24 Jul 2024


Merged Danfoss-Vacon business sets its sights on ABB

The newly-combined Danfoss and Vacon drives business has set its sights on overtaking ABB to become the leader of the global drives market. Speaking at the recent Hannover Fair, Vesa Laisi, president of Danfoss Drives – the merged business formed following Danfoss’ €1bn acquisition of Vacon last year – said that the new business is “not too far” behind ABB.

At present, ABB has around 16–17% of the global market, while Danfoss and Vacon have a combined share of 12–13%. This makes them the world’s second-largest supplier in a fragmented market (assuming that they both retain their individual market shares).

The combined business employs around 4,800 people worldwide, about 1,000 of whom are research and development engineers. According to Laisi, this is almost as many as ABB.

He adds that the business has “a good global footprint” with four factories in Europe, and two each in China, India and the US. The r&d activities are also spread around the world, which Laisi sees an advantage when developing products for the global market.

There are no plans at present to cut back on the r&d activities and Laisi argues that there a fewer overlaps between the two businesses than you might expect. He points out, for example, that Danfoss and Vacon target different customers, with the Danish business being particularly strong in the HVAC market while the Finnish operation has traditionally focussed on areas such as power generation and building automation. Danfoss is also strong at the lower end of the power spectrum, while Vacon has a high-power portfolio.

For this reason, there are no plans for major rationalisation at this stage although there will be some merging of national sales operations – a process that is already underway. There are no plans for a single headquarters site and the business will operate along “virtual” lines.

Both brand names will continue to be used, for the short term at least, and most existing product lines will continue to be sold.

One characteristic shared by both Danfoss and Vacon is that they focus on selling drives rather than offering packages combined with motors. Laisi believes that this gives customers the flexibility to choose the motors they prefer. “I strongly believe that plug-and-play is best for customers,” he says.

Another characteristic that separates Danfoss Drives from most other suppliers is that it manufactures its own semiconductor power modules. “We can use our modules to optimise our drives,” says Laisi.

It is still early days for the merged business and no significant changes in the way that they operate are expected for several months yet.