Back in 1968, when Danfoss launched the world's first production drives, dc drives were the workhorse of industry but used for fewer and simpler applications than drives are today. In 2008 this has swung completely around and dc drives are very much a minority product while ac drives rule the roost and are more widely applied than ever before. The sale of ac variable speed drives is now measured in the tens of thousands; back in the early days, a real breakthrough would be the sale of just one or two pieces.
The growth of the business and the market acceptance of the technology has meant that the projected sales of Danfoss Drives in 2012 will be twice the production output of Danfoss drives in 2006.
Over the past three years, Danfoss has carried out a major reconstruction of its drives business. The company recognised that the technology had evolved to a point where it was necessary to address subtly different areas of application such as pumps, fans, food machinery and so forth, creating market specific teams for the key Strategic Business Areas (SBAs). With regards to the product approach, Danfoss has adopted a 'platform driven approach' and the current AutomationDrive was developed to provide a common drives platform right across the product range, enabling simplification and cost reduction in manufacture.
Moreover, the development of a common software platform, based on the existing object-oriented software framework, enabled software 'modules' to be integrated rapidly into the common drives platform. This created application-specific products dedicated to the SBAs; for example, the dedicated 'AQUA' drive for the water & waste treatment sector and heating ventilation air conditioning/refrigeration drives for the HVAC/R sector. As applications demand new features, Danfoss can meet this rapidly and cost effectively, achieving a technological advantage over its competitors and enabling customerspecific product adaptations in both software and hardware.
These changes to the technology also demanded a review of the marketing strategy. As a result, the whole Danfoss sales and sales support operation has been structured with the dedicated SBA teams in mind, and so that the consultancy skills of the sales engineers were strengthened by a close focus on specific industries. This has gained Danfoss substantial global market share over the last three years and has placed the company in a strong position to meet the challenges of a decidedly uncertain economy, with growth expectations remaining in double digits.
Danfoss has also invested heavily in streamlining production. The company has segmented the drives product range into three distinct parts: small, medium and large. A new operation has been established in China to develop and manufacture the small drives product range and this is currently being doubled in size. The original Graasten plant is almost in continuous expansion to meet rising demand for VLT drives and the High Power drives facility in Loves Park, Illinois is also doubling in size, with further additional acreage having been secured for expansion beyond 2011.
Recognising the age of Internet commerce, Danfoss has launched a novel e-commerce site where customers can order their drive products on line (www.vltmicro.co.uk). The company has learned valuable lessons from early entrants into B2B e-commerce and has taken an innovative approach with this new site, which surprised the market when it was launched last month.
The continuing strong investment in products, factories and people has seen Danfoss through troubled times in the past and the company is poised to weather the current economic storm better than most. It is also perfectly positioned to strengthen its share of the global drives market.