While flying one day in 2018, a Graco engineer read a short article in a trade journal about a small company developing a new kind of electric engine.

It was a lightbulb moment.

While the engines were being used for larger industrial fans, Dave Thompson, the engineer who is now president of Graco's contractor equipment division, saw how their design might be re-engineered to fit into the company's products.

Graco needed engines like those to improve its products.

Not only did his superiors agree with him, two years later Graco bought the Arizona company, Electric Torque Machines (ETM).

The deal was so small, there was no public announcement. But it has had an outsize effect on Graco's product innovation and its new round of products — those used on factory floors but also contractors applying paints and coatings.

A lighter, quieter engine

The ETM acquisition is now fueling breakthrough advances for Graco's contractor and industrial divisions, which together generate about 75% of the company's $2.1 billion in annual sales.

Known as transverse flux motors, the ETM motors are lighter, quieter and provide more torque.

So if it's in a paint sprayer or machine that applies bonding adhesives on solar panels, it's better for workers ergonomically and it applies the product more evenly.

A typical electric motor is limited in the number of poles it can have because the steel rods are wrapped in copper wire. The rods determine the speed at which they operate and the amount of rotational torque, or pivot, they have.

The ETM motors have 60 to 100 poles because the steel is wrapped around the copper, said Chuck Ensign, the head of ETM.

"It's not changing physics in any way," he said. "It's just doing it backwards."

Once Graco bought ETM, the next step was figuring out how to customize engines to the products the company makes.

The work is par for the course for Graco, according to President and CEO Mark Sheahan, who said on the Ayna Insights podcast in July 2024 that the company's business model is built on adapting its products to customer needs.

Graco was founded in 1926 in downtown Minneapolis, when two brothers were working as parking lot attendants and could not move grease around because of the cold. They invented an air-operated grease gun, Sheahan said.

"The company was really founded on innovation ... and it's really evolved over the decades," he said on the podcast. "The historical focus has always been driving innovation that serves customers, makes their lives easier, solves problems for those customers."

Graco's new product plan is to make small changes and upgrades to products every two to three years and to roll out "breakthrough technologies" every five to seven years. The idea, Sheahan said, is to grow revenue 10% per cycle, with organic growth being two-thirds of that.

The company spent $87.2 million, or 4.1% of revenue, on product development last fiscal year, which included new contractor products that are powered by the ETM motors.

The motors are now in 10 different contractor products, with two new products set to be released this month.

Integrating ETM into Graco

Thompson began his career at Graco in 1986 and spent his career there except for two years in the mid 1990s when he ran his own company. When he read that article on ETM, he was vice president of engineering, a role he held for 14 years.

"Part of the role of the VP of engineering was to plant seeds of potential technologies," said Thompson, who received his associate degree in engineering from Anoka Ramsey Community College and a bachelor's in business from Capella University.

His role has shifted to the operational role of leading the contractor division as the company started integrating ETM and figuring out how to use the technology.

One of those integrations was on the manufacturing end. ETM had used a contract manufacturer to make the motors.

Graco had traditionally bought motors for its products. Now Graco engineers took over motor manufacturing in the company's plants, after some trial and error.

"Honestly. there was probably more engineering and technology that went into that manufacturing line than the team working on the motor," Thompson said.

The Graco products with ETM motors required other modifications and those customized designs and manufacturing are done in-house.

"What's neat is within Graco, it's kind of spread like wildfire in terms of engineers understanding what this technology can do for them and wanting to try to use it in their products," said Ensign, who leads the motor operation.

Now, beyond the paint sprayers, the motors are used, for example, in electric pumps instead of bigger, louder, less efficient air-operated ones.

Seeing the potential

The ETM motors can't replace all industrial applications and Graco continues to buy some motors. But Graco engineers are rapidly adopting ETM motors where they do work.

Transverse flux motors had flummoxed engineers for decades but having figured out the manufacturing Graco is willing to share the technology, potentially creating a new line of revenue. According to Sheahan they examined a few different business models.

"It became really clear to us that, at least with respect to noncompetitive companies, that we should look at a model where we get a royalty or a license and we give them full access to the know-how," Sheahan said recently.

Graco has added to its sales and legal departments to handle potential deals and figured out a business plan, though Sheahan is hesitant to speculate on the long-term potential.

Wider adoption of the technology is no guarantee. Pete Johnson, a portfolio manager with the St. Paul-based investment firm Mairs & Power, said he believes ETM landed with the right company in Graco, which is well-capitalized has the patience to develop the technology.

"If they think this is something that is going to be huge someday, they will continue to support it and so, and I think that's the difference maker for this company, versus somebody else," Johnson said.

This article is part of Idea Lab, an occasional series about innovation. If you know of a recent breakthrough or development in Minnesota, email reporter Patrick Kennedy.