Danotek Knows Which Way The Wind Blows

Sitting still isn't something that Donald Naab does particularly well.

About two months ago, when the new president and CEO of Canton-based clean tech company Danotek injured his leg in a fall, doctors told him he'd likely need crutches for eight weeks. Naab , a sharp, reserved executive with the wiry mien of a runner, graduated to a cane in about five, and says he'll soon be ditching that as well.
"It's how I'm wired," Naab says.

Naab left Chicago to take the helm of Danotek in late May following a national search for an executive that could catapult the company to commercial success. The company's permanent magnet technology is a wind power industry "game changer," Naab claims, and Danotek is poised to begin commercial production of about 4,000 wind turbine generators a year.

But these days, Naab says, he's already looking for the next game-changing technology the company can develop.

"I want the next one," he boasts.

For Naab, moving to Michigan was a kind of homecoming. In the 1980s and early '90s he had been vice president of Holland, Michigan-based electronic control maker Robertshaw Controls Co., a $450 million division of a multinational corporation. Most recently, Naab was group president of the gear works and energy maintenance divisions of Naperville, Illinois-based Broadwind Energy, a $250 million group of four units that serve the wind power industry.

Naab has also headed companies and divisions in the medical device, aerospace, defense, and wireless telecommunications industries. The characteristic that unites all of them is a sense of urgency in getting new technologies to market. Introducing the latest technologies often means working at a pace "a little ahead of the market," he says. "I'd like the next generation tomorrow."

That sense of urgency was precisely what Danotek's investor team was looking for. GE Energy, Statoil, and San Francisco-based venture capital firm CMEA in 2008 invested $7.25 million to support Danotek's start-up. A year later the team, joined by Khosla Ventures, committed an additional $13.2 million to move Danotek into production.

"We were looking to bring in a CEO who came out of the wind industry and had relationships established," explains Rachel Sheinbein, senior associate on the energy and materials team at San Francisco venture capital firm CMEA Capital, a large backer of Danotek. "The former CEO had done a good job; now was the time to step it up and take it to the commercialization phase."

Danotek was formed in 2001 by Daniel Gizaw, a veteran engineer who had served with such global giants as General Electric and Cummins Power Generation. The company's core product -- a permanent magnet generator for wind turbines -- has a pared down design that makes it lighter and easier to maintain than other generators. It moves more smoothly, lasts longer, and, because it can go faster or slower depending on wind strength, it harvests more energy more efficiently than the competition, says Director of Business Development Scott Mabie.

The same technology can also be used in hybrid and electric vehicles, a market that Danotek is already selling to, Naab adds.

The company is transitioning to commercial production of the generators for wind turbines. And with a capacity of about 4,000 generators a year, it could generate as much as $300 million in sales in coming years. "We're at the cusp," Naab says. "It's imminent. We're on the verge of being at the right place at the right time."

Naab has already assembled a research team to produce new technology, and is interviewing researchers and materials experts with Ph.Ds to help produce Danotek's next product.

One idea? To be so bold as to lose the wind turbine altogether and go for a direct drive system, says Naab. "The mind starts to wonder as to what could be."

The sense of urgency is understandable. Wind power installations in 2009 grew to 10,012 megawatts, a nearly 40% increase from the year before, according to estimates from the American Wind Energy Association. The still-fledgling industry is driving development in composites and better drive trains -- Danotek's sweet spot, Sheinbein says.

And while the market is showing volatility, long-term, wind energy is expected to grow. More growth is expected if federal renewable energy targets are made policy, the association says, and if the industry is moved from investments spurred by government incentives to longer-term manufacturing investments.

Wind is Danotek's largest market, Naab says. But the technology could be adapted for use in as many as 30 to 40 different markets. An overseas automaker is already using the company's technology for a power steering pump on a new model of hybrid vehicle, Naab explains, although he declines to name the client, which has yet to unveil the vehicle.

But along with automotive, Danotek's technology could find its way into large trucks, rail, backup power units for big buildings or other structures, or to boost efficiency in heating and air conditioning units, says Scott Mabie, Danotek's director of business development.

"We could be in the dilemma of selecting which markets to prioritize," Naab adds. A good dilemma to have, to be sure. But these days, he says, executing a strategy to best serve the wind industry is top priority, including a bricks and mortar strategy.

Michigan's highly skilled workforce (the state may have the highest per capita rate of mechanical engineers, Mabie claims) and strong team work ethic make it a great place for Danotek to be, Naab explains.

But aside from industry giants such as General Electric, wind power's heavies tend to be located overseas. Danotek in the coming years will likely set up manufacturing cells near domestic and overseas wind turbine manufacturers to better supply the industry, he says.

Wind's supply chain has yet to consolidate, and overseas providers are moving to build here. Local markets in China and India are also growing, says Naab.

"We have to think about where in the world to be," he adds. But as a launching pad, Michigan "is the best place to be right now."

Michelle Martinez is the wind beneath Metromode's wings this week. She is a freelance writer and and editor who has reported on Metro Detroit businesses and issues for five years. She is also a regular contributor to Metromode. Her previous story was Team Detroit.

All Photos by Dave Lewinski

Dave Lewinski is the artist formerly known as Concentrate's Managing Photographer.  This is his first week as MetroMode's Managing Photographer.
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