PurposeTo present results of research closely linked with real life applications. It resumes work of a period of about two years.Design/methodology/approachApplying the finite‐element method (FEM) the impact of balancing kerfs in the bars of squirrel‐cage rotors of a small scale, mass series induction machine (IM) is studied. For the analysis and design optimization of the IM both, 2D electromagnetic, multi‐slice and 3D structure‐dynamic models are considered. Introducing and applying a novel 2D‐3D force‐transformation scheme, all possible balancing variants of the IM are studied in terms of electromagnetic and mechanical behaviour.FindingsThe obtained results lead to a significant improvement of the studied IM. In fact, it is found, that the method of balancing the rotor by carving the rotor bars results in higher unbalanced pull rather than reducing it. This is due to electromagnetic unbalance caused by balancing. Hence, the IM is no longer balanced in series production. This again leads to a major economic benefit.Research limitations/implicationsUsing the FEM for simulation of structure dynamic problems is often limited to how the boundary layers are handled. In real life materials are not “connected” but glued or clamped. Therefore, the behaviour can only be adopted by manipulating the material parameters derived from iterative parameter adoption by measurement.Practical implicationsOwing to the findings the IM is no longer balanced in series production, leading to a significant reduction of costs. In general, the applied methods can be used for the analysis and optimization of any kind of manufacturing or tolerance problem of electrical machines such as various kinds of eccentricity, punching kerfs, broken bars, magnetization errors in permanent‐magnet machines, etc.Originality/valueThis contribution gives a close insight of how to study the impact of manufacturing and tolerance problems of electric machinery, applying the method to an IM with balancing kerfs.