At the recent IEEE PES T&D Conference and Expo in Anaheim, the 60th anniversary, we had the pleasure of interviewing thought leaders to be able to bring the best of the marketplace to you. Several of those we interviewed are leaders of the Transformer Manufacturers Association of America, or TMAA and we captured their thoughts about what TMAA is all about, the formation of the organization and the mission and vision it has to support transformer manufacturers and suppliers, and by extension, customers, in the power industry.
I first met with Joe Donovan, Executive Director of TMAA and Tammy Behrens, of Prolec GE and current Chairwoman.
Alan Ross:
How are you Joe and Tammy, good to see both of you again.
Joe Donovan
I am well, thank you Alan.
Tammy Behrens
Good to see you as well Alan.
AR
It is a privilege to be here with you, doing this interview so thank you both. First of all, Tammy, tell me a little bit about how you got into the power industry?
TB
As the Marketing Director for Prolec, I have been in the power industry for almost 20 years. Back when I started, the company name was Waukesha Electric Systems in Waukesha, Wisconsin.
AR
The first transformer plant I ever went to was the Waukesha, Wisconsin plant. It was amazing.
TB
Yes, it's an amazing plant, an amazing facility. I started there back in 2005. The company name changed to SPX Transformer Solutions in 2012. And now it is Prolec GE Waukesha. I am the marketing director for all the company’s product lines. I enjoy the power industry more than I've enjoyed any of the other industries I've worked in, and I've worked in a number of them. This is by far my longest position, and I see myself retiring at Prolec. The electrical industry is a great industry to be in, and Prolec is a great company.
AR
Joe, tell me about why you got involved in it. I know you're with a legal firm that was hired to do this, to do lobbying, et cetera, but you've gotten engaged in it, my friend. You now have transformer oil flowing through your blood as I talk to you.
JD
I fell deeply into the chasm of transformers. I'm a power and natural gas lawyer by trade. I've been doing that since 1996, both as a regulator as well as in private practice and in-house at a Fortune 100 energy company. When I went back into private practice, my first client was a transformer manufacturer, Delta Star, and they retained me to help them put together a federal program called FAST, essentially a reserve program for power transformers.
They have a particular product that they were trying to include within that. That's how I got asked to the dance. By luck or grace or stupid luck, I'm not sure, I have been dealing with those issues for 10 years now. With the membership, we had an ad hoc coalition dealing with a lot of import trade issues, particularly with grain-oriented electric steel. That was the birth of the TMAA. We collectively had conversations about how our industry is perpetually reactive, and we're always reacting to pressure points or market changes instead of being proactive. I remember having conversations with that ad hoc group saying, “we really need a Trade Association”. It took us five years to get there, but finally, in 2021, we formed the TMAA.
I have been Executive Director now for about 18 months, and we've had great growth. I have great expectations as I am very bullish in this industry. I think if we manage things correctly, it can really help transform both the national economy as well as national security into the future.
AR
Remind me to come back to Grain-oriented Steel because that is a big issue that we've got to talk about. But first, I am going back to Tammy to ask why the power industry.
TB
I started my career in the farming industry marketing farm implements, and I have worked in the trucking and recreational vehicle industries, at a company that manufactured mirrors for RVs and over-the-road trucks. The electrical power industry is a more challenging industry. It's more exciting, and the equipment is bigger, more complex. The people are great. I really enjoy the people I work with and the respect the industry has shown me, both as a professional and as a woman.
AR
I think in Women in Power Systems, we featured you in that. Have we not? No. Well, we will. I will make sure that we do.
Let's go to the issues right now that the industry is dealing with. The first one is lead times. They're astronomical. If all of your members are sold out, why have an organization? In truth though, I've never seen the industry come together to try to solve problems that they're creating for utilities and industrials, because being sold out is a good thing. It's also a bad thing if people can't get transformers for this “hockey stick” of growth that we are experiencing.
Data centers changed everything after COVID and industrial manufacturing in America is over 90% capacity in many cases. The average industrial plant, and I'm talking about major power usage industrial plants, is running at 92% today. It doesn't seem like much, but it meansyou can't stop. Transformers can't fail. If youcan't get a new one for three years and you've got one that's 38 years old, it is a huge problem for society and our country. That is an issue that TMAA has got to be looking at, correct?
JD
Absolutely. We spend a lot of time dealing not only with the more macro issues or micro issues of the supply chain, but also what are the policies that are impacting that supply chain? The data you pointed at, 85% capacity, we are churning out all the transformers we can churn out on the current domestic production schedule. The only way to expand upon that is to focus on how we build out more production capacity. Does the market support more production capacity?
I think the answer is yes. We've certainly seen all those pressure points. But what are we doing to help incentivize the expansion of production that includes domestic transformer manufacturing and the underlying components that feed into that transformer? We have spent a lot of time this year dealing with those supply chain issues, coordinating with folks at DOE and at the White House, having conversations with folks at commerce about the impact of trade, trade restrictions, and what is called “Friendshoring”, I think they call it nowadays.
What are the countries that we get some of these components from that are not adverse to the interests of the US? And how can we mold all this together into a cohesive policy that addresses the deficit and the lead times and the frustrations in the market?
We hear from our customers. We know that there are pressures that they have. We know that we need to address it. It is not an easy short-term fix either. There are all sorts of underlying reasons why that is.
TB
I'll just add to that. Even if the government would give us all millions of dollars to build new plants, we have to be able to staff those facilities. There is a skilled labor shortage. When you're manufacturing transformers, you can't just take somebody off the street, put them into the building. It is not like making a widget, where you give them some instructions and say, okay, make this on this line. You must have skilled labor that can read blueprints and somebody that has technical knowledge to be able to look at something and realize that this goes here, and this goes there.
Sometimes it can take from six months to a year to train some positions, like winders. We have to have programs and help from either the government, private facilities, private agencies or schools where they are bringing these folks up to speed from a technical standpoint. We must have a better program to incentivize people to go to technical schools, to learn the skills we need in the factory to be able to build transformers.
I would say to those who do not want to go to college, there is a great market for people who have technical skills within the US job market.
We collectively had conversations about how our industry is perpetually reactive, and we're always reacting to pressure points or market changes instead of being proactive... finally, in 2021, we formed the TMAA.
AR
Having worked with a team from the Electric Power Reliability Alliance, lobbying congress and the White House for enactment of the Perkins Act, I can attest to the need to make Technical and Trade Schools a viable career option. These are good paying jobs that are going to last a career lifetime.
TB
We do promote a lot in the high schools, in the STEM programs, but the technical schools really need to graduate people who can do those kinds of jobs.
AR
We talked about your role at Prolec. Talk to me about why the chairmanship of TMAA. Obviously, they came calling, and obviously you had to say, “yes I will or will not do that”. What does that entail for you?
TB
Prolec was a founding member of the TMAA. We are one of those companies that Joe mentioned was instrumental in starting up the group and saying, “Hey, we need something in the industry like this.” We are very proud of being an inaugural member of the group.
As for the chairmanship, we had a previous chairperson who was in the role as we started the organization. With it being a rotational role between inaugural members, Prolec was next in line for that, and I was given the honor of being elected as the next chairperson.
JD
(Laughing) She hasn't taken a phone call from me since.
TB
(Smiling) Now Joe, you know that's not true.
JD
In fact, Tammy has been so instrumental and helped me. I was a newbie when she came on board. I had just taken over the Executive Directorship role, and she was very helpful. The primary focus of our first few months was working on rebranding TMAA. She was absolutely critical in getting that from start to finish. On top of all her regular job functions for Prolec, she took a lot of time to help guide a stupid lawyer who doesn't do IT on how to do a website and how to brand and color scheme and all that. So, she has done a phenomenal job.
AR
The rebranding of TMAA, what did that entail? New website, color schemes, different things?
TB
New logo, new website, new colors, all of that. So, you nailed all those three things. The website is now very comprehensive. It explains a lot about what we've been working on, what we plan to continue to work on.
There's a lot of information about our mission and our vision and our goals. We also give a call out to all of our members on the site. They each have an opportunity to put a little blurb on the site about their companies and what they do. There is a lot of information out there now, and it will give people a good opportunity to know what we do and how they too, can make an impact and be part of that single voice for the industry.
JD
It recognizes a larger trend that we're trying to implement. We were founded primarily by power transformer companies because those were the ones that were dealing the most with the Section 232 compliance issues.
We are now making a concerted effort to branch out from that. We have other companies that are in the process of coming on board that make distribution transformers. We're expanding into a slightly different market. We're also taking a deeper dive into our supply chain by asking who the vendors among our members are that would benefit from the membership and conversely would provide a benefit to the association with their subject matter expertise.
When I have phone calls with the DOE about the volumes of green-oriented electric steel, how many tonnage are we moving from here to there? I don't have the answers to those things. But with the right membership, I now have a network of folks I can tap into and say, “hey, can you answer this question for me?” So, it is critical that we grow to support the whole industry.
AR
Section 232, what is that?
JD
That is a tool that the President has to call on the Department of Commerce to do an investigation under Section 232 of the act, and that allows for an analysis as to whether there's national security implications for importation of particular devices or components.
The advocacy in favor of that regarding grain-oriented electric steel has been that there is a national security risk because we don't have enough grain-oriented electric steel production in the US to meet demand, and we are now dependent upon foreign sources. I think that's a very myopic, short-sighted perspective, and we've been very fortunate that, at least with regard to grain-oriented windings and cores, that there has not been a specific 232 application; but all steel imports into the US right now are subject to a 25% tariff. That eats into our margin. We have a very thin margin to begin with, and that eats into it very deeply. The interesting part is that a number of our members cannot use the domestic steel because it does not meet the dimensions that they're able to use in the current modern efficient transformer. So, we are forced into the international markets, and we're forced into the tariff.
AR
That is one of the values of having something like TMAA. Decisions are made somewhere that affect other people in other ways. And if somebody doesn't advocate it, half the time they don't know. Transformers are the heart of the power system. If we can't increase capacity, if we can't assure a competent, secure supply as a country, we're going to stumble. Any additional information you would like to pass on?
JD
We have an annual meeting as part of the TMAA. Generally, it's in DC. Dates have not been firmed up this year. It'll be sometime, probably late third quarter. We will all meet, all the members, and we will invite special guests from the government or from other agencies or associations that we are trying to develop.
AR
Let us know and we will get it publicized and get it out there through Transformer Technology. Excellent. Again, thank you so much, Tammy and Joe. This has been great and good luck with the future of TMAA.
The electrical power industry is a more challenging industry. It's more exciting, and the equipment is bigger, more complex. The people are great. I really enjoy the people I work with and the respect the industry has shown me, both as a professional and as a woman.
Our next interview was with Sandeep Chakravarty at IEEE PES T&D Conference and Expo. He is the CEO and President of Pennsylvania Transformer, a founding member of TMAA.
AR
Sandeep, tell me a little bit about how you got involved in the industry?
Sandeep Chakravarty
I am an electrical & electronics engineer by profession with a management degree in international trade. I've been in the power industry for about 32 years across diverse, mature, and emerging markets. Started my career in the transformer industry with CG in 1995 I was a part of a strategic team which made CG, an Indian multinational, into a global player and a major regional player in the Americas.
We grew from a $400 million company to $2.5 billion in 10 years with organic and inorganic strategies. That gave me a lot of exposure to the industry. I started in Southeast Asia, moved to Europe, Latin America, and eventually managed the Americas region for industrial and power products.
AR
Did they own Pennsylvania Transformers at the time?
SC
CG partnered with Pennsylvania Transformers in the 2000 to increase its market presence in the US and closely interacted with them. I joined PTT in 2019 as COO to turn around the company and create a sustainable business model. During my tenure here, I’ve built a strong leadership team, used my global experience, technical knowledge, vendor and customer relations to revitalize the business.
Pennsylvania Transformer has a legacy. It has been in business for close to 100 years now with multiple leaderships and multiple ownerships. It is a great company to work for, and results of the various initiatives were very positive. It was a family-owned company with no clear succession plan. I decided to take the company to the market with the approval of the shareholders, led the due diligence efforts, and we sold the company to Quanta Services on October 31st, 2023. This was a milestone in my career and, of course, for the company and for our customers.
For Quanta, it was their first investment into manufacturing. They are one of the largest infrastructure service companies in the US and we were a great synergic fit. They looked at PTT and saw we had great people who made great products. There was a big supply chain disconnect in the industry, and they were not able to complete major projects with the long lead times. Transformers and breakers were critical in their supply chain, and we were a perfect fit. We have tremendous amount of manufacturing space in the facility, especially in Canonsburg. They looked at that and said this is the right company to invest in.
AR
So, the best time to get into the transformer business, probably ever in the world, if you didn't in the ‘60s and '70s, was about 2019, when, all of a sudden, the demand curve has gone through the roof. Talk to me a little bit about that, because we'll talk about the problems that demand curves create. Why did the demand increase so dramatically, so quickly? Everybody's sold out in this industry, globally.
SC
Globally, yes. It's not just for the US, of course, but the US has primarily aging infrastructure and supporting legislation fueling growth. First of all, the pandemic exacerbated these issues. The market was, by and large, dependent on the international supply chain which was hampered by delays in logistics issues and delayed getting products on time. The customer perspective changed. Traditionally, when a lot of manufacturing went to China, most of the domestic transformer manufacturers scaled back on production and remained below the radar where competition was domestic. But post-pandemic, customers realized that they're so dependent on the foreign imports that they cannot get projects done on time, so they started nearshoring and started looking at domestic manufacturers. It was a surprise for us. We had not planned for this growth. And, all of a sudden, customer preferences changed. China changed its policy for data centers. A lot of data centers moved to the US, which need large amounts of power. The renewable strategy with the current government is still very strong, and with this Net Zero initiative, a lot of investments went into renewables. All these sectors grid modernization initiatives, plus EV and battery storage have created this huge demand.
AR
You wonder why we were caught so flat-footed. I know that because of COVID the supply chain issues were unique, but we should have seen the demand curve coming.
SC
The scale is different, but yes, the US hasn't invested in infrastructure for so long. Pennsylvania Transformer under its former brand name McGraw Edison supplied transformers to New York City in the early '70s, which are still running. Our equipment, which is designed for 30~40 years of life, are being used for 60, 70 years. It poses a risk to the grid. So that investment, which hadn't happened before, has started happening now.
AR
In 1968, I went to Georgia Tech, and I used a slide rule. We overbuilt everything, right? Now we use computers, and we only build to specification. The next generation of transformers, even though they're good, the next generation of transformers will likely not last 60 and 70 years. This is not just short-term. It's going to take decades in order to fulfill the needs that we have. Talk about supply chain issues, how you've helped overcome them, and the labor issues, labor shortages.
SC
I'll start with the labor first. We have three generations of workforce in our facilities. As the matured workforce is retiring, this has been a big challenge, not just with us, but across the industry. To get the young workforce to work in manufacturing or to attract them to manufacturing is not easy. There has been disparity in the wage scale. We have unionized labor. We have tried to circumvent that by creating a growth plan for the employees.
We have invested in training and development, which I think is very key, which we haven’t had for many years. We have set up a training school besides, of course, the support from Quanta now, which really is big in safety and training. We are trying to scale it down to our level where we can train winders and electricians and assemblers within our facilities. The outreach extends to high schools, polytechnics, community centers and trade schools. We are trying to get people to the facility, give them the skills they need to work in the transformer industry. We need a strong labor force to support our growth plans. That is one of the key strategies that we are following to retain and train the labor force.
AR
It's almost a German philosophy where the Germans, the Europeans, trained their own labor force. They did the apprenticeship programs, the training programs. We didn't do that in the United States.
SC
We are actually getting into that. Coincidentally, we have engaged Staufen, a German firm to help us with all these initiatives and employee communication. The same common goals flow down to the junior-most employee. Every day, there are communication meetings on Shop Floor Management, we map where resources have to be allocated and track the progress using LEAN principles. They are helping us develop a roadmap for Industry 4.0 in years to come, which includes labor strategy as well.
Unfortunately, the supply chain in the US is not kept up pace with the demand. We have to go global. There is no option. Especially in our industry, copper consumption is the maximum spend. One of our main suppliers decided not to produce CTC conductors in the US anymore, which was a very difficult decision for us because they were our main supplier. We had to go international and source CTC copper conductors.
What has happened in the industry because of this disparity in the supply chain is impacting engineering given that our products are made to order. Engineering has had to constantly change schedules to keep up with the varying lead times of critical raw materials and components.
We have not landed into a situation where we are totally at a loss for production. We are vertically integrated more than most of our competitors. That helps us mitigate the issue. We have diversified our vendor base and have used global resources to strengthen our supply chain and build a great team to navigate the challenges.
AR
I was talking with Joe Donovan at TMAA and he said to make sure to ask you about a major project that you've got, which you alluded to - expansion. Tell me about the future.
SC
We are expanding both of our existing facilities. Our Raeford facility makes small and medium power transformers. We are trying to increase the capacity by 50% there, by improving infrastructure, setting up a new building, and adding new equipment in place.
Our Canonsburg facility produces medium and large power transformers. We intend to double that capacity by 2027. Almost 80% of Large power transformers are imported in this country. We are trying to use this additional capacity to help our internal and external customers to complete their projects on time. We have ordered a lot of different critical equipment to support that.
On top of that, we are starting two new product lines. One is high voltage dead tank circuit breaker, which is, again, in short supply. We had this product line before, which we stopped manufacturing in 2014. Hopefully, by the first half of next year, we will start up that product line in Canonsburg.
Finally, we are starting a greenfield project to manufacture pad mount transformers and substation transformers, which is going to cater to just this high growth markets of renewables, data centers EV charging and BESS.
AR
From top to bottom, you have a very integrated product line.
SC
We want to be the power products division of Quanta. Our captive consumption is very high for all of these products. Our focus is to strengthen our supply chain within the group while continuing to service existing customers.
AR
As a founding member of TMAA, tell me about the value the Association brings to you and to the market.
SC
Just as Joe and Tammy have shared, getting our industry together to deal with common issues that each of us as manufacturers face, has been and will continue to be tremendous value. Working with regulators and policy makers, as Joe has alluded to, is critical in making sure we are all working together for the common good which supports nation building.
AR
Thank you, Sandeep.
SC
Thank you, Alan.
Post-pandemic, customers realized that they're so dependent on the foreign imports that they cannot get projects done on time, so they started nearshoring and started looking at domestic manufacturers. It was a surprise for us. And, all of a sudden, customer preferences changed.
My next interview is with Jared Delello, Pricing and Government Relations Manager at Delta Star, another founding member of TMAA.
AR
Jared, welcome, tell me a little about your background and how you got into the industry and about your current role with Delta Star?
Jared Delello
I earned my bachelor's degree in Political Science from Liberty University. A few years after graduating, I joined Delta Star's Contracts team, where I worked on RFQs, quotes, pricing, and bid feedback data. Over the past nine years, I've taken on the responsibility of managing all pricing and overseeing government relations efforts, including handling tariff cases in Canada and the USA and participating in the TMAA.
AR
Why did you become part of TMAA, what does it mean to you personally?
JD
Delta Star is proud to be one of the founding members of the TMAA. Over the years, we’ve come to understand the critical importance of the industry speaking with one unified voice when advocating for policies and engaging with political and other institutions. When we advocate collectively, it strengthens the message that a particular policy or stance benefits the entire industry, rather than just a single manufacturer or a selected few.
AR
Why is TMAA important to the industry and why now? What has made the organization more critical at this point in time when transformer demand is going so much?
JD
During times of high market demand, the TMAA plays a vital role in analyzing and communicating policies that can boost supply and identifying decisions that could potentially hinder growth. Over the past year, the TMAA has published and sent several policy and position statements to government leaders to address these important issues.
AR
What do you believe are the three most important outcomes/activities that TMAA is engaged in for the betterment of our industry?
JD
In no particular order: First, engaging with the DOE and the Office of the President to advocate for sound policies. Second, raising awareness within the transformer industry about various programs, such as the Inflation Reduction Act’s Tax Credits that can benefit the association’s members. Third, sharing crucial information about market shifts, supply chain issues, and other industry changes within the association.
AR
Thank you, Jared, I appreciate your perspective.
The TMAA plays a vital role in analyzing andcommunicating policies that can boost supply and identifying decisions that could potentially hinder growth.
My next interview is with Rakesh Rathi of Virginia Transformer, another founding member of TMAA.
AR
Welcome Rakesh.Tell me a little bit about your background, how you got involved in the industry, not so much with Virginia Transformer, but how did you get involved in the industry?
Why did you pick the power industry?
Rakesh Rathi
When I started my career, I started working for a transformer company, as a mechanical engineer in the design side and that kind of fascinated me from a mechanical engineering perspective. But then, over period of time you start learning things and as an engineer you are always solving problems, analyzing things and then I become more like a transformer engineer which is mechanical, electrical, metallurgy and everything.
From working on the design side, then moving to the manufacturing side, before you know it you have done practically all aspects of the business for the organization.
It is really fascinating because although we say transformers are a mature product and not much is changing, in actuality, different new processes are being used to design and build these critical infrastructure assets.
AR
As we speak, transformer demand is at an all-time high. Transformer supply lags demand because you cannot just all of a sudden ramp up your transformer manufacturing, labor, materials, all of those things. Where are we right now in the industry as a whole, as it relates to transformers, what do you think?
RR
The demand is much larger than what the industry can supply, especially in North America. Still, we see a lot of imports happening from overseas because of not having enough manufacturing capacity here, so that is the basic situation here. We see a lot of the growth in the power demand with EV's, data centers, storage, renewables, all adding to the demand curve, so a lot of utilities are trying to revamp or rebuild their systems
Since we all have the same issues, TMAA was formed to help us all, as an industry, deal with these issues.
AR
Why did Virginia Transformer become part of TMAA?
RR
As you said, there are the issues, which are common to all of us, so we asked ourselves how we can find a common solution. It could be certain policy matters. It could be fighting against some imports unfairly being brought into the market, which was happening. It was not able to make local industry sustainable, as well as legal, policy and regulatory issues.
Those are some of the factors which give you the idea of forming an association. We can have common issues that we can discuss together, try to solve them out together as one group rather than each one of us trying to do that.
That is how TMAA got started. But even before TMAA we were doing activities as a group, not through a common association, but through partnership and talking to each other because the issues were more or less common.
It originally started with competitors coming together to address common issues, but it has still survived because some of those issues you have to resolve from a policy standpoint or regulatory standpoint, making sure that it's a level playing field for everybody. I think that has happened, but now suppliers have become part of it.
There's a move to make it something bigger than just a regulatory policy group.
AR
Why is that and what is that?
RR
Now suppliers also want to come in to, to understand, what the issues manufacturers are facing and how they can help to support those issues. They also want to have their voices heard within the overall group, which gives us a larger voice as the government is listening to us. We discuss what we need to do to solve those issues so everybody tries to have their voices heard.
We also see people who are not manufacturing-based in the US who want to join our group because ultimately everybody wants to see how they can get some support from us.
As a result, we have accepted companies who are in the North American manufacturing arena, like Canadian manufacturers and suppliers, we have allowed them to become part of TMAA. While we are one of the founding members, the others are either becoming industry members or supporting members. That is what we are trying to do to increase the strength of this group.
AR
The last question for you is the issue over transformer steel, grain-oriented steel or amorphous steel. What was that issue and has it been resolved?
RR
It has not been resolved yet. As you know, the U.S. government brought in section 232 about four years ago, and sometime in 2020 they applied a duty for any steel or aluminum coming from outside the country. In the US we have only one manufacturer for steel, and they do not have enough capacity to meet the entire demand.
This restriction on imports of the steel it started putting a lot of strain on manufacturing since we can only import a certain form of steel, but not in the other form.
That was the challenge and what is happening now is that the local supplier here in the U.S. realizes that they now have the monopoly. This affects pricing, supply and the ability for the industry to meet this increasing demand cost-effectively. That is the challenge of core steel, or as we call it transformer steel or silicon steel.
AR
So, it is still an issue that needs to be addressed?
RR
It is an issue. Because of the pressure by the U.S. Government, the same thing is being done in Canada, and we believe Mexico will follow. In North America, we don't have enough of a supply base of the required volume of steel.
This issue is something TMAA is working on when we speak with one voice. That way we can have a much greater impact.
AR
Rakesh, thanks for being part of TMAA and thanks for sharing with us.
Since we all have the same issues, TMAA was formed to help us as an industry deal with these challenges. It’s about finding common solutions, whether it’s policy matters or addressing unfair competition.
Special thanks to Pennsylvania Transformer and Prolec Energy for their continued support in bringing these important industry discussions to life.
