The UK motors market is in turmoil at the moment. Manufacturers are
dropping prices in the face of one of the biggest hikes in raw materials
costs in decades, and it is just unsustainable. Les Hunt talked to ABB's
Steve Ruddell about issues of motor pricing, quality and efficiency
The motors market appears to be a bargain-hunter's paradise at the
moment, but the current downward pressure on prices is having a
detrimental effect on both the manufacturers and their customers.
Manufacturers are faced with rising raw materials costs (copper prices,
for one, rose 100% last year), and as more than half the cost of a motor
is tied up the in raw materials that went into its construction, selling
at a discount has a strictly limited life span. And the buyer doesn't
escape the consequences either. Getting hitched to a supplier offering
bargain basement prices might seem to be a sound business proposition,
but in the long run, can that supplier sustain both price and delivery
obligations under such market conditions?
And as the market leaders have been telling us for years, the initial
purchase price of a motor pales into insignificance when you take its
lifetime running costs into consideration. So, a good quality,
high-efficiency motor is going to be a winner long term, simply because
it will waste less energy (where most of the money goes) and cause less
downtime. But is that message getting through? ABB's Steve Ruddell has,
more than once, banged the drum on motor quality issues in these pages
when he looked after that company's UK motor sales. Now eleven months
into his job as general manager of ABB's UK drives and motors business,
he is no less ardent about the subject.
Everyone likes to think they can spot a bargain, he says. But when it
comes to choosing motors, over-zealous bargain hunting can end up costing
serious money. Some motors with similar specifications can cost twice as
much as others, but the higher priced alternatives will almost certainly
prove to be the real bargains in the long run. What end users must
realise is that lower quality motors will end up costing them money - in
wasted energy and in downtime and replacement expenses when the motors
fail.
Mr Ruddell believes customers choosing motors on cost alone are simply
walking into a price trap. In his estimation, the market is undergoing a
vicious price attack , which is wholly unsustainable and which will
ultimately see a shakeout of the industry. When your supplier goes out of
business, where does that leave you, the OEM or end user? If a motor
manufacturer goes under because it has been selling too cheaply, its OEM
customers are faced with increased costs, says Mr Ruddell. They will
not be able to get motors elsewhere for the same price, and they will
only be able to fulfil outstanding orders at a loss.
With responsibility for both motors and drives, Mr Ruddell is also well
positioned to promote the energy-saving benefits of a VSD/high-efficiency
motor combination. And it's not just the big energy users that are the
obvious targets. Small businesses - the so-called SMEs - have an overall
energy bill of £3.5bn. It has been estimated that they waste as much as
30% of their energy. That amounts to £1.1bn, or an average of £7,000 per
business. For many of these businesses, a cut of 20% in energy costs
gives the same benefit to the bottom line as a 5% increase in sales.
It has been a long slog, but campaigning by ABB and its competitors is
finally seeing the energy efficiency message beginning to percolate up to
those that hold the purse strings - financial controllers at board level.
With gas prices rising this year by as much as 60% for some industries,
those that pay the energy bills are at last sitting up and taking notice
- and some action.
Take General Domestic Appliances' case as an example. Manufacturing as
many as 12,000 cooking appliances a we