Geert Follens on the 'five pillars' of Atlas Copco Portable Energy

The renaming of Atlas Copco's Portable Air division to Portable Energy reflects a widening of the division's product range beyond its famous compressors. Murray Pollok reports from its headquarters in Antwerp, Belgium.

Geert Follens has been getting plenty of practice explaining the strategy for the Atlas Copco Portable Energy division. He was in Panama earlier this year for an Americas roadshow for customers and dealers, and a similar event for Europe was held in Antwerp in October, to be followed by two others in India and Asia Pacific.

The orgy of explanation is necessary for several reasons: first is the renaming of Portable Air to Portable Energy to better reflect its product range - which now goes well beyond its famous portable compressors.

Second is a new structure at parent company Atlas Copco, which has seen Portable Energy moved from its previous home in the Compressor Technique unit into the new Construction division, alongside Atlas Copco's road construction (Dynapac) and construction tools products. (That change also sees the Specialty Rentals division, previously part of Portable Air, remaining at Compressor Technique.)

It is the name change, however, that signals the main thrust of the division's strategy. "By changing the name we want to give the message to customers that we are providing a range of products, not just air", Mr Follens told the Antwerp audience. ‘Not just air' translates into a ‘five pillars' strategy, covering air, power, lighting towers, pumps and used equipment.

Alongside that broadening of the product range the company will maintain a multi-brand strategy. For example, compressors are now sold under the Atlas Copco, Chicago Pneumatic, Liutech and Bolaite names, while generators are sold as Atlas Copco, Chicago Pneumatic and, most recently, Gesan, which was acquired over the summer.

"The multi-brand strategy is well developed in compressors, and Gesan gives us a kick-start on the multi-brand for generators", says Mr Follens.

Portable Energy already makes generators from small 12 kVA sizes up to its new 1 MW containerized unit, but Gesan will add bigger gensets - up to 3 MW - and also adds geographical strength in Africa and the Middle East. "They also have a competence to react quickly to produce special designs", says Mr Follens.
The Gesan name will be retained, of course, as will its production facility in Zaragoza. "It's one of the nicest factories we have", says Mr Follen, "It's new, and maybe a bit big - it's our job to fill it."

This expansion of the generator range will be mirrored in the other product areas. Another of the five pillars is pumps, with Portable Energy selling the WEDA range of submersible pumps, which are now made in Bad Oeynhausen, Germany. These were originally acquired four years ago as part of the Dynapac acquisition and have been part of the Portable Energy portfolio since September 2010.

"We see that we have gaps [in the pump range] and we are determined to fill these gaps", says Mr Follens, "We realize that there is a diesel driven pump market - we are looking for a solution to that". That solution "could be an acquisition."

The submersible range, which offers particular synergies with the portable generator business, will also be expanded, with a 54 kW high head model likely, as well as a 20 kW unit to fill a gap in the range. In addition, 60 Hz variants will be added across the entire range by the end of this year.

Meanwhile, Atlas Copco's lighting towers are what you could describe as standard products, not yet offering the new technology or lower-energy use options offered by some of its competitors, with TowerLight being one example.

Mr Follens acknowledges that its lighting towers are currently a "synergy business", which means units sold off the back of sales of its ‘core' compressors or generators. "You can sell technology [on lighting towers], but we're not at that stage yet. But, being Atlas Copco, we will play in that market."

Of course, compressors remain the cornerstone product for the division. However, Mr Follens says the days when compressors alone were considered the ‘core' have gone. He says generators are now core products and that the other product ranges will have to become more than ‘synergy' businesses. "If you define business as synergy business you will lose", he says.

The final plank in the strategy is a newly launched used equipment division, being run by former Portable Air communication manager Sam Waes. A Polish used equipment centre - based at an Atlas Copco facility in Warsaw - has been opened to refurbish and sell Portable Energy products, with other worldwide centres to be established in the coming year or two. There may be as many as three other locations worldwide, although the exact plan has still to be confirmed.

The new operation has around used 50 units for sale now - and can be seen at the Portable Energy website - and are sold under a five different ‘quality' levels.

Promoting the ‘five pillars' strategy also allows the company to focus in public on what it can do rather than address the more problematic issues, such as uncertain market conditions or price increases on compressors related to Stage 3B/Stage IV engine emissions regulations.

Despite economic uncertainty, Mr Follens says Portable Energy has enjoyed sales "significantly up on last year". Sales of larger units in the 130 to 560 kW range were helped because customers were buying ahead of the new, stricter emission requirements, which will increase compressor prices by between 35 and 45%.

In the smaller sizes, where Stage IIIB/Tier IV Interim limits come into play next year, the division has been "enjoying a good business cycle. Some customers are already talking about buying next year."

The market for bigger sizes will definitely be hit next year, and Mr Follens says that while there has been no revising down of budgets for 2011 because of the Eurozone debt crisis, "legislation on the big machines has moved things forward, so next year we expect a slow down on big machines."

Selling a 35-45% price hike is a definite challenge; "It's more than an engineering change, it's a mentality change. Customers react to price increases", he tells IRN, "We explain that there is a physical reason why, [but] if you can't sell [the concept of] clean air, then it's a burden for them."

The Eurozone crisis is not helping matters. Geert Follens says that the company hasn't noticed a big change, "but if the financial crisis turns into an economic crisis, then Stage IIIB will add to the collapse."

If we discount that happening, then we can expect Portable Energy to continue to grow, adding brands and products to its range.

But does calling your strategy ‘five pillars' place unnecessary limits on what it can do? "It's five today", is Geert Follens' simple response.

BOX STORY
Rental changes

While Portable Energy is now in Atlas Copco's Construction division, the Atlas Copco Speciality Rentals business stays in the Compressor Technique business unit, creating a separation between the sales and rental services sides of the compressor business.

At the same time, Atlas Copco has announced that Horst Wassel, president of Specialty Rentals since January 2007, is leaving the business, having been appointed president of the recently created Quality Air division, taking up his new post on 1 January.

Atlas Copco is now looking for a successor to take over at Specialty Rentals and says it is looking for an internal candidate.