The ground is shifting – is your energy plan leading you to success?
The power equipment industry in Australia is going to transform over the next three years, which means new markets will be established and new market leaders will emerge by 2021. By Gary Fooks.
With any significant change to the business environment, those who adapt to change prosper, and those who stick to the path that has worked in the past often walk over a cliff. To help OPE businesses navigate the future, I’ve highlighted what is about to hit us.
Storm #1 – Change
The first storm is the changes that will occur following the 2018 small engine emissions standards. This comes with disruptors.
Disruptor #1: The range of available products will shrink, and the high emission cheap and cheerful copies (CCC) will disappear from mainstream shelves.
Disruptor #2: The big stores (Bunnings, Big W, etc.), will want to fill the vacant shelves by tempting brands away from relying on franchise dealerships.
Disruptor #3: The CCC direct import market may flourish by exploiting legal loopholes.
The Australian Government has chosen the cheapest possible way to regulate the emissions standards. This leaves several obvious loopholes including direct consumer imports through eBay or Ali Express. In the end, Industry will need to undertake a self-policing role to fill the government enforcement void. This idea has some traction, but the pain and real motivation to get serious won’t be felt until 2019 and I fear we will lose the initiative.
Storm #2 – Battery power
Big names like STIHL and Husqvarna already offer cordless products, giving the category “bona-fides”. Company executives report sales as being “unbelievable” and “beyond all expectations”.
Battery products are easier, quieter and more convenient and have actually expanded the market for Power Equipment. Battery PE buyers fall into three categories:
1.Those replacing traditional petrol equipment.
2.Consumers who rarely bought OPE in the past due to perceived inconveniences and even a fear of petrol – this is an opportunity/new market segment.
3.Trades are a new market segment; e.g. a plumber buying a battery blower/vac to do a quick clean up after a job, and throw away the broom.
Disruptor #4: The serious brands now moving into convenient cordless PE bring new uses and new users into the market.
These first-time buyers have a different reason to buy, and respond to different marketing messages than those who buy the petrol range. Are we missing this market by maintaining the traditional messages of “power, guts” etc? Or do we focus on communicating with first time PE buyers with the “convenient, safe” message they want to hear?
Disruptor #5: Electric blurs the business boundaries and will bring competitors we never knew existed.
Once upon a time Makita did a fine job of making power tools for the carpenter and STIHL delivered fine chainsaws to the arborists. Now they find themselves in direct competition in the light chainsaw, blower and hedge trimmer segments.
This sort of demolition of traditional boundaries is not new: Sony suddenly went head to head against Nikon over digital photography.
Storm #2.5? Solar + battery?
Solar and battery power are merging together in the home power segment. Tesla, the electric car maker, has grabbed all of the media attention with its Powerwall. Basically, you use solar panels to run your house during the day, as well as to charge a giant battery, then sell excess to the grid. At current prices, the numbers don’t stack up. Well, not unless you rent your battery to the grid as a supply buffer – that can mean free power (see ‘Sonnen Batterie’).
I have on my desk a phone recharging battery pack, with a solar panel on one side that recharges the battery. Can we imagine a mower we leave in the sun all week and use the charged-up battery to cut the lawn on Saturday?
Sadly, the self-charging battery on my desk is not much more than a sexy paperweight. It needs about a week in full sun to give the battery any life at all and has never reached full charge.
We need to find much more efficient, smaller solar panels. With current technology we would need a solar panel the size of a large shed to recharge a mower battery.
When we get solar panels to a size and efficiency that we see them fitted to the roof of an electric car, then it’s time to get ready for self-charging lawn mowers.
Next Generation of Batteries
Mostly fuelled by the car industry’s need to meet future emissions requirements, the great battery race is underway to find the next transformative technology: a battery that’s five times lighter and for one fifth of the cost is what’s needed for a $20,000 electric car. When that battery trickles down to the PE industry it’s a whole new ball game.
In the meantime, the PE sector has taken the advantage of swappable batteries, an option not feasible for automotive applications and abandoned by the phone industry. But for PE, buy a battery or two, a charger and then use the power packs in a variety of skins – from blowers to hedge trimmers. Need even more power for a lawn mower? No problem, just clip in two 18V batteries to deliver 36V.
Multi-use battery packs also lock in buyer loyalty. If I already own a Ryobi 18V hedge trimmer and blower and two batteries, then the Ryobi mower is looking the smart buy for me. The trick is to get me to buy the first machine, battery and charger. (Sounds like printers and ink cartridges?)
This business model is all well and good for the big players with up to 70 products powered by the one battery type, but what about the small, family owned OPE manufacturers in Australia?
Companies like Briggs & Stratton and Honda already opened the door to these small businesses by supplying them engines, even where the finished products compete against their own brands (e.g. the Atom Industries blower with a Honda engine). What I haven’t seen yet is a small OEM “go electric” by buying off the shelf motors and battery/charger combinations.
It will happen, and the financial rewards will go to those who get it right first. Partner with OEMs to help them make the change and lock in their loyalty.
Thrive or survive in the next five years?
Change is always good for those who ride the wave, and fighting the tide has never been a winning strategy.
Look at the big companies like STIHL and Honda – fine engineers who love their petrol engines that have been the backbone of their success – bravely leaping into the new world of battery machines.
If nothing else, develop “electric” expertise within your firm. Your first steps may mean investing in training yourself and your key staff in electric power technology.
For those familiar with a SWOT analysis, what you have above are the beginnings of the Opportunities and Threats segments. Complete it on your own and hold on for the ride.
Gary Fooks is Chair of the Blue Sky Alliance: a collaboration between the OPEA and the marine engine sector. Gary has been working on small engine emissions standards since 2005 and was announced as the Environment Minister’s Clean Air Champion in 2015.