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Tuesday, Jun 6, 2023

East Coast Firm Takes Charge of Battery Maker

When battery manufacturer EnerSys was looking for a way to get into the medical device market and get a bigger share of the satellite market, the company found what it was looking for in the San Fernando Valley. The Reading, Pa. firm is acquiring Quallion LLC in Sylmar, one of the largest makers of lithium ion batteries in the country and part of the technology portfolio of billionaire Alfred Mann. The deal is valued at $30 million. The Quallion acquisition follows an established pattern of growing EnerSys primarily through acquisitions. The company has done 26 deals of varying sizes since 2000, said Richard Zuidema, executive vice president of EnerSys. The appeal of Quallion was twofold. For one, it gives EnerSys entry into the medical device market that it currently does not serve. Additionally, Quallion’s batteries for satellites are a good match with ABSL Power Solutions Ltd., a company in the United Kingdom that EnerSys acquired in 2011, which also supplies to the space market. “The combination of the two makes us the largest domestic producer of space batteries in the U.S.,” Zuidema said. EnerSys is a publicly traded company that employs more than 9,000 in facilities around the world. For the first quarter ending June 30, the company reported revenue of $597 million. Management at Quallion declined to discuss the deal as it had not been finalized. Zuidema would not speculate on Mann’s motivation to sell the company. “It is one of Al Mann’s companies and he has been divesting a number of different companies over the past several years,” Zuidema said. In March 2012, he sold Stellar Microelectronic in Valencia to Flextronics, a Singapore manufacturer serving the aerospace and defense, automotive and consumer electronics industries. In an interview that year with the Business Journal, Mann said that under “the right circumstances” he would sell Quallion. He founded the company with battery pioneer Hisashi Tsukamoto in 1998, and the pair positioned the firm as an industry leader in developing batteries for use in complicated environments. It currently makes power supplies for medical devices such as cochlear implants for the deaf, spinal-cord stimulators, glucose sensors and pacemakers, as well as batteries for transportation and military uses. EnerSys has entered the medical device market at a time of consolidation and challenge. Minneapolis-based Medtronic, for example, the world’s largest medical device maker which has a facility in Northridge, announced in May layoffs of 2,000 employees worldwide in response to sluggish growth. Health care reform hasn’t helped. Companies in the industry have to pay a 2.5 percent tax based on their sales to help pay for the cost of the program. Also, the reform is encouraging companies to control their device costs, said Bruce Jackson, an analyst with Northland Capital Markets in Minneapolis who follows the industry. At the same time, the U.S. Food and Drug Administration is taking a rigorous approach to new product applications. That approach lengthens the time it takes new devices to get to market, Jackson said. Suppliers to medical manufacturers, such as battery makers, are dependent on new products and slow movement by the FDA will eventually affect those businesses, he added. “The longer those take to approve, the more difficult it is for (suppliers) to forecast what will happen,” Jackson said. Labor Woes Chinese electric vehicle manufacturer BYD Co. Ltd. finds itself under close scrutiny by the state Department of Industrial Relations for workplace violations. BYD had been aggressively wooed by officials from both Los Angeles, where its North American headquarters is located, and in Lancaster in the Antelope Valley, where BYD has a bus manufacturing plant that opened in May. The department has specifically cited BYD for not paying minimum wage nor providing worker’s compensation insurance, failure to provide itemized wage statements and not giving workers a second rest break. The department has levied fines of $99,245 against the company. The citations prompted an Oct. 30 protest outside BYD’s Los Angeles headquarters by the Los Angeles Alliance for a New Economy, a left-leaning economic and social-justice organization. BYD has taken several steps in its defense. The company has hired international law firm Paul Hastings LLP to represent it in the on-going state investigation. On Nov. 4, the company issued a press release saying its engineers, battery specialists and bus-design specialists are only in California temporarily to train its U.S. workforce on BYD’s electric-bus and battery-charging technology. It stated the Chinese engineers earn $2,200 a month while here, and also receive free housing and use of company vehicles. “These knowledge experts are not displacing any American workers; rather, they are training and providing support to the approximately 40 California-based employees who BYD already has hired to start up its operations,” the release said. “BYD always considers these engineers as its most valuable asset.” BYD is based in the industrial city of Shenzhen. Warren Buffett’s Berkshire Hathaway Inc. has about a 10 percent stake in the manufacturer. Staff Reporter Mark R. Madler can be reached at (818) 316-3126 or mmadler@sfvbj.com.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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