Rockwell Automation Inc., Milwaukee, plans to sell the majority of its power systems segment, including its Reliance Electric motors and motor repair services, to boost shareholder value.
The company also plans to sell its Dodge mechanical motors business. Both businesses are headquartered in Greenville, S.C., and both businesses contribute substantially all of the revenue generated by Power Systems. The businesses are expected to generate $1 billion in revenue with segment operating margins of 15 percent in fiscal 2006.
Rockwell Automation will keep the Reliance Electric and Reliance Electric-branded variable-speed drives and related parts and services, it said. Rockwell Automation bought Reliance Electric for $1.6 billion in cash after a bidding war with General Signal Corp., Stamford, Conn., in late 1994.
Reliance Electric is a significant part of Rockwell Automation, said one Rockwell Automation distributor who asked not to be identified. He said Rockwell Automation and Reliance Electric primarily went to market through separate sales forces, and that while some Rockwell Automation distributors carried Reliance Electric products, Reliance Electric did much of its business selling through motor distributors and motor repair shops.
“An interesting thing that was happening was some of the Reliance products, specifically the variable-speed drives, were sort of migrating to a Rockwell product,” he said. “So we were seeing competition from the Reliance channel against our traditional Rockwell products. We're hopeful that will change in that Rockwell is going to retain variable-speed drive products and expertise, and we won't have to compete with the Reliance channel in that overlap gray area,” he said.
Rockwell employs about 21,000 people and does business in 80 countries.