On Climate Change, DC Power and New Life for Symphony

What Is the Biggest "Megatrend" Today?

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 2011 ABB Automation & Power World ABB LinkedIn
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Answering questions on a variety of subjects relating to ABB's current focus and view of the future, Joe Hogan, CEO of the ABB Group, spent an hour in a "Town Hall" setting with an audience of users, analysts and interested parties at a Tuesday afternoon ABB Automation and Power World session this week in Orlando.

Asked what he thinks is the biggest "megatrend" today, Hogan zeroed in on climate change and its human impact. "Call it what you want, but the world will move towards more energy savings. No matter what, whether it's the Copenhagen or Kyoto protocols, more than 50% of that CO2 reduction is from energy savings."

Expanding on remarks from earlier in the day that illustrated ABB's expertise in DC power, Hogan endorsed DC power as a market disrupter, adding, "I'm not saying AC power is dead…but look at the lights in here," said Hogan. "Those are LEDs. Right now we're inverting AC to DC to run those lights. My role is to look for disruptive things and see what's changing and what role we can play in that. There's a strong direct current literacy and capability in ABB. And we see a pull from the market happening more and more. If you look at renewable energy, whether it's solar or wind, it's coming off as DC, and we have a lot of technology geared around that. I talked about data centers this morning, and the idea that you want to invert AC power five times before it ever gets to the server banks is kind of ridiculous. Further, why would you ever run a ship on AC? It's 25% more efficient to do that with DC.”

While much attention has been given to the motors aspect of the late 2010 Baldor Electric acquisition, Hogan was asked if the mechanical pieces of the Baldor business, such as Dodge, fit in. "It's a good fit. It's kind of what we do. We want to grow it, we'll invest in it, and I think we can internationalize it more because of our broader channels."

Later Hogan talked about the acquisition process, saying he learned far more from acquisitions that didn’t work. "The biggest mistake you can make in acquisitions is arrogance," Hogan said. "We'll show you how it's done. Well, you have to find and leverage the strengths in each area, and sometimes it's reverse integration that works best."

Asked about Rockwell Automation, as is usually the occasion when acquisitions are part of a growth strategy, Hogan said that ABB doesn't need to buy it. "Discrete manufacturing is changing. It’s not just PLC-driven controls. I don't think we need Allen-Bradley. We can peacefully co-exist."

Hogan admitted to being stunned by what ABB did to the Elsag-Bailey Harmony and Melody platforms "because we thought we'd have a universal process automation platform that would take care of everything." So, said Hogan, ABB came to realize it needed to rescue the Symphony product line and bring it back as an integral piece of the ABB offering. "Now, we're not looking for another platform," added Hogan. "We have enough, and we can apply it to certain markets, and we can optimize what we have. I'm not a 'grand unification' theorist about process automation platforms. Nothing can do everything."

Responding to concerns from a paper industry audience member who said that Stuxnet-type vulnerabilities are a scary new animal for them, and who wondered what ABB will do to help protect them, Hogan said ABB tore the virus apart and marveled at its complexity and sophistication. "Like any good competitor, we’ll tell you we think our controller has less vulnerability than a Siemens controller, but that’s kind of a ‘prettiest pig’ contest. We all have vulnerabilities—you can only listen to your engineers so much."

Hogan said ABB has a process to address and reduce vulnerabilities, but you'll never eliminate them. "That's why we invested in Industrial Defender," he said. "I'm not trying to create business where it shouldn’t be, but we see [these attacks] as a huge risk. We all built control systems for years without the thought that someone would come along and attack them. However," Hogan added, "the biggest risk I see is not from the outside world, but from within, so something like Industrial Defender is important to alert whenever anomalies show up in your control system."

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