Tuesday, November 11, 2008
I'll pursue the technological point I mentioned in yesterday's entry for a moment today, because I do think its healthy for those of us who characteristically write about the financial side of business news to re-focus when we can on the operational side -- on the fact that companies do stuff, they make things, they provide services to people, etc.
The cash flow, and everything connected with it, ultimately is founded on this doing-of-stuff. Operations should drive finance, not the other way around.
So in trying to understand the dispute over Tecumseh, I found myself wondering what exactly is a "scroll compressor."
To start at the start: a "compressor" in the relevant sense is a device that increases the pressure of a gas by reducing its volume. The more traditional sorts of compressor are: rotary, reciprocating, or wobble-plate. Reciprocating compressors, just for example, use pistones driven by a crankshaft.
A scroll cmopressor, on the other hand, involves two spiral-shaped surfaces, interleaved. One is fixed, the other orbits eccentrically without rotating. If you look at a diagram of this, the effect is positively hypnotic. There's a photograph that will give the general idea.
The site that includes that photograph also gives a list (in the context of their use cooling milk) of some of the benefits of scroll compressors: they require less electrical current than the alternatives, make less noise, are easier to maintain since there is no metal-on-metal friction, etc.
So now I understand: one of the contentions of the dissidents in the Tecumseh proxy fight is that the management failed to make a transition to scroll compressors in a timely way, and is now behind the rest of the industry.
On the other hand ... scroll compressors are not without their drawbacks. They're more vulnerable than other compressors to damage caused by foreign objects, or by brief power interruptions.
At any rate, these issues have been under consideration within Tecumseh for more than a decade. In the company's 2000 annual report there's a reference to the company's investment in a scroll compressor manufacturing facility, with the rueful observations that, "In 1996, unacceptable field testing results led to the abandonment of this particular design. Since then, several new designs, intended to serve primarily commercial applications, have been under development and testing."
So that's my bit of didacticism on engineering for the day. Back to finance tomorrow.