ABB CEO Outlines Essential Global Challenges

In one succinct presentation, Michel Demaré, CEO and CFO of ABB, outlined many of the world’s outstanding industrial issues in his “New Challenges for Industrial Companies in the 21st Century” presentation today at ABB Automation World 2008 in Houston. 

“We’re also creating a corporate vision and culture where sustainability is central.” ABB CEO Michel Demaré on how his company is addressing the challenges of today’s global economy.

Demaré reported that the primary, interrelated, external challenges for industrial companies are globalization, resources supply and the environment:

• Globalization involves how to compete globally; how to address new players and regional training blocks; and how to develop new products for these emerging regions. As a result, ABB is supporting globalization with a balanced, non-colonial approach, Demare said.
• Resources supply involves how to find enough raw materials; how to use existing ones more efficiently; and how to do it when 15 million more people per year are moving from China’s rural areas to its cities. So Demaré added, ABB is striving to make its participation in the global economy more resource-efficient.
• Environment involves addressing climate change, developing needed protocols and doing it before the 2016 threshold when some estimates project these changes will become irreversible. Consequently, ABB recommends acting now, both internally and externally, to proactively address climate change issues.

“In fact, research indicates that we could reduce future increases in our global energy consumption by 30% to 50% by 2030,” said Demaré. “We’re committed to addressing these challenges, and we have technologies such as low-voltage drives that can help. Low-voltage drives can save 70% on the previous power consumption of many motors, and only about 10% of those that could be installed have been so far.”

In addition, Demaré added that ABB’s main, interrelated, internal challenges are talent, innovation and customers:

• Talent consists of how to find and keep the right people; how to handle the imminent retirement of many engineers; how to preserve their knowledge; and how to recruit and train young engineers.
• Innovation involves how to develop new products and services efficiently and retain competitive edges, while still maintaining price premiums.
• Customer issues center around the perennial task of maintaining and building customer relationships, even as 72% of ABB’s new hires are from emerging nations and must be trained.

To handle the other subjects that globalization touches—such as free trade’s success, new technological impacts, potential global divides and changing demographics—Demaré suggests that citizens should acknowledge the profound benefits of globalization and free trade; recognize that only a global approach allows us to solve some of the world’s most worrisome challenges; fight protectionism, particularly in Europe; and support fair global trade policies. He added that ABB is taking a pro-globalization stance as a corporate citizen; setting an example of establishing a global culture; globalizing and diversifying its business systems; growing beyond “national strategies”; and preparing for disruptions.

To handle the resource and environmental issues it faces, Demaré says ABB is addressing supply challenges by securing access to supply with long-term contracts; diversifying its geographic supply chain; looking for substitutes for critical materials; and reducing its need for critical materials with smarter designs. The company also is offering solutions for energy and environmental challenges; promoting energy efficiency as the best form of clean energy; developing more environmentally friendly technologies; and taking part in “clean technology” marketing.

“We’re also creating a corporate vision and culture where sustainability is a central aspect and permeates R&D, innovation, operations and marketing,” said Demaré, who also presented several specific examples of ABB’s recent projects in this area:

• In pump control, China Steel in Taiwan replaced mechanical valves and added drives to existing fixed-speed booster pump motors to reduced CO₂ emissions by more than 1.4 million kg per year.
• In fan control, the Cruz Azul plant in Mexico replaced control of two 1,000-hp, fixed-speed fans with ABB’s AC drive control, and reduced its CO₂ emissions by more than 2.7 million kg per year.
• For power efficiency, StatoilHydro in Norway replaced gas turbines on its North Sea platform with high-voltage connections to bring hydropower from the mainland, which reduced CO₂ emissions by 230 million kg per year.
• In ship propulsion, ShinNihonkai in Japan fitted two ferries with ABB’s Azipod units, which avoided the need for a propulsion motor, main propeller and rudder, and reduced CO₂ emissions by 68 million kg per year.
• For climate control, the Yokado mall in China installed low-voltage products to manage air conditioning, heating and lighting systems and reduced CO₂ emissions by more than 1.8 million kg per year.
• In the heat and power industry, the Wladyslawowo facility in Poland replaced 10 oil-fired and 110 coal-fired boilers with a plant that generates heat and power from gas previously wasted at a Baltic Sea oil rig, which cut CO₂ emissions by 134 million kg per year.