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The Real End Game

Oct. 1, 2010
Green players in the electrical market may find themselves holding all of the cards either way the power generation scenario plays out.

This issue is loaded with ideas on how you need to reposition your company to deal with broad market realities such as customers who have to do more with less, the mobile computing revolution and the marketable ROI of green electrical products. You can learn about this repositioning process from a global giant now going through it: Schneider Electric. Industry veterans still often slip and say “Square D” when they are supposed to say “Schneider Electric.” They have that familiar Square D logo imprinted on their electrical consciousness and some even remember the classic “Jones Is Dead!” Square D magazine ad from the 1920s, which created demand for the company's safety switches.

While Square D safety switches, circuit breakers, load centers and motor controls make up a big chunk of Schneider's core market basket, the company has expanded way past this electrical base. In addition to these familiar electrical products, this $22 billion company is a major player in the UPS and industrial controls markets and has growing positions in energy-efficient lighting, HVAC and building automation, security, solar and electric vehicles.

While Schneider has doubled its sales in the past four years, Jeff Drees, the company's new U.S. president, says Schneider's real future lies in becoming an energy management specialist that links all of its products together to provide its customers with a one-stop total solution for all of a building's energy needs. It's a grand vision that doesn't always include electrical distributors and reportedly puts Schneider at the “big-boy” table for discussions with companies like Google, Amazon and IBM on how electricity will be generated, used, saved, sold and transported over the next two decades.

Schneider Electric promoted its vision of the electrical future at a recent media gathering where more than 40 business journalists learned about its strategic vision of becoming an energy management specialist and the progress it has made in uninterruptible power systems, electric vehicle chargers, solar, data center efficiency, its concerns about global warming and other factors impacting the energy management game.

Some of its progress may be rather sobering for distributors, contractors and the design community. Schneider now handles many of its largest turnkey retrofit projects direct because it says customers want a single point of contact for some large-scale projects. And some of the discussions at the meeting about Schneider's “total solution” danced around the fact that in some of the market niches it entered over the past decade such as lighting systems and solar, it provides some products but does not yet offer the whole enchilada.

But Schneider's vision for the electrical future is still fascinating because of how it incorporates so many of the key trends now reshaping the electrical market. At the editors' meeting, many of these big-picture ideas were discussed, but none bigger than the simple two-world answer one of Schneider's customers gave to a question during a panel discussion on where the green movement is headed: self sufficiency.

That's a pretty interesting answer when you think of the billions of dollars utilities and the government plan to spend to rebuild the U.S. electrical grid and equip it with smart-grid metering that will provide two-way communications between utilities and their customers, as well as the development of utility-scale wind farms and PV fields. If homes and businesses could one day produce most of their own power with PV panels, fuel cells and other sources of decentralized power, how does that affect the utilities that spend billions on upgraded facilities and distribution systems to produce power centrally and transport its over thousands of miles of transmission lines to the point-of-use?

Whether power generation evolves toward self sufficiency or blends in a healthy dose of centralized power, electrical distributors, manufacturers and reps are still in a good spot. Building owners and homeowners will still need their green electrical products to help squeeze every last Watt out of their electrical systems so their personalized power plants don't have to produce as much electricity — and they can sell any excess electricity out on the grid to anyone else who needs it. There's plenty of opportunity for everyone in the electrical market if this end game plays out.

About the Author

Jim Lucy | Editor-in-Chief of Electrical Wholesaling and Electrical Marketing

Jim Lucy has been wandering through the electrical market for more than 40 years, most of the time as an editor for Electrical Wholesaling and Electrical Marketing newsletter, and as a contributing writer for EC&M magazine During that time he and the editorial team for the publications have won numerous national awards for their coverage of the electrical business. He showed an early interest in electricity, when as a youth he had an idea for a hot dog cooker. Unfortunately, the first crude prototype malfunctioned and the arc nearly blew him out of his parents' basement.

Before becoming an editor for Electrical Wholesaling  and Electrical Marketing, he earned a BA degree in journalism and a MA in communications from Glassboro State College, Glassboro, NJ., which is formerly best known as the site of the 1967 summit meeting between President Lyndon Johnson and Russian Premier Aleksei Nikolayevich Kosygin, and now best known as the New Jersey state college that changed its name in 1992 to Rowan University because of a generous $100 million donation by N.J. zillionaire industrialist Henry Rowan. Jim is a Brooklyn-born Jersey Guy happily transplanted with his wife and three sons in the fertile plains of Kansas for the past 30 years. 

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