Company mergers and acquisitions are a common occurrence in the business world. However, they can sometimes bring about mixed feelings. On the one hand, for the companies involved they can offer benefits such as increasing manufacturing capacity or financial capital as well as technological capabilities. But on the other hand—especially for those on the outside—it can feel like an industry or sector is shrinking.
Over the last several years, the fluid power and related industries have seen a number of mergers which brings to light the question: How will the industry be impacted?
Most recently, it was announced Bosch Rexroth is acquiring HydraForce Inc. HydraForce will become a part of Bosch Rexroth's Compact Hydraulics business. The companies both touted in their announcements about the acquisition the complementary nature of their products as well as the further development opportunities now possible by bringing together their collective engineering expertise.
In addition, the companies noted the expanded footprint Bosch Rexroth will now have in North America and around the world as HydraForce has facilities in the U.S., Brazil, Great Britain and China. Bosch Rexroth's Compact Hydraulics business has locations in China, the U.S., Germany and Italy. The companies foresee the merger helping meet ongoing demand for hydraulic components as their workforce and manufacturing capacity will be expanded as well.
The hydraulics market, and fluid power industry in general, is anticipated to remain positive in the coming years as manufacturing, mobile equipment and other sectors served continue to see strong demand for products.
READ MORE: Positive Market Conditions Will Continue for Hydraulics and Pneumatics
Another major acquisition which took place in the fluid power industry was the announcement of Danfoss acquiring Eaton's hydraulics business in early 2020. Both companies had a strong presence in the global hydraulics market; bringing them together enabled an even stronger market footprint as well as the entry of Danfoss into the industrial hydraulics market.
The acquisition was finalized in 2021, at which time Eric Alström, president of Danfoss Power Solutions, suggested the merger of the companies would benefit the technological innovation taking place in the hydraulics industry. Alström stated in an interview with Power & Motion that hydraulics have been a strong core business for Danfoss and the inclusion of Eaton Hydraulics would help further strengthen that core business.
Adding the Eaton business allowed Danfoss to double its sales force as well as its engineering and manufacturing capacities, enabling it to better serve customers around the world. This has also allowed the company to expand its innovation team so it can create solutions to meet various industry trends such as electrification and automation.
When asked what customers could expect from the merger, Alström said combining the capabilities of the two companies would allow better and faster customer support. In addition, a broader range of products would be available and new hydraulic component developments could be expected in the future.
Opportunities for Market Expansion
Since selling its hydraulics business, Eaton has continued to focus on its several other business areas while also expanding into additional areas such as emobility — a growing sector for many companies and industries.
Due to the market opportunities it sees in electrification and machine connectivity, Poclain Group announced in June 2022 its investment in two companies which specialize in these technologies. Doing so allows the company to bring that expertise into its own product portfolio without having to invest a lot of time or effort in developing it in house.
Instead, Poclain can partner with the newly acquired companies to pair its knowledge of mobile equipment applications and requirements with their technology to create solutions which will best fit the needs of heavy machinery.
When companies like Poclain can invest in or partner with companies that have expertise in other technology areas it can help speed up the development process for new products due to combined industry knowledge coming together.
This was the case when fluid power manufacturer Aidro was acquired by Desktop Metal in 2021. Through its acquisition of Aidro, Desktop Metal could better support its OEM customers with the design and application knowledge being brought into the company.
Aidro as well benefits from the acquisition through further advancement of its additive manufacturing (AM) capabilities. Desktop Metal was able to bring its scale and advanced AM technology, enabling Aidro to expand upon the hydraulic component designs it was creating using additive manufacturing.
READ MORE: Additive Manufacturing Brings Opportunities to Improve Component Design and Production
While the above examples and many other company mergers may make it feel as though the fluid power industry is getting smaller, there are also new companies entering the space. Many of these are expanding the capabilities of hydraulics and pneumatics through the incorporation of electronics, bringing mechatronics and other motion control solutions into the mix.
As electrification and automation continue to expand in manufacturing, mobile equipment and the other industries served by fluid power, it will be necessary to have a wide range of component and system options available as well as various companies to supply them.
We want to hear from you!
How have you seen company mergers and acquisitions impact the industry? What further impacts could there be if more companies merge in the future? Are there additional opportunities that could be achieved? Let us know!
