From small beginnings in 1927, the privately owned Danfoss Group is one of the largest industrial companies in Denmark today.
The group has net sales of more than Ç2 billion and some 18 500 employees located throughout the world, some 6500 of these working in Denmark. Danfoss' production facilities are located at 59 factories in 21 countries emphasising the company's desire to be close to its customers. Together, these companies produce about 250 000 components per day. Danfoss products are sold and serviced internationally through a global network of 118 sales companies and 72 agents and distributors staffed by engineers who know the special needs of their own markets. Danfoss comprises three divisions covering refrigeration and airconditioning, heating, and motion control.
Motion control through Sauer-Danfoss
In terms of motion control, what was to become Danfoss Fluid Power A/S was established in 1933 with the name being changed to Danfoss Hydraulics in 1946. The first Danfoss hydraulic product was developed in 1964, and between 1990 and 1996, multiple acquisitions in the USA and Europe brought together a global competency. In 1998 Danfoss Hydraulics became an independent company under the name Danfoss Fluid Power, setting it apart from the Danfoss core business.
Over a similar period, Sundsrand Machine Tools (USA) was established in 1946, changing its name to Sundstrand Corporation in 1959. A joint venture arrangement with German company Sauer was established in 1987 and in 1989 Sundstrand sold its interest and the company name was changed to Sauer-Sundstrand. Finally, during 2000, Sauer-Sundstrand and Danfoss Fluid Power AG became one company under the name of Sauer-Danfoss (with Danfoss holding a large equity stake) and this company continues to operate today as a global comprehensive supplier of engineered hydraulic and electronic systems and components.
Note, that to avoid customer confusion, many of the historical brand names were continued, these included Comatrol and Fluid Control. During the acquisition phase of the company it was found that various companies purchased had the same or similar products. These are now being consolidated into a global product range, with for example, standardised mountings.
Sauer-Danfoss has continued to expand its business since the merger in 2000 with a number of further strategic acquisitions and joint ventures in several countries throughout the world. Today the company employs more than 8000 people worldwide. The company is listed on the New York and Frankfurt stock exchanges and Danfoss itself is well represented at board level.
South African presence
Danfoss has had a presence since 1992 in South Africa through its wholly owned subsidiary. Initially the focus was on hydraulics and variable speed drives (VSD) and only two people were employed, as the refrigeration products were initially represented through other local companies. Today Danfoss looks after the total portfolio of products from the parent company and Sauer-Danfoss, and employs 43 people with the head office in Johannesburg and a branch in Cape Town. Locally the main business is 69% refrigeration with the rest split between drives and hydraulics.
In terms of hydraulics the company operates with a very lean team which includes Ron Sheehan as business unit manager, a product manager (responsible for technical support to OEMs and distributors with the emphasis on training to empower the customer himself to identify problems), two OEM sales engineers (who provide turnkey support), one person in internal sales, and one person in logistics. As the hydraulics team operates autonomously this implies that it can be very responsive to customer enquiries. The core business of the company is the design and supply of hydraulic systems for the mobile and off-highway markets.
Product range
Despite the small team a very wide range of products are offered. These include:
* Transmission products, hydrostatic drive, pumps and motors for closed loop applications.
* Load sensing piston pumps for open circuit applications used in conjunction with the Sauer-Danfoss proportional valve (PVG).
* Hydraulic motors, low-speed high-torque, steering control units, mobile proportional valves, gearboxes, cartridge valves and manifolds.
* Water hydraulics (a speciality of Danfoss itself).
* Radio remote control products for use with proportional and cetop directional valves.
* Planetary gearboxes and wheel stations.
Sauer-Danfoss itself deals directly with the OEMs and they have worked with all of the major players in the country. As the combined entity now has all the components to supply a complete system the team at the head office is heavily involved in the design and integration of systems using advanced electronic controls. This provides the local company with the opportunity to design and supply systems to local OEMs and to provide aftermarket support for the international market where the machines were originally imported. The Sauer-Danfoss product is fitted to a vast range of equipment from overseas OEMs and consequently the aftermarket (serviced by distributors) is large and requires significant local inventory. To provide immediate support to customers, Sauer-Danfoss holds stock with a value of some R10 million, while distributors also have their own product inventory. Stock is usually available on short lead times from Europe but this is not always the case. One benefit is however that the flexibility of the product range allows the company to design with existing stock with relatively minor modifications being carried out locally.
Water hydraulics - Nessie
Besides extensive offerings from Sauer-Danfoss, strong emphasis must also be placed on the development by Danfoss itself of a water-based hydraulic system. Perfected in the late 1980s and code-named Nessie, after the legendary Loch Ness monster, the system provides an effective solution to the possibility of contamination from oil spills from traditional hydraulic systems.
Nessie, today the registered brand name, has proved particularly successful in fire control (high-pressure water mist) and desalination systems (Perhaps something the Cape Town municipality should consider). It is also widely used in the environmentally conscious European industry in a variety of applications ranging from food preparation, drying wood in forestry applications and industrial cleaning where the system can deliver 16 MPa from a normal tap water supply. Although water hydraulic systems come with a price premium to conventional systems, environmental legislation will see increased introduction. Customers using Nessie in Europe have shown that the price premium can be rapidly recovered when it has not been necessary to expend resources on clean up operations after a critical oil spill. Fines for such contamination could also be applicable.
Markets addressed locally include:
* Mining (particularly for OEMs with both local and international sales).
* Agriculture.
* Construction.
* Road building.
* Forestry.
* Off road equipment.
* Material handling.
Distributor network
Sauer-Danfoss relies heavily on its distributors that are located in all major regions of South Africa. The reason behind the choice of the distributor route was to be able to make the product more available in those regions and to have local customer technical support. The distributors were carefully chosen based on feedback from customers themselves, and strict selection criteria. The distributors are trained by Danfoss both using local resources and through visits by technical experts from both Germany and Denmark. The local company is also responsible for the whole of the sub-Saharan region and has identified Angola and Zambia for example as strong growth markets. Both these countries are emerging from civil unrest and major reconstruction programmes are well underway. The distributor in KwaZulu-Natal has already expanded its operations into Mozambique and other distributors are looking at opening up branches in other African countries. Ron Sheehan sees expansion into Africa through the existing distributor base as being the ideal strategy as they already have the technology in-house.
Local service and repair
While there is no local manufacture of Sauer-Danfoss products, repairs and servicing is carried out locally. During 2003 it was decided to outsource this function and the Sauer-Danfoss Authorised Service Centre was opened in Jet Park in Johannesburg, followed more recently by the opening of another one in Cape Town. These centres have been accredited by Sauer-Danfoss in Germany and it should be stressed that only genuine parts supplied by Sauer-Danfoss are used, with none of the pirate parts that often find their way into other parts of this industry.
Social responsibility
Danfoss as a Danish company believes strongly in the upliftment and support of the communities in which it operates. In regard to South Africa, despite its positive business outlook, the company has identified that the biggest challenge in future will be HIV/Aids. Within its own workforce, Danfoss is heavily involved in social programmes that provide education and support to staff and their families affected by this disease. The funding to operate this programme was provided by Danfoss in Denmark. The parent company has also produced a documentary on HIV/ Aids that is aired on Danfoss television to the global organisation to create awareness and get the local community more involved in the pandemic that is ravaging Africa.
While Danfoss is not a BEE company as it is a wholly owned subsidiary of a foreign group, it has its own equity programme in place in terms of employment. One of the major challenges here is the lack of hydraulics engineers and technically qualified sales consultants entering the market, as hydraulics is not high up on the list of career priorities. This has seen Danfoss introduce its own training scheme that will take its staff through to degree level and this has proved positive in helping the company retain its valuable staff resource.
Current developments
Sauer-Danfoss has to continually develop new systems to keep pace with the needs of the OEMs. A new direction today is the integration of electronics into hardware and then connectivity of this to the customer's control logic. OEMs are also requiring more sophistication to differentiate themselves from competitors and this has seen the introduction of for example GPS-based tracking systems and full ergonomic integration for the machine driver. Sauer-Danfoss carries out the design using effectively plug-and-play modules making use of their own unique software, namely PLUS 1. PLUS 1 allows development of machine management applications, downloading of software via CAN and development of user-specific service and diagnostic tools. This provides users with fast diagnostic capabilities and rapid replacement of faulty components or modules. The unique Danfoss software also allows the OEMs to make changes to their machines without having to employ specialised software developers.
The future
As for the future, Sauer-Danfoss believes that AC/DC drives will eventually replace hydraulics. To act timeously in this regard the European company has already acquired an AC/DC drives and motor supplier. The use of one power source (electrics/electronics) will be of major benefit while the removal of hydraulic systems will contribute to less environmental pollution as required in Europe and other developed economies.
For more information contact Sauer-Danfoss, +27 (0) 11 803 8390, [email protected], www.sauer-danfoss.com
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