The industrial automation landscape witnessed a significant shift in 2018 with the merger of Danfoss and Vacon. These two titans of the drives industry, Danfoss Drives and Vacon Drives, joined forces to create a powerhouse with a global presence and a commitment to innovation. But what exactly were the driving forces behind this merger, and how has it benefitted the industry as a whole?
This blog delves into the strategic advantages unlocked by this union, exploring the impact on various stakeholders, from manufacturers to end-users.
Market Dominance and Growth Potential
Prior to the merger, both Danfoss and Vacon were prominent players in the drives market, but not the undisputed leaders. ABB held the top spot. The combined entity, however, became an instant force to be reckoned with. By combining their market shares, Danfoss Drives and Vacon Drives became the world’s second-largest drives supplier, boasting a significant chunk of the market [1]. This not only solidified their positions but also opened doors for further growth.
The merger created a more robust competitor with the resources and reach to challenge the market leader. This healthy competition fosters innovation and drives down prices, ultimately benefiting end-users who gain access to more advanced technology at potentially lower costs.
Synergy and Streamlined Operations
One of the most significant advantages of the merger lies in the synergy between the two companies. While both Danfoss and Vacon were major players, they had distinct areas of focus. Danfoss Drives excelled in the HVAC (Heating, Ventilation, and Air Conditioning) market, while Vacon Drives had a strong presence in power generation and building automation. This complementary nature eliminates overlap and allows the merged entity to cater to a broader range of applications and industries [2].
Furthermore, the merger streamlined operations. While there might be some consolidation in national sales in the future, both Danfoss and Vacon brands are expected to continue operating in the short term, allowing for a smoother transition and leveraging the existing brand recognition of both companies [3]. This not only minimizes disruption for existing customers but also allows the merged entity to maintain a strong foothold in diverse market segments.
Enhanced Innovation and R&D Powerhouse
The merger didn’t just create a market leader; it also established a powerhouse for research and development (R&D). By combining their expertise and talent pool, Danfoss Drives and Vacon Drives now possess a team of nearly 1000 engineers dedicated to pushing the boundaries of drive technology [1]. This not only translates into faster development cycles for new products but also strengthens their ability to adapt and cater to the evolving needs of the industry.
A crucial aspect of this R&D strength lies in the limited overlap between the two companies’ previous focus areas. This allows them to leverage their existing strengths and expertise in complementary fields, fostering a more diverse and innovative approach to drive development.
Benefits for Customers: A Wider Portfolio and Focus
The merger offers a plethora of benefits for customers across industries. Here’s a closer look at some key advantages:
- Wider Product Portfolio: Customers now have access to a significantly broader range of drive solutions, encompassing both Danfoss and Vacon’s strengths. This one-stop-shop approach simplifies procurement and streamlines project management.
- Enhanced Expertise and Support: With a larger pool of engineers and specialists, the merged entity can provide more comprehensive technical support and application expertise to customers.
- Focus on Efficiency and Sustainability: Both Danfoss and Vacon have a strong commitment to energy efficiency and sustainable solutions. The merger allows them to combine their resources and expertise to develop even more advanced drives that contribute to a greener future.
A Look Ahead: The Future of Danfoss Drives
The Danfoss and Vacon merger has undoubtedly reshaped the drives industry. The combined entity boasts a powerful market position, a robust R&D engine, and a commitment to providing innovative solutions to its customers. As the industry continues to evolve towards increased automation and energy efficiency, Danfoss Drives is well-positioned to play a leading role in shaping the future of motor control technology.
While the short-term focus might be on consolidating operations and leveraging existing brand strengths, the long-term vision is likely to see a unified Danfoss Drives brand emerge. This unified entity will be a force to be reckoned with, driving innovation, efficiency, and sustainability in the drives market for years to come.
