Power Plays: ABB, Rockwell, Schneider (+Graybar) Info

Companies involved in the power distribution space have recently made a number of announcements that we thought were newsworthy:

ABB

At its recent Investor Day meeting, ABB’s CEO announced the plan to divest of three business units.  One is from the Electrification group, a division called Power Conversion.

According to sources, The Power Conversion (EL) business is located in Plano, TX and is run by Jeff Schnitzer. It was a GE acquisition several years ago of a company named Lineage. They manufacturer DC Power Systems and Embedded Power Products for the data center & communications market. It is not a core MV or LV Power Distribution business.  Products include DC power systems and Embedded Power.

While this is a profitable division, reportedly it was a somewhat of a misfit within the organization. ABB acquired it through its GE Industrial Solutions acquisition. The GE acquisition team must have considered “all things ‘power’ are the same and should fit our strategy”, however, this is a Telecom Power Conversion company.   This division supplies companies such as Alcatel, Nokia and Verizon.   It was part of the GE, or ABB strategy.

What was surprising with the announcement is what was not mentioned, but has been widely rumored – that ABB would divest of either the entire “T&B” offering or piecemeal sell some of the construction brands / products that make up the T&B offering. Reportedly ABB does not make much, if anything, on the construction products while distributors have reported “operational challenges” with the T&B offering

But, with acquirers and probably private equity firms calling on ABB due to the announced divestitures, who knows what else may happen.

Schneider Electric

• While not directly Schneider, but Graybar announced that it acquired Shingle & Gibb Automation. It is rare that Graybar makes an acquisition (the last one was in 2016, Cape Electric, for $60 million). A potential link with Shingle & Gibb is that Shingle & Gibb represents Schneider’s motor drives and Citect Scada, which is SCADA/HMI and software solutions. So, the connection may indicate Graybar’s interest in increasing their automation reach and alignment with Schneider.
• While Schneider has had some supply chain challenges during the pandemic that have impacted distributors, the company announced a $40 million investment in its plants to further modernize facilities in Iowa, Kentucky, Nebraska and Texas. As part of the investment they are hiring 130 more people in Q1 at these facilities, investing in digital training and increasing production.
• Schneider invested in a couple of industrial software companies (one in the US.). They acquired a controlling stake of 80% in Operation Technology Inc. / ETAP Automation Inc., a U.S. company that provides software for electrical power-systems modeling and simulation.  The other is a minority stake of 25% in Planon Beheer, which provides software for building and workplace management.
• Schneider also help their virtual Innovation Summit last month. Many topics – over 50 thought leaders and 20 strategy session. The content is still available online. This content also represents an opportunity for distributor marketers to possible ask Schneider for access to the content to host snippets (or recorded sessions) on their site and/or promote the topics to their customers.

Rockwell

Rockwell distributors, from a pure business valuation viewpoint, may be thanking Rockwell, albeit there is a limited business buyers’ market. The reason is that Rockwell continues to acquire software / technology companies to build out its portfolio. While this can create sales and support talent challenges (do you have the right people), it is slowly converting these companies into technology-driven distributors … and technology companies have higher valuations.

• Rockwell acquired Fixx, a software tool that created 6 million work orders last year. Fixx is an artificial-intelligence-enabled computerized maintenance management system company
• They strengthened / extended their relationship with Microsoft for 5 years. The goal of the partnership is to connect development, operations, and maintenance teams through a “singular, trusted data environment” that extends from the edge to the cloud. To date the two companies, have co-developed more than 20 use cases using their combined technologies across the food and beverage, household and personal care, and life sciences industries. This is an Azure play for Microsoft.
• They strengthened their relationship with PTC.  PTC’s technology helps companies through Through a combination of our Augmented Reality, Industrial IoT, PLM and CAD solutions.  According to the press release, the two companies have also collaborated on a project with Pfizer during the pandemic.
• And they acquired an industrial cyber security company called Oylo.
• Rockwell held their Automation Fair conference last month. Since it was virtual, it created an opportunity for me to attend some of it. Very well done. Lots of sessions (people could spend weeks on it if they wanted to listen to everything) but it struck me that they have so much content that a distributor could use in their local marketing efforts relating to applications for targeted industries, product information, thought leadership for targeted industries, information from Encompass partners and 2021 insights. The content is available for on-demand viewing, however, Rockwell distributors should reach out to Rockwell to see how they can access the content to market locally. The conference was impressive and very high quality (which you’d expect from Rockwell.) And if you didn’t attend, perhaps see if you can still register to view the sessions.

In the end, what does this all mean. Clearly some are investing into their business and planning for a robust future.

Rockwell has a vision for the factory floor that is much more than just equipment. It’s about data. Rockwell distributors potentially have unique opportunities from a business model viewpoint (presuming Rockwell enables them to participate in subscription / ongoing revenue streams) as well as monitoring / pre-emptive services (and if not, then they are lead generation and sales processing resources). Their sales organizations need to be solution-driven. The net for these distributors is that the culture required for selling these types of offerings can permeate into other offerings / product categories. And they will have a need to upgrade talent … via training and hiring (and this will inevitably increase compensation as the people become more skilled.)

Schneider is investing, albeit from a production viewpoint with financial investments into software, but may not have the same level of “vision” for the industrial workplace. Part of Schneider’s challenge is it starts further behind, especially with its distribution network more construction-oriented.

The positive … positioning for tomorrow. For distributors, know where your key partners are going / investing so you can map out how you can take advantage of opportunities … because not all distributors with the same line will.

It’s all about vision and being able to execute.