The global site of the UK's leading magazine for automation, motion engineering and power transmission
18 September, 2019

Product and Supplier Search

Facebook

Austria`s ATB takes control at Brook Crompton

01 March, 2006

The Austrian motor-manufacturer ATB has moved a step closer to owning the British motor-maker Brook Crompton by becoming the largest shareholder in Brook`s parent, the Singaporean company, Lindeteves-Jacoberg. ATB now owns just over 45% of L-J and hopes to take its stake to more than 50% soon, thus creating Europe`s third-largest motor supplier, with a combined turnover of nearly €400m. The group will rank fifth or sixth globally.

ATB first became involved in L-J last September when it made a €12.5m loan to the cash-strapped Singapore firm. This money has helped Brook Crompton to pay its suppliers and to cut the lengthy lead times that have plagued it in recent years and have led to an exodus of customers. Similarly, Brook`s sister company, the German high-voltage machines specialist Schorch, is starting to eat into the backlog in its order book.

Last month, ATB`s loan was converted into a shareholding. ATB has negotiated a long-term loan from a group of banks which are holding a 15.1% share in L-J. If necessary, ATB could buy this stake to take full control of L-J. "We are certain we will end up with a 51% share," says ATB`s Heinz Grossmann (above), who has replaced Lim Say Hui as L-J`s chief executive.

At one time, Brook Crompton held around 70% of the UK motors market with a turnover of some £75m. Its market share has since slumped to just above 20%, with annual sales amounting to about £25m. But ATB is confident that Brook will now start to win customers back. Grossmann hopes that Brook will regain about a third of the UK market within three years, hitting a sales figure of around £40m.

In a move designed to reassure its customers and to regain their confidence, Brook Crompton is now offering guaranteed delivery times which will vary according to the size of motor, from six weeks for smaller machines (frame sizes 63-160) to 14 weeks for large motors (frame sizes 315-355). If the company fails to meet these deadlines, it will compensate customers in a subsequent order.

Graham Harries, Brook Crompton`s UK managing director (above), says that if items from the company`s basic range of motors up to 90kW go out of stock, they will be replaced on the stockists` shelves within four weeks. Special-build motors up to 22kW will be available on six-week lead times (ex works) and larger machines, up to 110kW, on eight weeks.

Brook Crompton now employs 155 people in the UK - down from around 1,500 in 2001. But if confidence in Brook Crompton returns as hoped, Harries expects to start recruiting more staff again. He reports that some former sales staff have already been in touch to find out whether they can rejoin the company.

Brook Crompton`s Huddersfield site will be re-established as a global hub for sales, support and customer service. It is also the base for Brook`s engineering capability which, according to Harries, has been maintained throughout the company`s difficult years. "It`s what sets us apart," he says.

The future of Brook Crompton`s sole remaining UK production plant in Blackheath, Birmingham, is undecided, because its lease expires at the end of 2006. The site is currently used to produce DC motors up to 750kW, as well as developing customer-specific products.

Most of Brook Crompton`s production is now carried out at its Tamel plant in Poland, which ATB will also use to provide extra capacity for producing its own machines. The plant, which employs 1,340 people and makes 35,000 motors per month, is "central to our strategy" says Grossmann. For example, ATB has recently placed an order for Tamel to produce 18,000 motors which it did not have sufficient capacity to make in its own plants.

Jan Kurkiewicz, managing director of Brook`s Polish operation, recalls that L-J`s cash shortage resulted in "terrible problems trying to deliver motors on time to customers". But he adds, that ATB`s cash injection is already bearing fruit. During January and February of this year, the Tamel plant was producing twice as many motors as it had during the latter months of 2005.

Neil Stewardson (above), the commercial director of the Leeds-based mining motors specialist Morley, which ATB bought in 2004, has been appointed as L-J`s chief operating office and deputy CEO.

Grossmann says that ATB is "very happy" with the way ATB Morley has been performing. The company produces just 500 machines a year, mainly built to order for specific projects, and 85% of its production is exported. According to Stewardson, the Morley business is "flourishing" with a "very good" order book, buoyed by rising energy prices and substantial investments in the Chinese infrastructure. "We have continued to build machines that other manufacturers have dropped," he adds.

Grossmann argues that ATB and Lindeteves-Jacoberg are a good match geographically, with ATB being strong in some markets where Brook is weak (notably Germany, which represents 51% of ATB`s business, and Austria). Brook has a stronger presence in other areas (such as the UK, North America and the Far East), where ATB has not been well represented in the past.

There is some overlap between ATB and the L-J companies in terms of technologies, especially in the lower-efficiency Eff 2 market, which could necessitate some rationalisation in production.

One of Brook`s strong-points is its high-efficiency (Eff 1) W range - an area where ATB is currently weak. It is possible that the W range will, in future, be sold under the ATB brand name in German-speaking markets.

Grossmann says that L-J`s "bold" strategy for restructuring the Brook Crompton business was correct, but that "the execution could have been done better". The operation was "led by people with no idea of production," he adds, and was carried out too rapidly without paying attention to customers` needs.

At the same time, the rapidly changing market conditions starved L-J of cash. "They ran out of cash half-way through the restructuring," Grossmann reports. This affected the L-J member companies` ability to supply products, and damaged customer and supplier relations severely.

Grossmann declares that the cash shortages are now "a thing of the past". Although ATB`s loan took longer to disperse than originally expected, Grossmann reports that L-J`s turnover is already increasing. "We are close to breaking even at a group level," he says.

According to Grosssman, the main effort now is to rebuild customer confidence, but he admits that "it won`t be easy and it won`t happen overnight".

Nevertheless, he continues, "we`re confident that during 2006 we will see a return of customer confidence, and we will succeed in turning around the group, with Brook Crompton once again being regarded as a reliable market player.

"Everything is in place to become successful," he adds. "Unlike the previous owner, we`re from the industry - we know how to make electric motors. We intend to build a leading worldwide electric motors group."

The ATB group employs 4,000 people across nine sites, with plants in Germany, France, China, Serbia and the Czech Republic as well as Austria and the UK. Its turnover last year was €224m, with 47% of its income coming from industrial motors, 36% from motors for appliances and garden equipment, 13% from explosion-proof motors and 4% from its r&d operation which also produces special motors (such as air- and water-cooled asynchronous machines, permanent magnet motors and switched reluctance motors) as well as power electronics.

ATB claims to be the European market leader in motors for domestic and garden appliances (notably, lawnmowers), as well the German market-leader in explosion-proof and pump motors. It is also German`s second-largest supplier of industrial motors, after Siemens.

For further coverage of this topic, see Analysis: Can Brook bounce back?.




Magazine
  • To view a digital copy of the latest issue of Drives & Controls, click here.

    To visit the digital library of past issues, click here

    To subscribe to the magazine, click here

    To see the latest Products & Services Directory, click here

     

Exhibition

Birmingham 2020The next Drives & Controls Exhibition and Conference will take place in Birmingham, UK, from 21-23 April, 2020. For more information on the event, visit the Show Web site

Poll

"Do you think that robots create or destroy jobs?"

Newsletter
Newsletter

Events

Most Read Articles