Atlas Copco, long associated with the construction industry, is looking to increase its capabilities in other areas. We spoke to Andrew Walker, senior executive vice president and business area president, Power Technique at Atlas Copco, at the recent new strategy announcement in London.
At Alexandra Palace in March, the leadership team of the Atlas Copco Power Technique business area presented a strategic vision outlining how mega-trends such as digitalisation and the construction of smart cities will be powered by cleaner and more connected energy source technologies, and how the company planned to contribute, under the theme, ‘Powering the future’.
These advances will allow professionals working across multiple industry sectors, from construction to manufacturing, equipment rental, utilities, oil and gas, demolition and above-ground mining, to make the most of opportunities presented by mega-trends, while overcoming forthcoming legislation such as new emission regulation changes.
Walker told the gathering, “Our core competency is providing power solutions to thousands of sites all over the world. We are now focused purely on three pillars – air, power and flow, and will continue to accelerate our research and NPD efforts in these areas to pioneer the technology of the future. We are committed to offering our customers and partners premium products that will deliver exceptional value and enhance the productivity of their businesses at the lowest possible total cost of ownership.”
The newly formed power and flow division is earmarked to grow its influence in power markets but Walker says it’s a challenging environment for Atlas Copco’s business.
“Having industrial generators in certain parts of the world, such as Nigeria, East Africa, Pakistan, and to a lesser extent US and EU is essential. The market for what we call our industrial generator range is much more challenging now – with more CHP plants there are more backup installations in Europe- so for us that’s a very challenging segment.”
“The challenge for us is that we are a non engine manufacturer, where all our major competitors are all producing generators and we like to say we are the biggest generator company that doesn’t produce its own engine.”
“So we try to innovate with different product offerings and turn the business a bit in generating power with twin power units and variable speed generators. We don’t get involved in supplying on site power and we’re not combined heat and power guys. We have customers who are doing that, but we principally stay in the supply of equipment business, allowing the customers to focus on the supply of generation.”
“We are focused on hardware apart from industrial rental solutions where 80 per cent of the business is in oil free compressed air and 20 per cent of the business is in generating power.”
Walker says Atlas Copco’s new strategy is about developing more parts of the business, which had been marginal. This is indicated by the announcement of a new Power and Flow division, within Power Technique.
“We intend to do more, and the unit has the task of growing the generator part of the business in the rental division as well as growing the pump rental business. Instead of having one leg in the rental sector which is frequently oil-free compressed air, today they’re going to have three legs which means more power and more flow.”
The company recently provided its generators as part of a modular power plant (MPP) serving a city in the Peruvian Amazon.
MPP applications were presented at the London event, including the brand new QAC 1450 TwinPower generator which promises to deliver versatility, optimised performance and fuel economy. The generator is a 20 foot, ISO containerised unit housing two compact 725 kVA generators; powered by V8 Scania engines with double bearing alternators. This configuration, with its fast-paralleling system, allows the two generators to work independently or in parallel with each other.
The company name’s ubiquity indicates the trust there is in it, according to Walker, by way of explanation for its success in far flung parts of the world.
“We have the reputation of being very reliable and some people say that makes us expensive but we’re not expensive. The equipment is very reliable, so it does end up in inhospitable areas because when its says Atlas Copco on the side people trust it, and people are a bit more careful about what they purchase in these remote regions as distinct from here in for example London, where there is good service backup and lots of suppliers.”
Walker says the company’s willingness to set up local factories, instead of exporting from outside, has also helped it to achieve better results.
“That might be a key difference We are not trying to supply products to these markets with equipment built in the UK or Belgium. We have for example a factory in Brazil, two in China, one in India, we’re there on the ground.”
That local presence has helped the company ride out what have been challenging economic times in these regions.
“China had been in the doldrums for the last three years and is only now coming out if it. India has been growing exponentially and we have doubled our business in India in the last three years.”
Although markets like India are to some extent ‘untapped’, there is a lot of work involved in fitting in.
“It’s challenging in the context of prices, local competition and having to produce locally. If you produce a generator or compressor in the UK, just try shipping it to India. Engine regulations and costs are different. Bottom line is you have to produce in India and we have a large factory in Pune – using local engines, local castings, local labour and management and the price point is completely different than in Europe.”
Atlas Copco has a similar arrangement in China, where its Wushi plant uses local engines made in China, or even Chinese-made Cummins engines. It has a 5,000 strong workforce there.
“If you’re not doing that you haven’t a chance of being successful. You have to have the same cost base or its over. I think that’s part of our success story, that we’re in these different locations. We are prepared to take a risk and step into new markets.”
Walker says while growth is part of the company’s mission, having a high market share in its core business means ‘having to do adjacent things.’
“In rental for instance we bought a steam rental business lately, also a pump rental, and we’re also involved in nitrogen. It’s difficult to grow further in the same segment.”
“We want to create a business in power and pump rental as big as our air business. We will be trying to build our fleet of pumps and generators and if we can do that we have a chance to grow faster.”
Atlas Copco presents new strategic vision