Baldor, a manufacturer of motors and power transmission products, is headquartered in Ft. Smith, Arkansas
ABB , a power and automation technology group, and Baldor Electric Company a North American provider of industrial motor and related products, have agreed that ABB will acquire Baldor in an all-cash transaction valued at approximately $4.2 billion, including $1.1 billion of net debt.
Under the terms of the definitive agreement, which has been unanimously approved by both companies’ Boards of Directors, ABB will commence a tender offer to purchase all of Baldor’s outstanding shares for $63.50 per share in cash. The transaction represents a 41 percent premium to Baldor’s closing stock price on Nov. 29, 2010. The Board of Directors of Baldor will recommend that Baldor shareholders tender their shares in the tender offer. The deal is expected to close in the first quarter of 2011.
The transaction closes a gap in ABB’s automation portfolio in North America by adding Baldor’s strong NEMA motors product line and positions the company as a market leader for industrial motors, including high-efficiency motors. Baldor also adds a growing and profitable mechanical power transmission business to ABB’s portfolio.
The transaction will substantially improve ABB’s access to the industrial customer base in North America, opening opportunities for ABB’s wider portfolio including energy efficient drives and complementary motors. This move comes at a time when regulatory changes in the US and other parts of the world will accelerate demand for energy efficient industrial motion products. The acquisition will strengthen ABB’s position as a leading supplier of industrial motion solutions, and will also enable ABB to tap the huge potential in North America for rail and wind investments, both of which are expected to grow rapidly in coming years.
“Baldor is a great company with an extremely strong brand in the world’s largest industrial market,” said Joe Hogan, ABB’s CEO. “Baldor’s product range and regional scope are highly complementary to ours and give both companies significant opportunities to deliver greater value to our customers.”
John McFarland, Chairman of the Board and CEO of Baldor, commented: “Our Board of Directors believes this transaction is in the best interest of our shareholders, our employees and our customers. It demonstrates the value our employees have created and the strength of our brand and products in the global motors industry. We are excited about the opportunity to join ABB’s worldwide family as we have always respected ABB. We are very pleased that ABB will locate its motor and generator business headquarters for North America in Fort Smith and we are confident that the combined global platform will be well positioned to capitalize on meaningful growth opportunities in the future.” John McFarland will stay with the combined business to support a successful integration.
“ABB is well known in the marketplace for premium, innovative and advanced products. We have respected them as both a market participant and a value-added supplier for many years,” said Ron Tucker, Baldor’s current President and COO, and CEO designate. Ron Tucker will run Baldor including the mechanical power transmission products business and ABB’s motor and generator business in North America after the transaction is completed.
Baldor is based in Fort Smith, Arkansas, and is a supplier in the large North American industrial motors industry. In addition, Baldor offers a broad range of mechanical power transmission products such as mounted bearings, enclosed gearing and couplings – used primarily in process industries – as well as drives and generators. The Baldor drives business will be combined with the larger ABB drives business to achieve even further penetration of this product line.
Baldor employs approximately 7,000 people and reported an operating profit of $184 million on revenue of $1.29 billion in first nine months of 2010. This represents an increase of 30% in operating profit and 11% in revenue over the comparable period in 2009.
The US market for high-efficiency motors is expected to grow 10 to15 percent in 2011on the back of new regulations, effective in December this year. Similar regulations in Canada, Mexico and in the European Union are expected in 2011.
“ABB and Baldor will be able to offer our North American and global customers an unparalleled range of high-efficiency industrial products and services to help them meet their new demands,” said Ulrich Spiesshofer, Executive Committee member responsible for ABB’s Discrete Automation and Motion division, into which Baldor’s business will be integrated alongside the existing Motors and Generators business. We expect to achieve over $200 million in annual synergies by 2015, consisting of more than $100 million annual cost synergies and at least the same global revenue synergies. We estimate two-thirds of these synergies will be realized by 2013. We intend to build on Baldor’s excellent North American position to sell energy efficient drives, larger motors and generators. Together, we will accelerate the expansion of Baldor’s mechanical power transmission product portfolio into the global process automation market using ABB’s strong channels in this sector.”
“We are deeply impressed by the skill and passion of the Baldor team and their excellent customer relationships,” Spiesshofer said. “The strength of Baldor’s people and executive team, which will continue under the new ownership, will play a key role in our mutual success.”
Under the terms of the merger agreement, the transaction is structured as a cash tender offer to be followed as soon as possible by a merger. The tender offer is expected to commence in December and is subject to customary terms and conditions, including the tender of at least two-thirds (2/3) of Baldor's shares on a fully diluted basis, and regulatory clearance.
ABB is a leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. The ABB Group of companies operates in around 100 countries and employs about 117,000 people.
Tuesday, November 30, 2010
Wednesday, November 24, 2010
Durable goods orders dropped in October
Biggest monthly drop in nearly two years
Orders for U.S. durable, goods, products meant to last at least three years, unexpectedly dropped in October, according to the U.S. Commerce Department.
Demand for durable goods decreased 3.3 percent, the biggest drop since January 2009, after a revised 5 percent jump in September.
Meanwhile, jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20, according to the Labor Department.
Orders for U.S. durable, goods, products meant to last at least three years, unexpectedly dropped in October, according to the U.S. Commerce Department.
Demand for durable goods decreased 3.3 percent, the biggest drop since January 2009, after a revised 5 percent jump in September.
Meanwhile, jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20, according to the Labor Department.
Monday, November 22, 2010
NABE expects moderate GDP growth in 2011
Labor market conditions to improve slightly
The National Assn. for Business Economics today forecast only a moderate increase in GDP growth in 2011. NABE’s outlook panel said it expects GDP to grow 2.6 percent, unchanged from its previous prediction made in October.
“NABE Outlook survey panelists made only modest revisions to their forecasts for the November report compared with their October projections for economic growth,” said NABE President Richard Wobbekind, associate dean of the Leeds School of Business at the University of Colorado. “Projections for real GDP growth remain sub-par through the first quarter of 2011, but accelerate gradually through the forecast period. For next year as a whole, GDP growth is expected to be moderate.
"Factors restraining growth going forward include ongoing balance-sheet restructuring by consumers and businesses, and a diminished contribution to GDP growth from inventory restocking and government stimulus. Confidence in the expansion’s durability is intact, but panelists remain concerned about high levels of federal debt, a continuing high level of unemployment, increased business regulation, and rising commodity prices.”
Here is a breakdown of what NABE expects:
The NABE Outlook panel made modest revisions to its economic growth predictions for 2010 and 2011. Real gross domestic product (GDP) is now expected to advance 2.7 percent (year-over-year) in 2010, a slight increase from the panel’s October prediction of 2.6 percent. Next year’s projected 2.6 percent GDP growth rate was unchanged from October’s prediction, and, as is typical in a recovery after a severe financial crisis, shows the lack of a more pronounced cyclical rebound. The projected growth rate for 2011 is slightly below the panel’s current estimate of the economy’s long-term growth trend of 2.7 percent. The survey respondents’ estimate of trend growth has declined by one-quarter-percentage point since 2007.
To a large extent, the latest NABE forecast reflects the view that the economy will struggle against financial headwinds. Forty percent of survey respondents—compared to 37 percent in October—characterize the expansion as “sub-par with severe wealth losses and onerous debt burdens inhibiting spending and lending.” In contrast, 28 percent of respondents feel that “the economy will overcome its headwinds, and behave more in line with a traditional business cycle expansion: real output will grow at a rate above potential, and households and businesses will boost discretionary spending.” The likelihood of either stagflation or the economy slipping back into recession is viewed as relatively low.
Consumer spending is expected to remain modest throughout the forecast horizon due to weak job gains, persistently high unemployment, and negligible growth in household net worth. This year’s holiday retail sales are still expected to be weak, rising only 2.5 percent from those of last year. Roughly half of the panelists expect the personal saving rate to fall over the forecast period, while the other half of the panel is divided as to whether it will rise further or stay at roughly the same rate.
Labor market conditions will improve slowly. Monthly payroll gains are forecast to average less than 150,000 until the latter half of 2011, at which time gains will improve at a range of roughly 150,000-170,000. Joblessness will remain high, with the unemployment rate persisting at over 9.5 percent or higher through the first quarter of 2011 before easing—but only slightly—to 9.2 percent by year-end 2011.
This will mark the weakest post-recession job recovery on record. Panelists estimate the current long-run or natural rate of unemployment at 5.8 percent, up by one-half-percentage point since 2007.
The National Assn. for Business Economics today forecast only a moderate increase in GDP growth in 2011. NABE’s outlook panel said it expects GDP to grow 2.6 percent, unchanged from its previous prediction made in October.
“NABE Outlook survey panelists made only modest revisions to their forecasts for the November report compared with their October projections for economic growth,” said NABE President Richard Wobbekind, associate dean of the Leeds School of Business at the University of Colorado. “Projections for real GDP growth remain sub-par through the first quarter of 2011, but accelerate gradually through the forecast period. For next year as a whole, GDP growth is expected to be moderate.
"Factors restraining growth going forward include ongoing balance-sheet restructuring by consumers and businesses, and a diminished contribution to GDP growth from inventory restocking and government stimulus. Confidence in the expansion’s durability is intact, but panelists remain concerned about high levels of federal debt, a continuing high level of unemployment, increased business regulation, and rising commodity prices.”
Here is a breakdown of what NABE expects:
The NABE Outlook panel made modest revisions to its economic growth predictions for 2010 and 2011. Real gross domestic product (GDP) is now expected to advance 2.7 percent (year-over-year) in 2010, a slight increase from the panel’s October prediction of 2.6 percent. Next year’s projected 2.6 percent GDP growth rate was unchanged from October’s prediction, and, as is typical in a recovery after a severe financial crisis, shows the lack of a more pronounced cyclical rebound. The projected growth rate for 2011 is slightly below the panel’s current estimate of the economy’s long-term growth trend of 2.7 percent. The survey respondents’ estimate of trend growth has declined by one-quarter-percentage point since 2007.
To a large extent, the latest NABE forecast reflects the view that the economy will struggle against financial headwinds. Forty percent of survey respondents—compared to 37 percent in October—characterize the expansion as “sub-par with severe wealth losses and onerous debt burdens inhibiting spending and lending.” In contrast, 28 percent of respondents feel that “the economy will overcome its headwinds, and behave more in line with a traditional business cycle expansion: real output will grow at a rate above potential, and households and businesses will boost discretionary spending.” The likelihood of either stagflation or the economy slipping back into recession is viewed as relatively low.
Consumer spending is expected to remain modest throughout the forecast horizon due to weak job gains, persistently high unemployment, and negligible growth in household net worth. This year’s holiday retail sales are still expected to be weak, rising only 2.5 percent from those of last year. Roughly half of the panelists expect the personal saving rate to fall over the forecast period, while the other half of the panel is divided as to whether it will rise further or stay at roughly the same rate.
Labor market conditions will improve slowly. Monthly payroll gains are forecast to average less than 150,000 until the latter half of 2011, at which time gains will improve at a range of roughly 150,000-170,000. Joblessness will remain high, with the unemployment rate persisting at over 9.5 percent or higher through the first quarter of 2011 before easing—but only slightly—to 9.2 percent by year-end 2011.
This will mark the weakest post-recession job recovery on record. Panelists estimate the current long-run or natural rate of unemployment at 5.8 percent, up by one-half-percentage point since 2007.
Grainger optimistic about Q4
Sales expected to grow 8 to 10 percent
Grainger, the large broad line supplier of maintenance, repair and operating products serving government, businesses and institutions, last week told financial analysts that it expects a solid sales increase for the fourth quarter.
For the 2010 fourth quarter, the company is forecasting sales to increase 8% to 10%, and expects earnings per share for the quarter to be between $1.49 and $1.69, excluding unusual items.
•For the full year 2010, the company expects sales to increase 14% to 15%, and has narrowed its earnings per share forecast to be between $6.50 and $6.70, excluding unusual items. In October, the company had forecasted 2010 full year EPS of $6.40 to $6.70 on 14% to 15% sales growth.
•For the full year 2011, the company is forecasting sales to increase 5% to 9%, and expects earnings per share to be between $7.15 and $7.90.
The company also reviewed its long term operating margin objectives. Grainger expects to expand its operating margin by approximately 50 basis points per year in the context of mid to high single digit organic sales growth. The company established a new long term objective of increasing its operating margin to a range of 14% to 16%, up from the previous objective of 11% to 13%.
Grainger, the large broad line supplier of maintenance, repair and operating products serving government, businesses and institutions, last week told financial analysts that it expects a solid sales increase for the fourth quarter.
For the 2010 fourth quarter, the company is forecasting sales to increase 8% to 10%, and expects earnings per share for the quarter to be between $1.49 and $1.69, excluding unusual items.
•For the full year 2010, the company expects sales to increase 14% to 15%, and has narrowed its earnings per share forecast to be between $6.50 and $6.70, excluding unusual items. In October, the company had forecasted 2010 full year EPS of $6.40 to $6.70 on 14% to 15% sales growth.
•For the full year 2011, the company is forecasting sales to increase 5% to 9%, and expects earnings per share to be between $7.15 and $7.90.
The company also reviewed its long term operating margin objectives. Grainger expects to expand its operating margin by approximately 50 basis points per year in the context of mid to high single digit organic sales growth. The company established a new long term objective of increasing its operating margin to a range of 14% to 16%, up from the previous objective of 11% to 13%.
Wednesday, November 17, 2010
Hose distributors seek to expand technical knowledge
Recent NAHAD “Road Show” provided networking, education opportunities on hose assembly fabrication
NAHAD-The Assn. for Hose & Accessories Distribution took its Hose Assembly Guidelines program on the road recently as part of an ongoing outreach program designed to spread the word about the importance of providing safe, reliable hose assemblies to customers in all lines of trade.
NAHAD’s Hose Assembly Guidelines are a set of comprehensive recommendations for hose assembly specification, design and fabrication; they are designed to maximize the life of a hose assembly and optimize hose assembly safety, quality and reliability. San Diego was the fourth in a series of “road shows” created to spread the word about the guidelines program. The meeting was held Sept. 29-30 at the San Diego Marriott Hotel & Marina.
The training and education aspects of the program attracted John Green, president of Green Rubber/Kennedy Ag of Salinas, Calif., a first-time attendee who said he was “curious to see what the program was all about.”
“Our biggest concern as a medium-sized company is training,” said Green, whose company specializes in selling hose and rubber products to California’s food industry. “[NAHAD] stresses the importance of having qualified people learning about and doing proper assembly of specialty hoses.
“We know the chemical compatibilities and proper couplings to install on the hoses and the working pressures and so on, but these are things you can take for granted that your people know. And the training out there is very limited. So this was a way for us to stay informed.”
The Hose Assembly Guidelines program includes a training and certification component, something Green said he is particularly interested in.
“Most people think a hose is a hose and they don’t take into consideration what goes through it and how much pressure is involved,” he added, pointing to the potential for injury and damage if a hose fails. “We all want more information and a better understanding of what our products are capable of doing and what they’re not capable of doing. You really have to be astute in taking the time to make sure you know what you’re talking about when you make recommendations to customers.”
Distributors who adhere to NAHAD’s Hose Assembly Guidelines agree to fabricate hose assemblies according to the association’s standards—for industrial, composite, hydraulic, corrugated metal and fluoropolymer hose, as well as ducting and custom-made hose—and also agree to train and test their employees on those standards. They can then become NAHAD Listed members, a marketing program that lets end users and others know that they adhere to the NAHAD guidelines.
Green says he plans to take part in the Guidelines program as a result of the meeting.
Mike Helfer, president of Specialty Hose Corp. in North Canton, Ohio, deemed the Road Show a success in large part because of first-time attendees like Green. Helfer is a NAHAD board member and also serves on the association’s standards committee.
“Although we do some [programming] geared toward the Guidelines at our annual convention, there are still many people who walk away from that meeting without a complete understanding of what [the Guidelines] are and how they can affect them and their business,” Helfer explained. “[The Road Shows provide] hands-on, live examples from people who are using the Guidelines on a daily basis, giving [newcomers] insight about what this program is that everyone is talking about and how they can use it at their company.”
Key topics at the San Diego Road Show included safety concerns, liability issues in cases of hose failure, and the importance of ongoing employee training, Helfer and Green said. Companies experienced in using the Guidelines—such as Helfer’s—shared their experiences as NAHAD Listed members, while newcomers asked questions and also shared their insights on key issues and trends shaping the industry.
Among the meeting’s key “take-aways” for Green was a simple piece of sales advice.
“We all have trained salesmen who go out and try to explain to the purchasing people or the engineering people or the safety people why they should spend a certain amount of money on a particular product,” Green said. “But in most cases, people are looking for price. At [the Road Show], one gentleman explained it this way: You find somebody who [cares]. And when you find that person, you explain that if you think this hose might be expensive, wait until you find out how expensive a lawsuit can be.”
For more information on NAHAD’s Hose Assembly Guidelines program, go to http://www.hoseguidelines.com/.
NAHAD-The Assn. for Hose & Accessories Distribution took its Hose Assembly Guidelines program on the road recently as part of an ongoing outreach program designed to spread the word about the importance of providing safe, reliable hose assemblies to customers in all lines of trade.
NAHAD’s Hose Assembly Guidelines are a set of comprehensive recommendations for hose assembly specification, design and fabrication; they are designed to maximize the life of a hose assembly and optimize hose assembly safety, quality and reliability. San Diego was the fourth in a series of “road shows” created to spread the word about the guidelines program. The meeting was held Sept. 29-30 at the San Diego Marriott Hotel & Marina.
The training and education aspects of the program attracted John Green, president of Green Rubber/Kennedy Ag of Salinas, Calif., a first-time attendee who said he was “curious to see what the program was all about.”
“Our biggest concern as a medium-sized company is training,” said Green, whose company specializes in selling hose and rubber products to California’s food industry. “[NAHAD] stresses the importance of having qualified people learning about and doing proper assembly of specialty hoses.
“We know the chemical compatibilities and proper couplings to install on the hoses and the working pressures and so on, but these are things you can take for granted that your people know. And the training out there is very limited. So this was a way for us to stay informed.”
The Hose Assembly Guidelines program includes a training and certification component, something Green said he is particularly interested in.
“Most people think a hose is a hose and they don’t take into consideration what goes through it and how much pressure is involved,” he added, pointing to the potential for injury and damage if a hose fails. “We all want more information and a better understanding of what our products are capable of doing and what they’re not capable of doing. You really have to be astute in taking the time to make sure you know what you’re talking about when you make recommendations to customers.”
Distributors who adhere to NAHAD’s Hose Assembly Guidelines agree to fabricate hose assemblies according to the association’s standards—for industrial, composite, hydraulic, corrugated metal and fluoropolymer hose, as well as ducting and custom-made hose—and also agree to train and test their employees on those standards. They can then become NAHAD Listed members, a marketing program that lets end users and others know that they adhere to the NAHAD guidelines.
Green says he plans to take part in the Guidelines program as a result of the meeting.
Mike Helfer, president of Specialty Hose Corp. in North Canton, Ohio, deemed the Road Show a success in large part because of first-time attendees like Green. Helfer is a NAHAD board member and also serves on the association’s standards committee.
“Although we do some [programming] geared toward the Guidelines at our annual convention, there are still many people who walk away from that meeting without a complete understanding of what [the Guidelines] are and how they can affect them and their business,” Helfer explained. “[The Road Shows provide] hands-on, live examples from people who are using the Guidelines on a daily basis, giving [newcomers] insight about what this program is that everyone is talking about and how they can use it at their company.”
Key topics at the San Diego Road Show included safety concerns, liability issues in cases of hose failure, and the importance of ongoing employee training, Helfer and Green said. Companies experienced in using the Guidelines—such as Helfer’s—shared their experiences as NAHAD Listed members, while newcomers asked questions and also shared their insights on key issues and trends shaping the industry.
Among the meeting’s key “take-aways” for Green was a simple piece of sales advice.
“We all have trained salesmen who go out and try to explain to the purchasing people or the engineering people or the safety people why they should spend a certain amount of money on a particular product,” Green said. “But in most cases, people are looking for price. At [the Road Show], one gentleman explained it this way: You find somebody who [cares]. And when you find that person, you explain that if you think this hose might be expensive, wait until you find out how expensive a lawsuit can be.”
For more information on NAHAD’s Hose Assembly Guidelines program, go to http://www.hoseguidelines.com/.
Tuesday, November 16, 2010
Purvis Industries acquires BMG
Purvis will also be opening a new MT. Pleasant, TX store
CAPCORP, a division of Purvis Industries of Dallas, TX, has acquired Belt Maintenance Group of Texas (BMG) from BMG of Tampa, FL. The acquisition consists of the Mt. Pleasant, TX, and San Antonio, TX, locations.
BMG sells conveyor belting sales and service solutions including field service and installation to the Texas, Louisiana, Arkansas, Oklahoma and surrounding areas
“We believe the culture of quality service and field work with an emphasis on maintaining a safe and professional presence on the job demonstrated by BMG Texas is a great fit with the CAPCORP organization and its philosophy” said Allan Ross, vice president of sales and operations at CAPCORP.
Purvis Industries will also be opening a new Mt Pleasant, TX store to be co-located in a new 15,000-square-foot facility to be occupied by BGM and CAPCORP.
CAPCORP, a division of Purvis Industries of Dallas, TX, has acquired Belt Maintenance Group of Texas (BMG) from BMG of Tampa, FL. The acquisition consists of the Mt. Pleasant, TX, and San Antonio, TX, locations.
BMG sells conveyor belting sales and service solutions including field service and installation to the Texas, Louisiana, Arkansas, Oklahoma and surrounding areas
“We believe the culture of quality service and field work with an emphasis on maintaining a safe and professional presence on the job demonstrated by BMG Texas is a great fit with the CAPCORP organization and its philosophy” said Allan Ross, vice president of sales and operations at CAPCORP.
Purvis Industries will also be opening a new Mt Pleasant, TX store to be co-located in a new 15,000-square-foot facility to be occupied by BGM and CAPCORP.
Friday, November 12, 2010
PT/motion control sales rose in September
Sales of PT products are up 11.9 percent this year compared to 2009
Sales of power transmission/motion control (PT/MC) products by U.S. and Canadian manufacturers grew for the second consecutive month in September. U.S. sales were up 1.4 percent and Canadian manufacturers’ sales rose 10.4 percent according to September 2010 sales data released by the Power Transmission Distributors Association (PTDA) in its Market Outlook Report.
In the U.S., year-to-date sales are up 11.9 percent over the same period in 2009. In Canada, sales are 13.0 percent ahead of 2009.
Confidence in the market by U.S. manufacturers rose from 4.8 in August to 4.9 on a scale of 1 (very pessimistic) to 10 (outstanding). Canadian manufacturers’ confidence decreased slightly from 5.2 in August to 5.1.
The Market Outlook Report is published monthly by the Power Transmission Distributors Association. The full report includes U.S. and Canadian manufacturer data for sales and order trends for mounted bearings, unmounted bearings, standard industrial motors (U.S. only), variable speed drives, positioning systems/linear motion products, gear products, clutches and brakes, shaft couplings and mechanical drive systems and other PT products.
Sales of power transmission/motion control (PT/MC) products by U.S. and Canadian manufacturers grew for the second consecutive month in September. U.S. sales were up 1.4 percent and Canadian manufacturers’ sales rose 10.4 percent according to September 2010 sales data released by the Power Transmission Distributors Association (PTDA) in its Market Outlook Report.
In the U.S., year-to-date sales are up 11.9 percent over the same period in 2009. In Canada, sales are 13.0 percent ahead of 2009.
Confidence in the market by U.S. manufacturers rose from 4.8 in August to 4.9 on a scale of 1 (very pessimistic) to 10 (outstanding). Canadian manufacturers’ confidence decreased slightly from 5.2 in August to 5.1.
The Market Outlook Report is published monthly by the Power Transmission Distributors Association. The full report includes U.S. and Canadian manufacturer data for sales and order trends for mounted bearings, unmounted bearings, standard industrial motors (U.S. only), variable speed drives, positioning systems/linear motion products, gear products, clutches and brakes, shaft couplings and mechanical drive systems and other PT products.
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