How Concentric and MHI can take the US data center market by storm

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“The worst possible scenario was hearing that quietness, no fans, nothing humming,” says a data center operator, describing his ‘worst day’ when the Houston data center he was responsible for went offline as a piece of power equipment failed.

This reminds me why Concentric is in business: to enable thousands of customers in warehouses, data centers and technical facilities across the United States to handle power more efficiently, more predictably and without interruption. And, if they let us manage their equipment as well, we can usually do it at significantly lower cost as well.

Concentric was started early in the 2000s by a group of entrepreneurs to re-imagine the industrial battery space – to help customers better manage their forklift and critical backup power systems. Over the past six years, funded by private equity, we have acquired more than 25 businesses and built the only independent nationwide network, with 60-plus sales and service centers across the US.

We have also learned how to integrate, typically doubling the sales of the companies we buy in three to four years, allowing us to achieve 30% annual compound growth of our own.

The key is our people: the commitment we have to one another and to our customers. We have built a culture focused on being Customer-Centric and Technician-Centric. Half of our 1,100-strong staff are technicians and engineers, and they are laser focused on providing a one-stop shop that covers sales, service and engineering. There is fierce competition in the US market, from small independents to large battery manufacturers, and the customer relationship is where the battle is lost or won. Our front-line technician, sales and application engineering team is what helps us stand out from the crowd and deliver outsized value for customers.

Ground game: forklift power and on-site maintenance

Concentric has a better ‘ground game’ than our rivals. Around 20% of our revenues come from customers we serve on-site all day, every day with over 200 technicians seconded to distribution centers, factories and the like. A skilled engineer paired with the technician team, one that really understands a customer’s operations, is able to offer precisely what they need, often before asked, which is why we rarely lose a customer.

All of this makes us a great platform for MHI, which bought Concentric in 2023. In our traditional business, still over half of sales, we supply batteries for electric forklifts, creating obvious synergies with Mitsubishi Logisnext, one of the biggest manufacturers of forklifts in the US and a leader in electric models.

Forklift fleets are steadily electrifying and within that, lithium-ion batteries that are faster to charge and longer-lasting, are winning share from lead acid ones. Already, they represent 30% of our volumes and more in terms of value.

But they are also trickier to maintain, so Concentric is increasingly providing complete battery management solutions such as GuaranteedPOWER systems, which have evolved into PowerHIVE systems. By expanding battery life, improving safety and reducing downtime, we not only save customers money; we solve a problem that lets them focus on their core business. This market will continue to expand steadily.

Growth game: critical power and data centers

The fastest-growing part of our business, however, and already almost 30% of revenues, is what we call critical power. Here we offer batteries, chargers, uninterruptible power supplies, generators and more to mission-critical infrastructure, such as hospitals, telecom exchanges, cold storage warehouses…and, of course, data centers.

The growth in this market is staggering. As we transition from the Industrial Revolution to the Intelligence Revolution, there is a race to build digital infrastructure that can host the cloud- and AI-based applications that are becoming integral to modern lives.

This is a multi-trillion-dollar opportunity -- some $400 billion is being spent on data center construction in the US this year alone – and it is happening faster than previous transformations like the roll-out of the railways or even cell phones.

It is important to note that with demand far outstripping supply, the data center market is showing considerable stress currently. This means we need to be thoughtful in how we invest and position ourselves.

Nevertheless, I believe that together, MHI and Concentric can succeed. We already have deep, strategic, relationships with data center developers and operators, providing critical backup power solutions and advanced battery systems.

With support from our new parent, we are in a position to broaden our offering by acquiring companies that sell, integrate and service power and cooling equipment – and to apply the ‘Concentric recipe’ in integrating and growing those businesses.

Using their relationships, we can eventually introduce MHI’s own suite of power and cooling technologies, from gas engines to hydrogen-firing turbines to immersion cooling systems. Concentric’s approach is to bring brand independent access to customers so that they can choose the best system configuration in every category, but as Concentric secures even more customers, we provide MHI a unique platform for future equipment success in the US data center market.

As we come to dominate the ‘grey space’ – the power, cooling and fiber equipment that supports the servers in the ‘white space’ of the data center -- we can deepen our relationships, with the specialist developers, and build direct links with ‘hyperscalers’ like Amazon, Microsoft and Google.

In time, we can follow them into international markets. Given the global dominance of the US hyperscalers, data center development around the world is being strongly influenced by standards set in America.

MHI has a deep history of innovative manufacturing and developing market-leading technologies, while Concentric has a track record of building strong sales and service businesses propelled by deep power expertise and a focus on the customer, starting with our technicians. Together, we can take advantage of the mega trends of electrification and data center expansion, both to create a more sustainable society and to drive our combined growth for many years to come.