Motors are Strategic Technology

The 2007 Department of Commerce Census data is just now being released (how’s that for government efficiency?) and the good news is that the sector of the economy that manufactures electric motors and generators, a lot of which is used in industry for motion control applications, was up over 2002.  The increase in total revenue was a whopping $12.37 Bil over $9.08 Bil 2007/2002.  A couple of strange statistics show up in employment figures, total employees declined by 10,872 jobs, a full 20% based on the 2002 employment levels.

So we can register some gains prior to the slowdown in 2008, but there’s a catch.  We have traded in 20% of our employment for about 30% growth in the market over the five year period.  Those two facts cannot be resolved except by the fact that foreign suppliers have established operations in the US and are shipping products into the US for sale.  And we continue to lose manufacturing based employment.

On a happier note, average salaries increased by about $6500 per employee, so the news is not all bad.  And for those keeping score on health care costs, the industry paid an average of $4520. per employee for medical care.

But electric motors are used for all kinds of things.  Putting your favorite beer into a bottle and onto a truck requires millions of dollars of mechatronic equipment to get the job done at the rate of 1-2 million bottles a day.  You wouldn’t believe how much equipment goes into making frozen pizzas.  Missile guidance and a lot of military applications like targeting required high performance motors.  Disk drives are a huge user of brushless dc spindle motors.

And in order to make motors you have to have copper wire, steel laminations and magnets.  Copper wire and lamination grade steel have become much more expensive in the last few years while Neodymium magnets have declined steadily in cost at the rate of about 7% per year.  This has created a very strange situation where conventional AC motors with small high performance permanent magnets in the rotor have become more cost effective than their standard counterparts.  This is a set of circumstances that no one in the industry expected.  It was assumed that Neodymium magnets would always be expensive.

And the really high strength “exotic” materials are.  But there is this new middle ground where the costs have crossed over.  And high volume appliance manufacturers are jumping on the new platform of price and performance.

In an unrelated event, General Motors, who has been having financial problems for a while, sold it’s Magnequench business unit off to a Chinese owner.  Magnequench held some of the basic Patents for Neodymium magnets and was the largest and only producer of magnet grade Neodymium alloys in North America.

So where does that put us?  There are no US companies that can make motor grade Neodymium magnets.  Yes, the Magnequench factory is still in Indiana.  And I doubt there going anywhere anytime soon.  But still.  Every disk drive motor, every brushless servo, every high performance appliance motor will be using more parts made by Chines and not American companies.

Certainly GM did what it needed to do, but the sale of a US company to a foreign entity normally requires review by Commerce.  If you heard something about this, please let me know.

It’s time for some new ideas in the motor industry.