SOCIAL TOPICS (Archive): CUTTING EDGE COMPANIES  

Published, Summer 2003

This column highlights companies in the business of providing solutions to social and environmental challenges. Featured companies are typically held in the SmallCap Innovations portfolios offered to Walden’s clients.

Baldor Electric is one of few companies with a product line that could directly help cut U.S. emissions of carbon dioxide. Founded in 1920, Baldor Electric is the leading North American manufacturer of industrial electric motors. Baldor’s motor sizes range from fractional horsepower motors for small surgical tools used in operating rooms to multi-hundred horsepower motors used by large manufacturing plants. Baldor relies on product innovation to maintain its revenues, and energy efficiency is a key component of its innovation.

Baldor offers two energy efficient features in its motors: The first is improved design that cuts energy use directly; the second is a variable (or adjustable) speed feature to its motors. The variable speed feature is literally that optimizing energy output to the power needed. Variable speed helps avoid wasting energy by running motors at higher outputs than required. Variable speed drives also extend the life of a motor. Because the cost of electricity to power a motor over its lifetime is about 30 times its initial purchase price, an energy efficient motor saves money and reduces energy use as well as reducing emissions.

Baldor’s Super-E motors, first introduced 20 years ago, are probably the most efficient available, using about 5 percent less electricity than conventional motors. Baldor offers customers a software tool to choose the appropriate motor for a specific application and to determine the payback period from cost savings on energy (compared to the customer’s current motor), which helps serves Baldor’s own interests too.

About 30 percent of U.S. energy use is by industry, and Baldor estimates that 60 percent of industrial electricity is used to power motors. Thus, a switch to Baldor Super-E motors would cut U.S. energy use, and the associated carbon dioxide emissions, by about 1 percent or more.

While weathering the U.S. manufacturing recession, Baldor recently made two acquisitions that extended its motor business to the generator market, offering products with output up to 2000 kilowatts. Baldor then introduced its variable speed technology to its OptiGen line of generators, providing another set of customers with energy efficiency benefits.

Baldor also has relatively strong workplace practices. Fortune magazine’s list of "100 Best Companies to Work For" in 1999 commended Baldor for offering universal stock options and strong training benefits. Employees, who are non-union, also participate in a profit sharing plan. More unusual is Baldor’s commitment to an innovative workplace literacy effort helping all employees reach an eighth grade reading level, and then extending the program to employees’ families.  –K.Scott