This article reviews the impact of ABB's acquisition of Siemen's low-voltage NEMA motor business.
Summary
The competitive landscape in the low-voltage (LV) National Electrical Manufacturers Association (NEMA) motor market is changing as ABB further cements its lead as the top market player globally by acquiring Siemens’ NEMA business, effectively signifying Siemens’ exit from the NEMA market entirely.
ABB cements its lead in the NEMA market by acquiring Siemens’ NEMA motor business
The biggest shakeup to the competitive landscape in the LV motor market in 2022 occurred at the tail end of the year when ABB announced its acquisition of Siemens’ NEMA motor business. As it stands, the LV motor market is broken down into two standards: NEMA and the International Electrotechnical Commission (IEC). NEMA is the standard primarily used in North America, whereas the rest of the world abides by IEC standards.
The acquisition will expand ABB’s manufacturing operations in North America by giving it access to Siemens’ manufacturing plant in Guadalajara, Mexico, by 2Q23. This purchase will expand ABB’s product offerings and supply chain relationships as well as grow its existing customer base, thus further cementing its dominance in the North American market.
Currently, ABB is the leader in the NEMA market, making up approximately 39% of the global market for NEMA motors. The acquisition of Siemens’ NEMA business will expand ABB’s market share to over 43% of the global NEMA market.
Figure 1: Global NEMA market share, 2021
Notes: For percentages to this chart, please refer to the LV Motor Report 2022
Source: Omdia
The acquisition opens opportunities for competitors
The sale of Siemens’ business also provides competing manufacturers opportunities because the transition opens the opportunity for Siemens NEMA clients to reevaluate their partnerships with manufacturers. One of the concerns that distributors have is the risk of potentially competing against ABB’s direct-to-end user business after the transition is complete. This has led to distributors reassessing how much business they would continue doing with Siemens’ manufacturing plant and whether diversifying their partnerships would be a better long-term solution. Considering that sales via distribution made up an estimated 45% of all LV motor sales globally in 2021, the loss of business through this sales channel could be significant.
Figure 2: Global unit shipments of LV motor by sales channel, 2021
Notes: For percentages to this chart, please refer to the LV Motor Report 2022
Source: Omdia
Siemens is trending away from hardware toward services
On Siemens’ end, the sale is another step towards transitioning its business model from manufacturing components to industrial digitalization, software, and services. Over the last four years, Siemens’ announcements have centered on marketing its Industrial Internet of Things (IIoT) capabilities through predictive maintenance and asset management solutions. The sale of its NEMA division shows that Siemens is moving away from manufacturing a wide array of components such as NEMA motors, and instead focusing its remaining industrial manufacturing capabilities on a smaller portfolio in the IEC market, where it has a stronger foothold.
Appendix
Further reading
Low Voltage Motors Report – 2022 Data (September 2022)
Author
Ivan Campos, Analyst, Manufacturing Technology