Looking back at Kohler’s big week
15 March 2022
Over the course of 2021, Kohler Co. took some major steps in both its engine and power generation businesses. On the engine side, it unveiled its new KSD small diesel engines, the most significant engine development since it launched the KDI engines a decade ago.
On the power generation side, Kohler in 2021 debuted its Power Reserve energy storage batteries, undertook facility expansions in Wisconsin, Mississippi and France and created a new Home Energy Management Systems division within its Residential Power Products business.
Yet it’s not too much of a stretch to say that the company might have matched all of that activity of 2021 in the course of about a week in January.
Seven busy days
Four days into the new year, Kohler Power announced it had acquired Heila Technologies of Somerville, Mass., a specialist in distributed energy technologies. Then seven days later, it announced an even more intriguing deal, the acquisition of Curtis Instruments, a Mount Kisco, N.Y., supplier of electronic components for mobile equipment and electric powertrain applications.
As a privately held company, no financial details were provided concerning either purchase. Yet in terms of how it positions Kohler going forward, the activity of that one week may prove to be of critical importance to Kohler’s long-term prospects.
“You’re seeing the culmination of several years of work,” said Brian Melka, group president, Power at Kohler. “There’s certainly been some significant activity over the last year or two in really reshaping our business and thinking about it in a more transformational sense.
“At the heart of it, we really asked, what is it that we do? It’s easy to say well, we make engines and generators, and that’s what we’ve done for 101 years now. But the reality is, we provide power when the grid doesn’t. That’s what we’ve done for more than 100 years. We needed to expand our thinking about how we do that from a technology standpoint and what our customers are asking for. A number of customers have been asking us for broader solutions, not just in internal combustion engine technology, but hybridization – which we’ve been working on – but more recently, a lot more emphasis on full electric powertrains.
“So, all of the activity we’ve done – whether it’s the creation of our Home Energy Management business, whether it’s the acquisitions of Heila and Curtis – it has been along that vein of providing energy resources when the grid doesn’t, whether it’s your home, your business or to the mobile equipment markets we compete.”
On the mobile side, Curtis Instruments is an electrification supplier to OEMs across a broad range of markets including material handling, golf and recreational vehicles, mobile elevated work platforms, construction, agriculture, turf care, marine and select on-road segments. Its products include motor speed controllers, HMIs and instrumentation, power conversion systems and CAN modules.
That product and customer portfolio caught Kohler’s attention, Melka said, as it provided an effective avenue toward addressing the evolving needs of Kohler’s mobile equipment customers.
“When we’ve looked at how to diversify our portfolio, one thing that’s really important to emphasize is we’re not exiting the engine business,” said Melka. “We’re at an all-time high in terms of our engine output and capacity right now, and we expect that to continue.
“But we also have many customers in the OEM equipment space – in agriculture equipment, construction equipment, turf equipment – who have been asking us to diversify our power solutions. Kohler is their trusted partner, what can you do for them?
“We looked at how to more broadly enter the non-engine space of those markets – and vehicle controls, motor controls, HMI systems and inverters seemed to make a lot of sense for us because it really is core to how the equipment operates. There is always so much focus on the battery, but the reality is, it’s all about how you optimize the system to utilize the power that’s available.
“That’s why Curtis was so interesting to us, because it is really about designing and optimizing the system for total efficiency.”
Founded in 1960, Curtis Instruments operates in 16 countries, with manufacturing locations in Puerto Rico, Bulgaria, China and India. “In Curtis, we found a company that has just a tremendous amount of experience, talent and capability,” Melka said. “They’ve got 60 years in the business, five engineering centers around the world, and a very global footprint.”
Curtis Instruments will operate as a standalone entity within the Kohler Power Group with President Stuart Marwell reporting to Melka.
The Curtis deal came seven days after Kohler announced its acquisition of Heila Technologies, a company that focuses on the integration and operation of distributed energy resources (DERs) and microgrids. Its core product is the Heila Edge, a modular platform designed to simplify the integration, operation, optimization and scale-up of DERs, increasing resiliency and reliability, while reducing complexity and cost.
“With the majority of the customers that we’ve talked to when they think implementation of microgrid technologies, the number one use case is always about energy resiliency,” Melka said. “It’s always about, I need to have power when the grid doesn’t provide it to me. Resiliency is the business Kohler is in.
“Number two is, can you lower my operating costs? Can you lower my capital costs? Can you optimize my system to drive more efficiency? We have a lot of industrial customers who have diesel backup, put in solar because they thought it was the green thing to do, and also have energy storage. But in the end, they have these assets that aren’t really connected, aren’t talking to each other, and aren’t delivering an optimal solution.
“That’s what Heila allows us to do. They have a very resilient system with self-healing capability and it’s very simple to install. People who buy these systems are buying them for 10, or 20 or 30 years. One of the values that we bring to the table is that they know they can buy from Kohler and know that we’re going to be around in 10 or 20 or 30 years to support them. And that’s a really great combination.”
Heila Technologies will operate as a standalone entity within the Kohler Power Group with General Manager Francisco Morocz – co-founder of the company – reporting to Melka. “There’s such demand for the capability they bring that we want them to continue to be market agnostic,” Melka said. “We certainly want to leverage that internally within the Kohler Power portfolio and Clarke Energy’s renewable energy services as much as possible.
“But we think the technology itself has such value, that we want them to be agnostic to the market and be able to scale rapidly in all the different applications that are being deployed on a global basis.”
In the end, Melka said both acquisitions would provide significant benefits to Kohler and its customers.
“What’s really important is that this is about doing things that have real value for our customers,” he said. “These are good businesses that can help drive options and solutions for our customers and do it in a way that is more environmentally friendly in the balance of our portfolio. And they’re good businesses for Kohler, too.”