Sometimes when you meet the right person, you just know it. That is what happened when the team at the Seals & Bearings Business Unit within Wärtsilä Services met the American Hydro management team.
“When we met their team, we were impressed by their attitude,” recalls Rob Burford who heads the Wärtsilä Seals & Bearings Business Unit. “Their way of working and ethos were similar to ours, and their view on how to support and treat customers – with a focus on understanding customer needs and presenting an offer that aligns with customer expectations – reflected the way we treat customers in Seals & Bearings.”
With a lot in common, an acquisition was on the cards. In 2016, Wärtsilä took a major strategic step into the Hydro Services market and acquired American Hydro. Burford says the acquisition will enable Wärtsilä, which has more than 30 years’ experience in supplying seals and bearings to the global hydro and industrial markets, pursue its strategy of growth and expansion in the hydro sector. He explains that the company’s strong position in the North American market was the key driver behind the acquisition.
Headquartered in York, Pennsylvania, with a service centre in Montreal, Canada, American Hydro is a leading supplier and installer of large equipment upgrades and servicing for the hydropower industry. It provides consultancy, design and precision performance enhancements for hydro-turbines and pumps. It had 241 employees and net sales of USD 45.6 million in 2015.
Lee Martindale, Business Development Director, Wärtsilä Seals & Bearings, was the Integration Manager responsible for overseeing the incorporation of American Hydro into Wärtsilä Seals & Bearings. He says the Wärtsilä and American Hydro businesses have complemented each other from the outset.
Martindale explains that the U.S. market, where a large number of plants are now around 50 years old, is in need of extensive efficiency and reliability upgrades. The same applies to Canada, where there are also growing opportunities for new small hydro plants.
“The core business for American Hydro in York is the upgrade and rehabilitation of turbines for hydro plant installations, while Montreal provides a comprehensive service for the repair and overhaul of rotating and reciprocating machinery in mining, pulp and paper, oil and gas, and marine industries,” says Martindale, adding that the focus on upgrade and rehabilitation, and service and maintenance, made American Hydro an ideal fit for Wärtsilä.
As Burford explains, “The American Hydro business is a natural extension of Wärtsilä’s existing portfolios in Seals & Bearings and Propulsion System Services, but within turbine installation, which requires seals, bearings, water quality systems, monitoring, alignment, field service and reconditioning services. American Hydro’s skillsets of project management and delivery of maintenance contracts are very similar to those offered by Wärtsilä within Energy Solutions and Services for power plants.”
Other core competencies that Wärtsilä was keen to secure include American Hydro’s unique robotic welding capability and its expertise in hydraulic engineering.
Burford adds that, less than a year into the integration process, most of American Hydro’s support functions are being integrated into the Wärtsilä organisation, including SAP. In the meantime, American Hydro employees have started to work on their first joint projects together with the AMER and European area teams and continue to explore opportunities for synergies.
Burford and Martindale both agree that the prospects for future market expansion look bright.
“To date, American Hydro’s presence in the Latin American and European markets has been limited, but we have a huge opportunity to work together, utilising the Wärtsilä brand, as well as its local customer relationships and project management capabilities,” continues Martindale.
“Our strategy is to build on American Hydro’s strong position in North America, as we expand into Europe, Latin America and down the line into Asia,” Burford comments.
There are challenges, though. For instance, stricter terms and performance requirements being imposed by customers and increasingly competitive pricing offered by other OEMs. However, Burford is not worried. The power of two companies is a force to reckon with.
“Although Wärtsilä is a relatively new player in the hydro market, our global presence and track record from the marine and energy industry, combined with American Hydro’s expertise, will help us establish ourselves as a differentiated player on the global hydro market compared to the main service providers,” concludes Martindale.