OEMs react to drop in orders

GE Power Systems is to restructure its business and reduce its workforce by nearly seven per cent over the next nine months as the anticipated downturn in gas turbine orders starts to bite. In addition to the loss of 2500 jobs, GE Power Systems is to move generating manufacturing operations to Schenectady from Pensacola, Florida, USA.

GE Power Systems generated $1.91bn in second-quarter profit but chief executive John Rice said that a return to more normal levels was anticipated after a period of exceptional growth.

Germany’s Siemens is also expecting an end to the boom in turbines but it was shifting its focus to the service sector and initiating cuts to maintain operating margins. Siemens said turbine orders were down 51 per cent in the third quarter ended June.

Capstone microturbines pass endurance test

Capstone Turbine Corporation says its microturbine systems have clocked up over two million hours of documented operation worldwide – equivalent to 250 years.

Capstone has accumulated operating data on about half of the nearly 2400 microturbines the company has shipped since the 1998 introduction of the product. The microturbines are used in a variety of commercial, industrial and municipal facilities to generate power and heat.

Capstone has also announced its first distribution relationship in South Korea where Samsung Corporation is to handle sales, installation and service of Capstone’s onsite microturbine systems. In addition to its consumer electronics and other business activities, Samsung is engaged in energy services management throughout South Korea.

Capstone has established a market presence in Japan and sees South Korea as a favourable market to expand its involvement in Asia.

Aquila shuts power trading business

Kansas-based utility Aquila is to close its power trading business in which it was one of the most active players. The company is seeking to improve its liquidity position through both cost cutting and asset sales and has disposed of gas pipeline and storage assets in Texas and Oklahoma.

Aquila’s plan to exit the troubled energy trading industry by the end of this quarter comes less than two months after it announced moves to reduce its exposure to the risky business, cut jobs and sell $900m of new equity and debt to shore up its balance sheet.

The company said it expects to cut much of its remaining 500 power trading employees in Europe and the US in addition to the 550 jobs already lost.

Siemens sells metering business

Siemens AG has sold a majority interest in its worldwide metering products business to US equity investor Kohlberg Kravis Roberts & Co. for an undisclosed sum. Siemens described the deal as “part of a larger transaction to optimize its portfolio of businesses”.

Siemens will retain a 19 per cent interest in a new holding company being established to own the meter products business which is to trade under the name Landis & Gyr and will be based in Zug, Switzerland.

The UK metering service businesses will be retained by Siemens and operate under the new name Siemens Energy Services Limited.

Toshiba and Mitsubishi merge

Japan’s Toshiba Corporation and Mitsubishi have responded to more competitive trading conditions by announcing their intentions to merge their electric power transmission and distribution system businesses from the beginning of October.

A basic agreement for a 50/50 joint power systems venture was announced in March and the latest move is part of a restructuring of operations being undertaken to regain global competitiveness.

“The business environment for electric power systems is growing more difficult due to the slump in the domestic market and intensyfying competition abroad,” they said in a statement.

Powerspan and Wheelabrator in ECO technology collaboration

Powerspan Corporation has formed an alliance with Wheelabrator Air Pollution Control (WAPC) to commercialize Powerspan’s Electro-Catalytic Oxidation (ECO) technology.

ECO technology is a proprietary multi-pollutant control system for coal fired power plants which oxidizes pollutants in the gas stream and collects them in a compact wet scrubber and electrostatic precipitator in the form of a saleable ammonium sulphate nitrate fertilizer.

WAPC is to provide its wet scrubbing technology as part of the alliance. Powerspan is to retain responsibility for overall process engineering, the supply of ECO equipment and project management.

Correction: Following the news story ‘Babcock Borsig AG negotiations break down’ in the August 2002 issue (Vol. 10, Issue 8), PEi would like to point out that NEM, a daughter company of Babcock Borsig Power GmbH, is financially unaffected by Babcock Borsig AG’s insolvency.

News digest

Deutz advances: German diesel and gas engine manufacturer Deutz has turned in a first half profit of €3.1m ($3.01) compared with a €7.4m loss for the first half of 2001, despite lower sales and new orders. Deutz said it was beginning to see the benefits from its Re-Launch restructuring programme.

Wärtsilä powers ahead: Wärtsilä’s power division reported a three-fold increase in operating profit for the second quarter compared to last year, contributing €30.7m ($30m) to group profits of €148.8m but warned that business activity would need to pick-up if long-term targets were to be achieved.

PSEG links up: PSEG Nuclear and nuclear service company, Framatome have agreed to form a strategic partnership with incentives linked to improvements at PSEG Nuclear’s Salem and Hope Creek Nuclear units.

ABB orders up: Second quarter figures at ABB included orders up ten per cent over the same time last year. The company reported first half EBIT of $368m after $185m in restructuring costs, asset writedowns and charges.

Mott MacDonald link: Engineering and management consultant Mott MacDonald and capital project consultant Franklin & Andrews – each with core businesses in the energy sector – have joined forces to expand the project delivery capabilities of both companies.

Clients drive Exelergy record: Software firm Exelergy has secured several new major clients in the energy and utilty industry and has announced record Q2 sales and revenues. SembCorp Utilities of Singapore is among the new customers for the Massachusetts firm.

GE buys Panametrics: GE Power Systems has acquired Panametrics Inc. a provider of high-tech ultrasonic testing equipment and process control equipment including sensors designed for harsh environments. The company and its 1000 employees will become part of GE’s Energy Management services business.

Vericor seals deal: Vericor Power Systems has signed a five-year agreement with energy services company American Energy Solutions to jointly market the company’s products and services. The firms anticipate combining Vericor’s Onsite energy solutions with American Energy’s broad services.

Mirant probe: Mirant has become the subject of a US Securities and Exchange Commission enquiry following the admission by the energy company that it overstated the value of assets and liabilities in its 2001 financial statements. Mirant is also undertaking an internal review of accounting issues.