding branches of its own.

--SEW-Eurodrive has long been involved with South Carolina, opening its Lyman facility in 1983 and expanding over time to become its US corporate HQ, with a 250,000 square foot manufacturing plant.

Well, the South Carolina General Assembly has just passed a resolution that lets SEW know just how welcome they are. It is known as The House Resolution to recognise and honour SEW-Eurodrive for 31

its excellence as a corporate citizen in job creation, economic development, and community involvement, and to congratulate the company on its plans to diversify and expand its Lyman facility.

If I wrote a sentence like that in Year 8 my English teacher would have hit my knuckles with a wooden rule.

The House Resolution, H5395, was sponsored by representatives Parker and Allison.

I wonder if the Australian Power Transmission Podcast will ever warrant a House resolution of its own?

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July 9th, 2012 July 1st, 2012 saw the introduction of the Carbon Tax in Australia, which I have detailed more than once in previous episodes. The coming months will show how the tax on Australia’s biggest polluters will play out, although on the day of its introduction there was a high level of unpopularity among the business community and the general populace.

Australia experienced a major shake-up to its income tax regime back in 2000 when the LiberalNational coalition introduced a consumption tax – the Goods and Services Tax or GST – which was extremely unpopular. It took around 18 months for everyone to get on top of and now it is all people know. The carbon tax is not as big a change, but all issues affecting manufacturing need to be watched closely, including burdensome new taxes.

I will wait until the next episode – when the implications of the carbon tax introduction are more clearly understood – to list some of the feedback from industry. One early casualty is Deane Priest, the Managing Director of Australian franchise bakery firm Brumby’s. Priest circulated a memo to all franchisees, suggesting a price rise with blame to be placed on the carbon tax. Well, this memo was leaked, Priest is out of a job and now there are no queues at Brumby’s.

--Book your flights and accommodation and dust off your big hat, the Power Transmission Distributors Association is gearing up for its Industry Summit in Dallas, Texas in October.

Given the theme ‘Big Ideas to steer your business’, the PTDA has booked the Hyatt Regency from October 18 to 20, and has lined up some interesting keynotes and workshops. Undoubtedly, the main focus of the summit is the Manufacturer – Distributor Idea Exchange, which is the focus of networking efforts and probably the biggest draw of the event.

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The organisers have also tried to capitalise on the fact that so much talent will be on hand in the one place, scheduling an impressive line-up of industry-focused events. The distributor forum for bosses and CEOs of SMEs offers a prime networking opportunity, whilst addresses from speakers will spotlight evolving technology opportunities and the ever-looming retirement plan burden that will abruptly hit all baby-boomer countries soon.

--In mixed news from Downer EDI, an order has just been received from Fortescue Metals for the construction of 19 new locomotives for its iron ore mining business, the first of which is set to roll off the production line in August. The deal is worth $73 million, which includes maintenance for five years.

The news comes after a period of turbulence for Downer, which is also the engineering firm behind the consortium delivering New South Wales’ Waratah class trains. The Waratah struggled early, but quality is now much better out of China, so much so that Downer is looking to offshore all locomotive production to the People’s Republic.

--For years my dad kept telling me to watch out for the triumphant surge of the Orbital Engine, designed and developed by Ralph Sarich in the 1970s. Well, the original Orbital never made it, due to lubrication and temperature problems, but the company – Orbital Corporation Limited – continues, looking at ways its fuel-efficient engine design concept can be used to help in other applications.

Almost the perfect application for just such an engine is UAVs and Orbital has just announced a deal with Textron company AAI, supplying the locally-developed ‘Redback’ heavy fuel two-stroke engine for AAI’s new Small Unmanned Aircraft System, due for service with the US Navy and Special Operations Command.

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Timken’s board of directors is back up to 12, with the recent election of Diane C. Creel as Director.

With a history of working for green-themed businesses, Creel’s expertise in engineering and change management have been cited by the company as being important, along with her experience in mergers and acquisitions.

Another board appointment is that of Carsten J. Reinhardt to the board of Voith GmbH as well as president and CEO of Voith Turbo, replacing Dr. Hubert Lienhard. With a background in automotive management and technology and education qualifications earned in both Germany and the UK, Reinhardt’s skills have been sharpened with stints at Daimler, Freightliner and Meritor.

--PIX Transmissions Limited is selling its hydraulics business Parker-Hannifin, divesting the business unit to one of its current strategic partners to add further net working capital to its core transmission business efforts. Based in Nagpur, India, PIX employs 1500 across three manufacturing sites.

--One interesting piece of news is that of Baldor settling a US Labour Department complaint of discriminatory hiring practices, for $2 million. The Labour Department claimed that Baldor had screened out women and minorities in an ongoing basis, and although Baldor claimed it was not guilty, it deemed it sound to settle the claim. With 800 claimants, each will receive around $2500.

I’m not sure of what elements went into the decision, considering things like affirmative action in Human Resource Management, which really doesn’t have much of an airing in Australia. I’m not saying Australia is an employment utopia, but there is a skills shortage and employers only care that the task can be performed.

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Australia’s Performance of Manufacturing Index netted a result of 47.2 for June, up from May but still a contraction. China’s PMI, maintained by HSBC, revealed a contractionary result of 48.2, the eighth straight month less than a stagnant 50, whilst the US had its first manufacturing reversal in three years with a 49.7. Australia’s financial year to forget is over, with all eyes in manufacturing looking forward to what lays ahead.

Those employed in the mechanical power transmission and bearing industries could be loosely described as working in industrial distribution, even though the term industrial distribution is normally associated with engineering supply firms such as Blackwoods and Thomas Warburton in Australia and WW Grainger et al in the United States. Often described as ‘middle men’, industrial distributors have a good knowledge of their customer’s product and service requirements, at the same time reducing the burden on manufacturers, whose sales force simply wouldn’t be able to field the amount of enquiries coming from end users, without them.

In the United States, an alliance of trade organisations involved in industrial distribution has identified that the human resourcing needs of the market sector require more than ad hoc training and staffing, and have formed the Industrial Careers Pathway (or ICP). The following associations are ICP Alliance Partners; 

The American Supply Association – which is involved in the plumbing industry



The Bearing Specialists Association



The International Association of Plastics Distribution



NAHAD – The association for hose and accessories distribution



The National Fluid Power Association, and



The Power Transmission Distributors Association

In addition, the following are ICP Alliance Supporters;

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

HARDI, a consolidation of two wholesale trade organizations, namely North American Heating, Refrigeration & Air conditioning Wholesalers and Air conditioning & Refrigeration Wholesalers International, and



The National Association of Wholesaler - Distributors

There are also over 150 North American companies who contribute, reading as a who’s who of the industrial supply and power transmission industries.

To identify the aims of the ICP, I’ll read from their website, to be found at www.industrialcareerspathway.org.

‘The industrial distribution sector has come together as

Industrial Careers Pathway to tell the industrial distribution story, reach, inform, prepare and bring to the door of distributors tomorrow's sales leaders of industrial distribution.

Industrial Careers Pathway (ICP) is a multi-faceted program addressing the need for a skilled industrial distribution sales and customer service workforce today and tomorrow.

Supported by associations and organizations committed to the advancement of industrial distribution, ICP is: 

Reaching out to young adults across the United States and Canada with information about industrial distribution



Creating industrial distribution programs and courses at community and technical colleges



Building necessary educational tools and resources based on a solid understanding of industrial distribution



Connecting employers and potential employees

Initiatives such as the Industrial Careers Pathway get me excited to see that at least the industry knows that something must be done to ensure new talent is brought through the ranks. The average age of those employed in industrial distribution has steadily risen over the last decade, as new blood has not chosen the field as a sustainable career path, seeing the steady decline in 37

manufacturing as ominous for future prospects. This is not true, of course, but the continuing bad news from industry and manufacturing has surely taken its toll.

One thing that the ICP offers that I think is of real value is the $200 online course ‘Elements of Industrial Distribution’, which examines four modules, all key to employees in industrial distribution.

The four modules are industrial distribution fundamentals, functional operations overview, customer service and sales and marketing and profitability.

Australia doesn’t have anywhere near the scale to implement something like the ICP locally, indeed there are no industry organisations to even contribute to one. Joining individually – as can be done with the PTDA – looks like an option that has real merit.

I recommend checking out the Industrial Careers Pathway and looking at how it can bring the next generation through an aging industry.

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July 23rd, 2012 Ford Australia features a lot in the Australian Power Transmission Podcast. The last time was at the start of 2012, as it received government funding to research alternative engine types for its Falcon as well as look into broadening the product range. This time, it’s about shedding 440 staff across both the Broadmeadows and Geelong plants.

Ford did end up finding a new engine for the Falcon, importing its EcoBoost two-litre turbo four cylinder. Unfortunately, they forgot to tell anybody, focusing their advertising efforts on the fullyimported Focus and Mondeo.

It is no secret that Ford is hurting, moving less than half of the required amount of Australian-made cars needed to keep producing cars in Australia viable. The Falcon has been the staple for decades but its time has passed. I’m not going to declare an official time of death, yet, but there can be no doubting that the model is on life support.

--The 440 redundancies at Ford pale into insignificance in light of the 8000 jobs set to be slashed by PSA Peugeot-Citroen, in an announcement last week. Management has been forced to find One Billion Euros in cost savings, in light of sales reversals and resultant heavy losses. The French government has heavily subsidised their auto manufacturing industry but once again, if people aren’t buying your product, it doesn’t matter what new technologies are researched and proposed.

--WEG picked up Watt Drive last year and I speculated as to what product offerings might be coming through. Well, the wait’s over, with WEG announcing that they are going to shoe-horn their W22 motors onto Watt’s range, probably in compact or IMD (Integrated Motor Drive) format.

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WEG is also chipping in to fund an expansion of the Watt Markt Piesting manufacturing facility in Austria.

Information about sales and distribution have not yet been released, but WEG’s traditional motoronly distribution outlets won’t suffice on their own. Will the traditional Watt Drive channels be enough to move the expected levels of turnover?

--With continuous improvement always put forward as required to maintain manufacturing effectiveness, perhaps some time should be put into considering continuous investment. One case in point is the ongoing perils being suffered by Alcoa of Australia.

Alcoa, and its aluminium manufacturing plant in Point Henry, Geelong, has suffered from many years of underinvestment, resulting in an inefficient smelter that not only uses a lot of energy, but operates at a loss. Last quarter saw Alcoa report its aluminium operations as losing close to $200 million, with no reversals on the horizon due to the dollar and the price of aluminium.

None of this has deterred the state and federal governments, who have collectively chipped in enough cash to keep the Point Henry smelter open for at least another two years, citing the multiplier effect as the primary reason for retaining the 900 jobs at the site.

--In devastating news to all of the kids out there, famous Australian chocolate people Darrell Lea have appointed PPB as administrators, who have immediately started looking for a buyer. Darrell Lea has a long history, dating back over 80 years, to now employing over 800 nationwide.

Their

confectionary is produced at its south Sydney manufacturing facility.

Darrell Lea has remained family owned and operated, which may go some way to explaining just how management failed to act on the shift in consumer taste, away from the sickly-sweet offering to 40

the more refined bitter-sweet chocolate variants. It was only in March that the company opened a concept store in Perth to much fanfare, but even then, mere distribution was not going to be the main problem.

Chocolate manufacturing is a strong component of Australia’s food production know-how, with specialised bearings, chains and even geared motors all being used at Cadbury, Mars, Ballantyne, Kenman, Darrell Lea, Ernest Hillier and a host of others. Chocolate is also notorious for destroying anything that rotates once it gets past oil seals, as well as being really difficult to clean once it hardens.

--On the senior executive front, there have been two new appointments to the board of Schaeffler Industrial, owner of INA/FAG.

Rudolf Lenhart, President of the Spherical Roller Bearings Business

Unit and Plant Manager at Schweinfurt and Dr. Klaus Geißdörfer, Vice President Sector Management Industrial OEM, will assume their board positions on the 1st of September.

--Following on from my recent stories about the electric car industry and the known woes of A123 Systems, they once again have stated their need for at least $275 million in net working capital before mid-2013. Like all companies that need a lot of cash, management is expecting to be profitable ‘next year’.

A bulk amount of A123 Systems’ cash was chewed up replacing defective batteries and inventory after some problems were found during testing. Notwithstanding the setback, the company has an impressive list of customers and applications that looks set to keep growing as the technology starts to take hold.

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The Carbon Tax has been up and running for a couple of weeks, hype and hoopla has been flowing in all directions and still we really must wait to see how some of the details will play out. Pricing pollution is the only way to realistically get on top of it, so managing that price is going to be very important in the next few years. That task falls to the board of the Climate Change Authority.

The Climate Change Authority has announced its board, with the news coming from the desk of the Minister for Climate Change and Energy Efficiency, Greg Combet. The members of the board are, Lynne Williams, John Marlay, Professor David Karoly, Heather Ridout, Professor Clive Hamilton, Elana Rubin and Professor John Quiggin. I’ll quickly run through the background of each.

Dr. Lynne Williams is an economist with a substantial history in the public sector, now working as a consultant. Her education pinnacle includes a Master of Science in Econometrics and Mathematical Economics from the London School of Economics, whilst she has also completed a PhD at Monash University.

Representing the business community is John Marlay, a non-executive director of fertiliser business

Incitec Pivot Limited, building and construction materials manufacturers Boral Limited and Alesco Corporation Limited and civil engineering consultancy Cardno Limited. Marlay is also the independent Chairman of Tomago Aluminium Company.

The board’s climate man is Professor David Karoly, Professor of Climate Science in the University of Melbourne’s School of Earth Sciences.

Professor Karoly was invited to join the Australian

Government's High Level Coordinating Group on Climate Change Science at the end of 2009 and since 2011 has been a member of the Science Advisory Panel of the Australian Climate commission.

Heather Ridout has featured prominently on the Australian Power Transmission Podcast in her former role as chief executive of the Australian Industry Group. Now on the board of the Reserve

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Bank of Australia, Ridout’s time in Canberra has also seen her spend time on the Manufacturing Taskforce, the Henry Tax Review and Skills Australia, among others.

Next up is Professor Clive Hamilton, Professor of Public Ethics at the Centre for Applied Philosophy and Public Ethics, Charles Sturt University.

Professor Hamilton was executive

director of The Australia Institute – wait for it, a progressive think tank with the goal of questioning government interaction with the market. He also has a lengthy background as an economics consultant around the globe.

Elana Rubin is the Chair of AustralianSuper - a superannuation fund with $42 billion in assets – as well as a director of Mirvac Group, real estate specialists. She is also formerly Chair of the Victorian WorkCover Authority and Director of the Victorian Transport Accident Commission.

The wildcard of the group is undoubtedly Professor John Quiggin, who describes his worldview as social-democratic, is best known for his work on utility theory. In a typo from Minister Combet’s

office, they describe Professor Quiggin as ranking amongst the top 500 economists in the world according to IDEAS / Respect, when I’m sure they are referring to the RePEc database, which is Research Papers in Economics and something I am very pleased to have put behind me.

So there they are, The Magnificent Seven perhaps, but definitely seven people who are going to be in the news a lot in the coming months and years. They will be joining former Reserve Bank of

Australia Governor and Treasury Secretary Bernie Fraser and Professor Ian Chubb, the Chief Scientist. Fraser is the Chair.

Even if there are no climate change deniers on the board, I think the primary ‘nay’ votes for any board polls will come from John Marlay and Heather Ridout as representatives of industry. Having said that, I would not expect many unanimous decisions anyway. Boards are stronger when all views are expressed, so even though there may be claims of a conflict from some quarters, it would be wrong to stack the board with scientists and economists.

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I know that many economists, manufacturers, political theorists and Average Joes the world over are keenly following Australia’s implementation of the carbon tax, looking to see what ramifications are going to play out. I think it is still far too soon to report anything yet, as the only real stories to date have been opportunistic businesses price gouging an unsuspecting populace.

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August 20, 2012 South Australian company Chains & Accessories, trading as C&A Complete Drive Solutions, has been split up and sold by administrators BCR Advisory. C&A had appointed BCR back in May, who then contacted interested parties in both C&A’s infrastructure and agencies.

FW Hercus has purchased C&A’s engineering capability, leaving it on site but discarding the name and running it as Hercus. Some of the existing hardware enabled C&A to manufacture reasonably large gears and sprockets, so should fit hand in glove with South Australian-based Hercus.

Royce Cross Electric Motor Group has purchased C&A’s retail operations and details, and plans to continue running it without a name change, also from the existing premises.

One thing they will need to do is change the company page on their website to reflect the change of ownership and subsequent partitioning.

--Ford Australia’s recent woes have been all over the news and the speculation continues to grow about the eventual date the shutters will be pulled on local manufacturing. State and federal governments have given them just enough cash to make sure they don’t close during the incumbent’s tenure, but then what.

Contrast this, starkly, with the situation in Canada. GM Canada is set to invest $850 million in Ontario as part of its bailout obligations. The situation is obviously different to the Australian example, with GM Canada having a fairly large market to its immediate south and Ford Australia having a stable full of unexportable orphans.

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Manufacturing Australia’s Chairman Dick Warburtion has been earning his money of late, speaking out – everywhere - against the Australian government’s review of the Fair Work Act, which is the major industrial relations legislation in Australia. Warburton was scathing at the lack of engagement with third parties by the government during a review of the Act and is calling for multi-faceted productivity reform.

Since its inception in October 2011, Manufacturing Australia has evolved from a one trick pony of simple opposition to the carbon tax to having a range of policies, largely based on its four pillars of manufacturing reform, industrial relations, anti-dumping, regulation, and energy and resource allocation.

--The Bearing Specialists Association and the American Bearing Manufacturers Association will be having – in their words - a separate, joint meeting in Chicago on September 24th and 25th. The separate part being the BSA hosting a data synchronisation for business presentation by Susan Streich and the ABMA holding its committee meeting on Anti-Counterfeiting. The joint part being a reception and dinner for members of either group to facilitate networking.

A couple of weeks before the BSA and ABMA shindig, IMTS 2012 will be up and away again. The IMTS is the premiere manufacturing exhibition, and the numbers are very impressive for the event to be held in Chicago on September 10th; 1,100 exhibiting companies, 1.2 million square feet of exhibit space, 72 presentations encompassing five topic tracts (Manufacturing Technology, Materials, Quality/Metrology, Alternative Manufacturing Processes and Plant Operations).

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Cleveland Gear of – shock horror – Cleveland, Ohio, is 100 years old this year. The specialist worm-gear manufacturer, who also makes a full range of bevel-helicals and variators after expansion efforts in the last decade or so, was founded in 1912 as Cleveland Worm & Gear by F.M. Gregg, C.J. Fitzpatrick and David Fitzpatrick.

Throughout its life, Cleveland Gear has not been afraid to diversify from its core competencies.

In 1963, they purchased a design for a fluid strainer and adapted their wormbox to it to make it motorised. All of this was picked up by Vesper Corporation when they bought Cleveland in 1980.

Take a deep breath when you’re blowing out the 100 candles.

--Appointment-wise, Altra Industrial Motion brands Bibby Turboflex and Huco Dynatork have a new Managing Director, with the appointment of David Lockett. Lockett holds a mechanical engineering degree backed up by an MBA, and has been an employee of Huco for 14 years. He has been charged with overseeing the development of Altra’s coupling brands in Europe. These brands include TB Woods and Ameridrives, alongside Bibby and Huco.

--Kerry Ingredients, a Melbourne-based food ingredients manufacturer, has announced that it will be shutting its doors on April Fool’s Day next year, costing around 100 jobs in the process. Kerry will maintain operations in New South Wales, indeed some of the equipment will head up the Hume Highway, although the bulk of the capital equipment will be shipped to Kerry’s plant in Malaysia. It sounds like it’s time to re-skill if you’re one of the 100.

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Over the past 18 episodes of the Australian Power Transmission Podcast I have frequently talked about some of the professional associations that are involved in the bearing and power transmission ndustry.

Perhaps it is the right time to give some background on these

organisations, with both their goals and stated member benefits.

First founded in 1960, the Power Transmission Distributors Association is the pre-eminent association in the discipline. By the numbers, and I’m not too proud to say I have researched this by checking out the PTDA’s annual report, the PTDA has 185 distribution firms, 185 manufacturing firms and 21 associate firms as members, predominately from North America.

The PTDA puts out industry research papers, quarterly market outlook forecasts and frequent newsletters. Probably the biggest value to members is the networking opportunities afforded by the Industry Summit primarily, as well as other conferences. There is also a host of tools aimed at helping individual businesses, either by providing industry benchmarks, Annual membership costs are based on a sliding scale based on business revenue, starting at $780 for firms turning over less than $2 million right through to $9,500 for firms $1 billion and over. Individuals can also join, as well as education institutions.

So, that’s the PTDA. ‘Channelling the Power of Industry’, according to their website, which is www.ptda.org.

The European Power Transmission Distributors Association (or EPTDA) is the European equivalent of the PTDA, and offers the same services, mostly to European businesses.

A little harder core on the technical side and featuring a sharper focus, the American Gear Manufacturers Association (AGMA) is for manufacturers, distributors, suppliers and technical consultants who are involved in the gearing industry. AGMA is coming up to 100 years of existence, and one of its board members is Australia’s own Gordon New of Ronson Gears.

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Members all receive a full set of the much sought after AGMA standards and can be involved in the evolution of them, as well as the obligatory suite of technical business reports and outlooks.

AGMA also has a range of conferences and networking opportunities.

AGMA’s annual membership costs are on a sliding scale based on revenue directly attributable to gears and gear products, starting at $1575 and increasing by 43 cents per every $1,000 of turnover. www.agma.org The Bearing Specialists Association looks to develop and strengthen relationships in the bearing industry, nominally for the top brass in the game.

Designed so that peers in the bearing industry can keep up with benchmark practices, the BSA enables members to benefit from shared information, turnkey marketing campaigns, product price information, and marketing and sales materials. www.bsahome.org Way back in 1917, the ABMA (or American Bearing Manufacturers Association) was initially formed to aid bearing production in the First World War, and now claims to be the voice of the American bearing industry. Lately, the ABMA has led the charge against counterfeit bearings, with its members being a driving force behind the World Bearing Association and its efforts and you can see this podcast’s support of the initiative with the ‘stop fake bearings’ logo on the website. Click it and it will take you through to their website.

ABMA's Bearing Technical Committee (BTC) publishes its own peer-reviewed and approved set of industry standards, whilst other committees are maintained to further the interests of its members and the industry overall.

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The sliding scale rears its head again when determining annual dues, ranging from $1,410 to $46,000 for manufacturers and a flat $3,000 for associate members. http://www.americanbearings.org/ I covered the Industry Careers Pathway in detail in Episode 16 of the Australian Power Transmission Podcast, detailing what it sets out to achieve in HR and bringing through new talent. The ICP features most of the organisations that I’m talking about right now.

There are a few other organisations that add value to members in the power transmission industry and I might have a follow up on them in a future episode.

I think that businesses should look at the value that can be derived from joining an organisation of peers, noting of course that in many cases, further investments of resources such as travel and manpower must be made to get the most out of such affiliations.

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September 3, 2012 Rockwell Automation has dipped into its pockets to the tune of $83 million to purchase Chinese medium voltage drives manufacturer Harbin Jiuzhou Electric Company. Rockwell has used Jiuzhou as a contract manufacturer in the past, with Jiuzhou also producing its own range of DC power supplies, switchgear and wind power inverters.

--Also on the acquisition front, Kaman Industrial Technologies has purchased American automation company Zeller Corporation, who distribute Schneider, Sick and Kollmorgen among others.

Details of the acquisition such as purchase price have not been disclosed, although Zeller is expected to turnover around $80 million with 240 staff.

--Regal, the company formerly known as Regal Beloit Corporation of Beloit Wisconsin, has reported a second quarter profit increase of 82 percent, booking $64.3 million of earnings on sales of $863.9 million.

On their own, the figures all look rosy, but raw data can be a little deceiving, and a little extra digging into the Regal annual report from 2012 reveals why. Regal has a stated strategic aim of growth through acquisitions, which it has been following religiously for the last couple of years, purchasing CMG, Rotor B.V., Elco Group B.V, Unico, AFMC and EPC since 2010. The main problems with this are that the goodwill on the balance sheet has gone through the roof, up to $1.1 billion, and they have funded their purchases by increasing debt. Their debt-to-equity ratio is now .6, up from .32.

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Regal is now using significant leverage for operations, which will restrict its ability to keep acquiring businesses. They have noted this as a risk factor in their annual report, as well as the high level of goodwill which is now recorded as an asset.

--BHPBilliton has about-faced on its plan to expand Olympic Dam, mothballing the $20 billion expansion that it lobbied both the South Australian and federal governments very heavily for years. Uranium is suffering from receding prices, and BHP has had recent labour issues, both of which will have been considered in their decision, whether or not this was part of the official press release.

Regardless of the uranium which will remain in the ground for now, Olympic Dam features significant copper deposits, which BHP has maintained it will continually price-monitor and look for ways to make the stake economically viable.

The decision to postpone the Olympic Dam expansion has also cost BHP an impairment of $346 million, recognised in 2012.

--Mining Australia continues to gobble up the best of the HR talent pool and then some. This has created both a significant wage disparity compared to non-mining Australia along with a massive talent vacuum.

Well, with every issue comes opportunity, and Monash University (which is based in Victoria, nowhere near the recognised mining states) has started its own course to capitalise on a sustained boom that has seen other Universities get the jump on them. Known as the Bachelor of Mining Engineering (Honours) and part of the Faculty of Engineering, the degree offered

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includes subjects such as automation, environment, sustainability, people and community, safety, project management, economics, communication skills, innovation and leadership.

According to Professor Gary Codner, “graduates will be ready to make a positive impact in communities here and overseas. They will be ready to work in exploration, planning, extraction and processing of minerals.” http://monash.edu.au/study/coursefinder/course/4618/?courseview=domestic --Ford Australia. Those two words just might not be together in the future. During a guided tour for the press at Ford’s new design centre in Melbourne, Ford Australia President Bob Graziano was quizzed about local manufacturing and didn’t really quash any rumours that Ford may be pulling out at the end of the current Falcon and Territory runs in 2016.

He did point to the fact that Ford currently designs, manufactures and tests cars in Australia, and that the manufacturing component was not as big as many people thought. It was left to Ford’s marketing department to do its best to hose down any negative sentiment in the popular press.

--The Minister for Climate Change, Energy Efficiency, Industry and Innovation, Greg Combet, has announced The Automotive New Markets Initiative, a three-pronged scheme aimed at helping Australian automotive component suppliers stay in business.

Prong one is cash, funding research into diversification and known as the Automotive New Markets Program. Prong two is somewhat redundant - providing backing to develop new capabilities and called the Business Capability Support Program. The third prong is my favourite;

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an Automotive Envoy and Automotive Supplier Advocate who will don the cape and probably head straight to Thailand, where a fair swag of cars for the Australian market are made.

The Initiative has a total cost of $35 million over four years and carries co-funding from the carproducing states of Victoria and South Australia.

--The Australian Performance of Manufacturing Index increased a little, recording the stillcontractionary result of 45.3 for August. There are encouraging signs from some sub-sectors, although flat demand across the globe, coupled with China’s poor manufacturing result, will only serve to keep Australian manufacturing flat for the remainder of the year.

--“Smarter Manufacturing for a Smarter Australia”, that’s the title that has been given to a report of the non-government members of the Australian Prime Minister’s Taskforce on Manufacturing. Designed with the varied goals of responding to the existing and immediate challenges of exchange rates, technological change and resultant unfavourable trading conditions in the short term, and developing a framework and vision for the longer term, the report draws upon the resources of numerous government departments to assist with its recommendations.

First and foremost, the report identifies the narrowing of the economy brought about by booming commodity prices and decreased productivity growth and competitiveness. I’ve talked about manufacturing critical mass a lot in the history of this podcast, and the Smarter Manufacturing report goes one step further by listing the issues of losing it, including loss of capabilities, losing access to finance, an increasing skills shortage – both for task and knowledge

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workers and managerial skills and the ‘plug the gap’ immigration mentality to fix these shortages.

The Taskforce has developed a five-pointed set of policies that set out both a longer-term direction alongside some immediate action points and it must be said, they aren’t leaving much on the table.

Point one is a thorough list of specific measures aimed at capitalising on existing capital works, whilst adding value to projects already underway, which can be implemented immediately. This is done, and I’m quoting directly, “To address the urgent challenges facing may parts of Australian manufacturing and the real and imminent danger of large losses of jobs and capabilities.”

The second point is a very big catch-all, proposing a targeted stimulus to demand whilst reducing the costs of doing business, namely regulation, taxation and energy.

Point three calls for business and research collaboration, even going so far as suggesting the development of globally-oriented innovation precincts as part of a new Smarter Australia Network. I think that this idea is a pipe dream, but it can be developed into something that can work. Innovation precincts grow because people and organisations with innovative businesses grow them, normally around research areas.

Anyone with a half-decent memory and knowledge of Australian politics will recall the Hawke Labour government in the late 1980s spent a lot of political capital trying to get the ‘Multi Function Polis’ off the ground. The MFP was a proposed high tech city in Adelaide’s north that would be home to the next generation of jobs – sort of like an Australian ‘Silicone Valley’ – that would eventually house one million people, mostly funded by Japanese investment. Well, the

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Japanese economy stopped growing and local dissatisfaction with extensive Japanese money doomed the project whilst it was still a proposal.

The fourth policy direction calls for an increase in funding for Enterprise Connect, which is an initiative by the Department of Industry, Innovation, Science, Research and Tertiary Education that offers support to SMEs. Presently, Enterprise Connect consists of 12 branches across Australia that gives advice to manufacturing businesses to remain on top of their game. The Taskforce also calls for what it labels as ‘weak’ contributions from researchers and governments to SME innovation to be addressed.

The fifth point pleads for industrial relations stability, asking for a national conversation between industry, unions and government in something it labels ‘Smarter Workplaces’.

Australia has had periods of IR instability in the past, normally when a conservative national government first comes to power, although many of the ongoing issues have been sorted.

Further points of note from the report include: 

The Taskforce acknowledges that there are no ‘silver bullets’ or slogans to getting manufacturing in Australia back on track



The food industry, has and will continue to be a basis of strength for Australian manufacturing

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Mines, urban and regional infrastructure should be developed using the Australian manufacturing industry

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Manufacturers must also invest locally

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The sustained transformation of the government science and research budget to applied knowledge in manufacturing

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Manufacturers should be trained to deal with cyclical challenges and structural change

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

Significant power still lies with state and territory governments and efforts should be made to reduce policy duplication and red tape

One of the major projects on the cards in Australia’s manufacturing future is the replacement for the Collins Class submarines. Type in Collins Class submarine in your search engine and you will find a long list of the teething troubles that beset the project for Australia’s current submarines from the outset. Hopefully we’ve learnt how to do it better and can do it properly this time, especially with $25 billion on the cards.

Smarter Manufacturing for a Smarter Australia is 117 pages long and full of information about Australia’s manufacturing future, the problems we face and some possible ways to meet the challenges. With all of the gloom in the industry in Australia – and across the world for that matter – it is heartening to see this report. The recommendations are sweeping and I can’t really see them being implemented in full with any immediacy. Most of them will require changes to legislation and with a minority federal government in power, no bills are assured of passing both houses.

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October 8th, 2012 IMTS 2012 has just wrapped up, the International Manufacturing Technology Show, from Chicago, with all reports suggesting the show was a success in a neutral marketplace. The Association for Manufacturing Technology organised the event, and over 100,000 visitors went through the doors at McCormick Place, seeing over 1,900 exhibitors.

Although the IMTS doesn’t specifically cover the power transmission sector, many sub-sectors are served by the show, with gear production, MRO, materials handling and related industries all featuring exhibitors.

--The US Department of Energy has heard petitions from various electric motor manufacturers regarding increasing efficiency standards into the future. Petitions were received from a group of organisations including NEMA and the American Council for an Energy-Efficient Economy, that had the primary request of closing the numerous loopholes and exemptions that are currently in place for many motor types.

I think these groups have gotten on the front foot and made the proposals in an effort to head off any mandated standards that may have been thrust upon them by the Department. The good thing about doing this is they can keep help shape the way any changes will be adopted. $18 billion over 30 years is the dollar figure that has been attributed to closing the loophole.

--Darrell Lea – the confectioners who recently appointed PPB as administrators – will live on, after having its manufacturing and distribution channels acquired by the owners of VIP Petfoods, the Quinn family.

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As part of the acquisition, it would appear that turning around the profitability of the companyowned retail operations was out of the question. Over 200 retail staff have been made redundant as all Darrell Lea shops have been closed, however 83 manufacturing staff will remain on the payroll.

If nothing else, the Darrell Lea brand is iconic. Tony Quinn has been very capable in getting his VIP Petfoods brand into the big name supermarkets and will be looking to leverage this for his new confectionery business.

A now-defunct Victorian company called Chubpak made dog food that was both not canned and shelf stable, meaning it could be kept next to the canned dog foods in the supermarket but not carry canning costs. This got the jump on the major players in the industry. Quinn went in the opposite direction, using the fact that VIP had to be kept refrigerated tapped into a certain psyche of owners who wanted their pets to have the freshest available. Will he be able to do a PT Barnum with chocolate as well?

--Keeping with the food theme, Australian food products manufacturer Goodman Fielder has blamed the partial supermarket war between Coles and Woolworths on its need to slash the number of production facilities it will operate in the future. The loss-making baker has divested its Integro oil business to GrainCorp and will keep 35 of its 53 factories open in an attempt to return to profitability, reducing the scope of its range in the process.

The baking game is one of the bread and butter industries for the power transmission business – pardon the attempt at humour there – but the topic is quite serious. High-temp bearings, stainless couplings, special gearboxes, washdown motors; bakeries need the lot. Now there will be 18 less factories and 18 less opportunities out there.

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Dick Warburton has timed his latest round of media engagements to come out with the nongovernment report of the Manufacturing Taskforce of Australia, calling for a complete overhaul of the Australian tax system. In addition to assisting business with employment decisions and removing some of the state versus federal issues, Warburton believes that a reduction of the headline rate of company tax would be beneficial overall.

One thing else that Warburton suggested was an increase in the GST, which quite honestly will never be proposed by either mainstream political party prior to an election, but is probably going to be on the agenda before the next political term is out.

--Manufacturing micro-businesses in the UK can be on the receiving end of innovation seeding money, thanks to a £2 million fund set up by the Technology Strategy Board. The money has been made available to firms looking to demonstrate innovative processes in key manufacturing competencies, primarily process development, manufacture, service delivery and remanufacture/re-use.

Expressions of interest open today and close on November 7 th. For more information, go to www.innovateuk.org, where there are a whole host other funding initiatives aimed at promoting innovation, not just in manufacturing.

--Also in the UK, entries have just closed for the Queen Elizabeth Prize for Engineering, which heralds engineering innovation that has been of global benefit to humanity. The Prize is something akin to a Nobel Prize, with £1 million going to the recipient, as judged by a global ‘who’s who’ of engineering academic and practical talent.

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The Prize has a multitude of benefits; all the way from that cash to the eventual winner right through to putting engineering front of mind for secondary students who haven’t yet decided their future career path.

--Across the pond, the Americans are doing their best to prove that they like having a manufacturing industry, by declaring October 5th, 2012 as ‘National Manufacturing Day’.

Manufacturers were encouraged to open their doors and prove to prospective employees how good it is to work in the sector, in a hope that the 600,000 unfilled, semi-skilled manufacturing jobs will not continue to go begging.

National Manufacturing Day is an initiative of both the National Association of Manufacturers and the Manufacturing Institute, and more than 200 manufacturers participated. *Proving that statistics can be made to prove anything, even the truth, comes news from the Australian Bureau of Statistics that there are now more manufacturing workers in Australia than there were last year.

Quite honestly, I’m dumfounded.

Even Victoria supposedly has 13,100 more workers in manufacturing than it did last year.

I can’t see it. Companies have been not only shedding staff, but issuing profit warnings left, right and centre, so it comes as a real shock that things are apparently looking good for manufacturers.

Victoria’s government reckons that its $24.8 million ‘Investing in Manufacturing Technology’ program has been at the heart of the result, with the Minister for Manufacturing, Exports and

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Trade - Richard Dalla-Riva also revealing that a further $50 million is on the table for finding international opportunities for local manufacturers.

--Flying in the face of the manufacturing worker announcement comes the September result for the Performance of Manufacturing Index, which came in at a dismal 44.1, a further 1.2 points down from August. Overall manufacturing production was down, which would suggest that productivity per worker has declined in the past 12 months.

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