AMCA 2013

• Jerry Ossowski, District Manager, Baldor/ABB; President, Windy City Baldor, Inc.

• Alan Kilpatrick, District Manager, Baldor/ABB; President, Kilpatrick Sales LP

AMCA 2013

• Jerry O. and Alan K. are here at the invitation of Tim O’Hare

• This presentation is intended to discuss general industry information, not specific to any one company

• We hope that this is a two-way discussion; ask questions at any time

Why are you here?

From the brochure: Representatives from ABB Baldor will present ideas and strategies associated with promoting high efficiency products. Given the anticipated fan energy regulations forthcoming from the U.S. Department of Energy, the fan industry can benefit from sales and marketing activities undertaken by motor manufacturers.

Why are you here?

• What specifically did you hope to learn from this session

• How will you use this information – DOE discussions? – Association direction? – Your company direction? – Other?

Today • History of efficiency levels for industrial

electric motors – Pre-regulation – Post-regulation – Impact on motor manufacturers – Impact on motor users/OEM’s

• Things we learned/suggestions we have – Purely opinion but based on our experience

Energy Regulations

• Energy Policy Act (EPACT) – Passed in 1992 – Effective for Industrial Electric Motors in 1997

• Energy Independence and Security Act (EISA) – Passed in 2007 – Effective for Industrial Electric Motors in 2010

• Discussions ongoing at DOE to close loopholes; add products (i.e. single-phase)

History of energy efficient motors

• Electric motor industry began move to energy efficient products in late 1970’s – Motor efficiency varied widely between

manufacturers – Efficiency not put on most nameplates – Few users evaluated efficiency in motor selection

decision-making – Beginnings of “energy crisis” of the ‘70’s

History of energy efficient motors

• Leading manufacturers offered premium-priced motors for specific purposes • Petroleum, chemical, process and other energy-

intense industries wrote efficiency levels into specifications

• Payback analysis began being used for motor selection

• Motor manufacturers developed and marketed payback tools (without regulation!)

Energy Policy Act 1992

• Effective October, 1997 • Established efficiency levels for most popular

industrial electric motors – 1 – 200 HP – 2, 4 and 6 pole (3600, 1800, 1200 RPM) – ODP and TEFC – Foot mounted

• Covered about 60% of motors sold • Applied to motor manufacturers only

Energy Policy Act 1992

• Motor industry leaders had already developed the next generation of “premium” products

• Pre-October ’97: – Leading motor manufacturers had three

product lines » Pre-EPACT » EPACT-compliant » Premium efficiency

Energy Policy Act 1992

• Effective October, 1997 – Required major redesign of motors for most

manufacturers • Efficiency leaders already has products that met the

standard • These premium motors represented about 10% of sales • All manufacturers added new product line to meet reg

– Seriously affected smaller motor manufacturers • Especially hurt importers for a short period

Energy Policy Act 1992

• Minimum enforcement capability – Non-compliant motors required to be submitted

to DOE – Testing capabilities very limited – Led to “cheating”

• Leading manufacturers chose not to pursue smaller non-compliant manufacturers – High cost to “report” – Little effect in market

EPACT: “Unintended Consequences”

• Changes in efficiency affect motor starting torque • Some applications (i.e. high-inertia fans!)

negatively affected • Improvement in efficiency often reduces power

factor • Not easily measured by the customers • Definite cost on the electric bill

• Charlatans offered quick-fixes, i.e. “rewind existing motors to improve efficiency”

EISA 2007 • Effective December, 2010 • Increased efficiency levels for EPACT motors • Added more industrial motors to regulation

– Higher horsepower (500HP) – Lower speeds (900RPM) – More mountings (C-face, etc.)

• Improved enforcement capability – Random checks by DOE – Serious financial penalties for non-compliance

EISA 2007

• Leading manufacturers already producing compliant motors – Certain industries pay a premium for maximum

efficiency – User specifications continue to increase efficiency

levels • Still two levels of efficiency

– EISA-compliant – Above-EISA (“super premium”)

“Beyond EISA 2007”

• Leading motor manufacturers working on totally new designs – High efficiencies allow for smaller physical motor

size – Motors on VFD’s allow downsizing

• DOE still working on next levels – Eliminate remaining “loopholes” – Add smaller motors (48, 56 frames; single-phase)

“Thoughts…”

• Industry: thoughts for industry organizations (AMCA)

• Company: thoughts for you to take back to your own company

First thought… • More information is always better than less!

– Meet with customers – Explain what’s happening – Get feedback as early as possible

• Use feedback – Information to DOE – Company…

• Establish product development priorities • Avoid surprises (ask about compressor companies!)

Define Efficiency • Define your terms so customers understand • Industry

– Establish “indusry standards” for measuring air movement efficiency

• Gives customers confidence in every manufacturer’s statements when they reference the standards

• Company – Begin discussions with your customers as early as

possible – Eliminate “surprises” as regulations approach – Cost/price surprises are considered negatives!

Explain DOE’s interpretation

• Industry • Best suited to publish information during

negotiations • (Don’t tick off DOE!)

• Company • Let customers know you’re ahead of the curve • Work with them to help them plan changes well

before regulations are published

“Public Face”

• Be positive in all customer information – Explain to customers that differences of opinion

with DOE don’t mean you can’t or won’t comply – Show customers how changes can positively

impact them • OEM’s: higher sell prices for their products • Users: payback analysis

• BUT… – Be upfront if customers’ applications will be

negatively affected

“Publish or Perish”

• Frequently put out press releases, flyers, brochures, etc.

• Focus on customer benefits – Payback analysis – “Green”

• How many “cars worth of fuel saved” by reducing energy consumed/generated

• Use software to help customers evaluate payback analysis

Be your customers’ resource • Example of one motor manufacturer’s web site:

– Rebate Programs; Database of State Incentives for Renewables &

Efficiency: dsireusa.org – Efficiency Information; The Consortium for Energy Efficiency: cee1.org

– EISA Policy Information; The American Council for an Energy-Efficient

Economy: aceee.org – State Electricity Prices Energy Information administration: eia.doe.gov

– US Government; US Department of Energy: eere.energy.gov

Be Proud!!! • Don’t be afraid to take credit for previous

improvements • Explain how much more efficient an air handler is today

compared to 30 years ago (even if due to improved motor or V-drive efficiency)

• If there are incentives, be the resource for your customers to get these rebates • Available through local sales office; keeps them involved

Be Proud

• International: be the go-to for your customers, especially those with export needs

• Affiliate with educational institutions • Have a go-to person or department for your

own people, especially field sales people when they’re with customers

• Put out press releases; work with industry publications

Miscellaneous

• Compare your industry to others • Appliances have had requirements for years;

yellow tags on refrigerators • Electric Motor Industry already upgraded

– Your customers will relate • They’ve been through it with us

• Lighting is broadly accepted

Be aggressive!!!

• If product changes are required, consider offering the upgraded version as soon as possible – Shows customers the value of the new design vs.

the old before they’re required to upgrade – Begins getting payback for the redesign, i.e. if you

change 10% of your sales to the higher-cost new design, engineering and manufacturing upgrade payback will be amortized sooner

Communicate extensively

• Utilize your field sales people – They’re the ones who will face questions every

day – Do frequent, detailed training – Send them regular updates

(Trust us on this one; there’s nothing more important than keeping your sales force informed!)

Summary: Industry

• Keep all interested parties informed at every step

• Publish information as soon as it’s final • Establish “standards” so members can discuss

changes in products and performance from a standardized baseline

Summary: Company • Go to customers early and often

– Do it with your regular sales force • Explain to customers what’s happening – and

how it will affect both them and your company/products – They have a vested interest in your success

• Use feedback from customers to establish priorities in product design

• Publish literature to establish your company as a leader on whom customers can rely

Questions/Thoughts/Additions? (We know we aren’t the sole source of knowledge in this room…)

Thank you!!!