Magnetek plans tie with Soviets for generator-producing venture.

Magnetek plans tie with Soviets for generator-producing venture

Magnetek Inc. officials last week said within six months they expect to enter a joint venture with the Soviet Union's two largest power-equipment builders to produce giant electric generators in the U.S.S.R.

The deal, if consummated, would launch the West Los Angeles company into the ranks of General Electric, Mitsubishi Heavy Industries and other major-league manufacturers of big generators, turbines and related products and services sold to utilities.

Magnetek currently makes relatively small generators, like those it sold to Alaska oil pipeline builders for auxiliary electric needs. The Soviet partners can build generators some 3,500 times larger, with a capacity of 1,400 megawatts.

While many U.S.-Soviet ventures have snagged over the Soviets' lack of hard currency, Soviets in this case would provide construction services, while purchases would come from North American utilities that would pay in dollars, said officials. The venture would be based in the U.S.

Magnetek would provide what the Soviets don't have, namely, marketing, custom-design expertise and maintenance service for North American clients, said company spokesman Robert Murray.

"Many of the steam and hydro power plants here are aging; they are 30 to 40 years old," he said.

Frank Perna, Magnetek's president and chief executive, said in a statement that the joint venture "represents a competitive response to offshore electrical equipment conglomerates" that are entering American power-equipment markets, such as Mitsubishi and Siemens A.G. of Germany. Perna was out of town last week and did not return telephone inquiries from the Business Journal.

Magnetek is a $1.1 billion-in-sales maker and servicer of electrical equipment. It reckons it is the No. 1 builder of power transformers in the 2.5-to-100-megawatt range and the third-largest builder of electric motors in the United States.

The Soviet partners are Electrosila and Leningradsky Metallichesky Zavod, both based in Leningrad. Together they employ 40,000 workers and build the largest hydro-turbines and power generators available in the world today, according to Magnetek.

The Soviet pair would own 49 percent of the joint venture, named Magnetek Power Inc., with 51 percent owned by the local company.

Murray declined to state how much would be jointly invested, other than it's in excess of $10 million.

Other joint-venture products proposed are power transformers and large rotating equipment, as well as plant maintenance and repair services.