Escanaba EMP Bought by Swedish Concentric- Going Electric, Going Auto and Going Michigan! (Läget? 🤷 )

Delta County Michigan
Homeland to Hot Spot
Concentric makes farm hydraulics

Concentric has a plan to improve its electrification strategy to meet global and market changes in electric vehicles. According to the statement release David Wooley, CEO of Concentric states, "This is a landmark transaction, and a step change in Concentric’s electrification strategy as we dramatically increase our capacity, technological know-how and product portfolio to accelerate our growth in electrical products. We are now on track to beat our ambitious target of having 20% of group sales stemming from electrical products by 2025."

The actual press release can be found at Concentric AB acquires EMP Inc for MSEK 1,260 (MUSD 147) 

EMP is an Escanaba US producer of electric and mechanical water and oil pumps, electric fans, thermal management systems and precision machined components and the purchase will push them more toward e-Fans, e-Water Pumps, etc... that are used in cars, trucks and other types of vehicles.

The Strategy for EMP Purchase?

What is likely happening here is that there is a growing interest in developing electric vehicles and thus investing in local technologies that can be exported for bigger markets both within the U.S. and other locations. Such a purchase could be a strategy to acquire new technologies, develop new products and/or break into markets. i.e. electric vehicles. (You can read more about Concentric HERE. Take note of the financials HERE and some of the trends you might see). 

Just as sort of stick your thumb in the air 👍 I would suspect Concentric wants to get more involved in U.S. vehicle market in a much bigger way (See a similar sized small manufacturer purchase of geographic significance in the Allied Enterprises Acquisition). The acquisition (of both EMP and Allied Enterprises) were in cash (I didn't look around to check out any other acquisitions), focused on specific auto application, and at a time of heightened national interest in electric vehicles could mean they have pre-existing product interest/market and they expect the return to be significant.

 (Remember cash is king and it also allows for maximum management flexibility. In addition, it could also mean that synergies are being created among a number of smaller businesses and the ROI is expected to be high when they are in alignment. One might also add in the value of being a wholly own subsidiary to create R&D advances. You will notice Technology + Innovation = Sustainability on their site. Don't really know because it depends on the company's mid term strategy...lets just see if anything else interesting happens in the future.🤔)

If your interested in the company's stock Concentric AB (publ) (COIC.ST) land/or click Yahoo Finance where you can read much more about the stock and its history. When you browse the company news you will find information on a new VP, contracts for electric pumps for heavy duty truck, pumps for hydrogen fuel cells, electrohydrolic steering for American vehicles, etc. etc. etc. that give hints to the company's direction.

We can also review the 2020 Concentric Annual Report and notice that North America is their biggest market 36% and their sales are in 59% trucks. While they may be seeking to grow other product avenues it becomes likely they are for right now focused on trucks/cars in the U.S. That may or may not include industrial equipment and perhaps even specialized work for other industries aerospace, military, etc...(We just have to see how things shape up.). There could be some indication they will be spending more heavily on R&D and want to keep that knowledge close to home. 

The Economy

Producing local e-technologies in Michigan is also important as it can help restore solid paying jobs, attract intellectual capital for future growth, and encourage other companies to invest in similar successful strategies that leads to longer tail economic benefits. Attracting investment can improve the fundamentals of local economies through find a pathway of connecting small towns like Escanaba and Gladstone to the global economy. 

Currently the global economy (specifically the American auto industry) are experiencing  persistent supply chain lags that must be addressed if the U.S. hopes to be self-sufficient in its technologies (See Supply Chain). This may or may not get better but we are still at the mercy of others for our essential supplies (Not a good place to be in.)That will including drawing in Foreign Direct Investment and creating interfirm linkages that raise total value for everyone (See Inter Firm Linkages). Companies such as Concentric may want to expand their operations in the US/Michigan as well as locate themselves closer to complementary economic activities. (To understand how and why companies make global decisions to invest take a look at World Investment Report 2021).

Delta County (Escanaba and Gladstone) can/is be an attractive place to invest for innovative and new technology companies focused on key industries. It has the right environment, basic infrastructures, and local skills to match engineering and small scale/custom manufacturing that can be shipped in multiple ways. It can also be even more helpful if there is a concerted effort to attract certain types of firms to the area to build local capacity.(I worked on an example of how this might work but from the framework of small scale regional investment in the tourism-micro manufacturing sector Attracting SME Investment Delta County. There is a lot more support for this in other articles but this is just one example.).

Businesses that invest in Delta County MI can become important suppliers for Great Lakes auto, truck, robotic, space, etc... manufacturers then that might be a game changer for towns like Escanaba/Gladstone. Especially if engineering, design, and small scale manufacturing can be matched with other strategies that relate to attracting small business, rebuilding the downtown, and widening appeal of tourism to retain/attract talent. (...as long as significant wealth and investment is retained in the area that leads to further wealth development. See Transactional Clusters Theory.).

There are a couple of great articles so I'm not going to rewrite all of the details.

Concentric AB acquires EMP Inc for MSEK 1,260 (MUSD 147) in a transformational deal to support the e-pump electrification strategy

Engineered Machined Products in Escanaba to be acquired by Swedish company

Side note: Let's wait and see what happens. If I had the time it would be possible to trace the supply chain and resources as they are being drawn into the area creating a type of stronger understanding of how these things work. I might try using a hashtag #DeltaCountyDestination so I can pull back up the article to look at them at a latter date. Assuming I stay on top of it.