Keeping it simple
Keynote addresses at Automation & Power World highlight the virtues of a straightforward business strategy
ABB CEO Ulrich Spiesshofer began his March 3 keynote address at Automation & Power World with a family anecdote about his mother’s response to his being appointed to his current position. After listening to him explain what ABB does—for several minutes—she interrupted and asked, “that’s very nice, son, but can’t you explain all of this in simple terms?”
Mrs. Spiesshofer would probably have approved of the one-sentence definition of ABB’s business that her son delivered to the audience in Houston.
“ABB provides power and automation solutions to utility, transport and infrastructure, and general industry customers, and we do it globally.”
It doesn’t get much simpler than that, but this straightforward description maps to a global market of $600 billion today, with projections running to more than $750 billion by 2020. As Spiesshofer noted, ABB is “well positioned in attractive markets.”
Look no further than North America, where the company has deployed more than $10 billion in capital over the last five years. Baldor (motors, mechanical power transmission), Ventyx (enterprise software), Thomas & Betts (low-voltage products) and Power One (solar inverters)—these major acquisitions combined with organic growth in the region have fueled a 120 percent growth in sales between 2010 and 2014. Over the same time period, engineering sites proliferated from around 30 locations to more than 100 while overall headcount jumped 125 percent.
Americas President Greg Scheu followed with a brief presentation that fleshed out the regional story, with particular emphasis on the US. He provided several compelling examples of how the “big shifts” in power (e.g., microgrids, renewables, new business models) and automation (e.g., internet of things, analytics, advanced manufacturing) are manifesting in what remains ABB’s biggest growth market.
In power, for example, Scheu cited an innovative energy storage project ABB completed at SEPTA, the Philadelphia-area transit operator. A battery energy storage system captures energy from braking trains not only for use on the SEPTA system, but also to provide frequency regulation services back to the surrounding grid. In Alaska, ABB delivered a microgrid solution that allowed Kodiak Island to accommodate economic growth (i.e., the installation of a larger crane at the main port) using virtually 100 percent renewable power.
But Scheu was quick to point out that there is still much that can be done to improve efficiency and productivity in traditional businesses, too. He pointed to a new steel plant being constructed in Arkansas by Big River Steel where ABB is supplying high-efficiency Baldor motors as well as drives, transformers and rectifiers. The $1.3 billion greenfield project is proof that manufacturing, even in basic materials like steel, can still thrive in North America thanks to advances in efficiency and flexible plant design.
If there was one takeaway from both executives’ remarks it was that ABB has a lot of room to run in some very lucrative markets. And even if it wasn’t stated expressly, it’s clear that the company’s focus on its core competencies of power and automation has paid off.