Major shifts likely in turbomachinery industry soon

In the next 10 days, the turbomachinery industry may see some of the biggest corporate swaps. With GE and Siemens competing to buy all of Alstom, Rolls-Royce has announced that it is mulling a deal with Siemens to sell off its aeroderivative turbine and compressor business.

The Alstom board is said to be favourable to GE whereas the French government is pushing Alstom to consider a Siemens deal. GE is reported to have valued Alstom at around $13 billion. But Siemens has asked for access to Alstom’s books before it can make a proper offer.

The argument is that GE and Alstom have relatively separate core strengths and a merger between the two may be more beneficial. And a Siemens takeover may involve lay offs though the company has assured there won’t be any. As far as power generation equipment is concerned, while Alstom is a leader in steam turbines and boilers, Siemens too competes head-to-head in that segment. But GE is more of a gas turbine player.

In the recent past, Alstom got a government bailout of $4.5 billion to cover up for the losses and money spent in compensating for the below-guarantee performance of the GT24/26 gas turbine models it bought from ABB. The company had to ship upgraded compressors on its own cost to the customer units that were performing below par.  

Also, it won’t be the first time in recent days that a frame gas turbine maker is considering buying aeroderivatives known for their use of cutting edge aircraft technology. Mitsubishi recently bought Pratt & Whitney Power Systems. The technology flow, if any, from P&W to the Mitsubishi frames will be known in the next few years when Mitsubishi unveils upgrades to its existing gas turbine models. Siemens is making an offer to the Rolls-Royce aeroderivative and compressors – among the most widely used in oil and gas. The RBs and the associated compressors are often the preferred machines in that segment, whereas Siemens has always eyed a larger share of the ever-growing oil and gas pie. On sale will be the Rolls Royce Trent – rated at 66 MW it is among the biggest aeroderivatives in the business.