Economic tailwinds pushing US outlook

Automation & Power World press conference offers positive outlook on US market

Guest post courtesy of Bill Rose

One of the traditions each year at Automation & Power World is the “Media Day” and the highlight is always the annual Press Conference. It provides an exclusive-for-press, “state of the union” address with insights from ABB management, not only on the state of the company but the power and automation industries in general.

This year, for the first time, ABB unveiled its financial results specifically for the U.S. market. (See “ABB reports record U.S. revenue, rising 26 percent to $6.7 billion”).  ABB doubled both its revenues and its employee headcount in the U.S. since 2007, to $6.7 billion in revenues and more than 20,000 employees respectively.  The announcement also showed that ABB has invested heavily in U.S. manufacturing and software since 2010, including the acquisitions of Baldor Electric Company, Thomas & Betts, and Ventyx.

North America Region Manager Enrique Santacana reiterated the challenging outlook for the global economy that he presented in the opening General Session earlier, but he also gave an optimistic outlook for the near future in the U.S. energy and industrial markets.  Tailwinds include:

• the rise of shale oil and gas
• grid modernization
• investment in renewable energy
• the rise of data centers
• a possible “manufacturing renaissance” in the U.S.
• an improved and improving housing market

During an extended Q&A, one reporter asked Mr. Santacana, “If you could have the private ear of the White House Administration and Congress, what actions would you implore them to take?”

Santacana – who has served on numerous energy committees with the U.S. Department of Energy, NEMA and NERC– had a ready answer, with two items in particular for which he has a strong passion:  the urgent need for transmission line siting, and energy efficiency.

“Today you have 50 states that have their own regulations and their own way of constructing and running the lines that run through their states,” he noted.  That makes it nearly impossible for power generation to be transported cross country to where the population centers are.

This is particularly true with the rise of renewable in the U.S., and the need to get these massive amounts of wind power produced in the deserts of west Texas, for example, to Orlando or New York City or Dallas. Something needs to happen to give FERC the authority over states here.

Mr. Santacana pointed out the outstanding success of the interstate highway system created during the Eisenhower era, and how these cross-state highways promote commerce nationwide.

“We don’t have such an interstate highway for the power grid, but we desperately need this to enhance energy commerce,” he said.

As for energy efficiency, Santacana noted there’s a strong focus in the U.S. on making buildings and homes more efficient, but not much yet on industrials. Around one fourth of all electricity consumption happens in industrial motors, he said.  How much more efficient could we be if every motor had a drive?

“Having a motor without a drive is like driving a car at full speed with the accelerator all the way down, and using the brakes only for steering,” he said.  “There are hundreds of thousands of motors humming at full speed that need a drive. Imagine the enormous savings if we had those drives in every motor.”  All that’s needed for making that happen, he said, is the proper set of incentives.