Automation world doubles as ABB rebounds
ABB's AUTOMATION MANAGEMENT staff met the press at ABB Automation World in April. Dinesh Paliwal, who not only is the head of ABB's global automation business, but also head of ABB's businesses in the Americas, and a member of the ABB Executive Committee, was first up. Paliwal repeated over-and-over his mantra that ABB is in North America. He emphasized that he has personally has moved to Connecticut, moved ABB automations global headquarters there, that ABB Americas business unit headquarters was moved to Connecticut, and that ABB understands the North American market is home to the companys largest installed base.
This is a huge change from just a few years ago, when everything ABB did in North America was calculated to make operations run from Switzerland. And it shows. Paliwal noted that ABB has posted nine straight quarters of both revenue and profit growth ending Q4 of 2004. He indicated that the first quarter results for 2005, which had not yet been released, would have no surprises.
Paliwal noted that the ABB breadth of product line is matched by nobody except maybe Siemens, and that's true when you add in the powergen product lines.
Of course, Emerson makes motors and controls for the power industry too, don't forget. And Emerson Process Management is the big tail that wags the Emerson dog, amounting to over 20% of corporate revenues and earnings. Paliwal claimed double-digit growth in North America in 2004, 21% vs. "34% for the market as a whole."
Next up was Greg Scheu, senior vice president for automation products. Hes responsible for drives, motors and instrumentation products. According to Greg, 2004 was the first full year return to profitability for the instrumentation group since the consolidations that killed ABB's heritage brands like Taylor, Fisher and Porter, K-Flow, Kent and all the others.
The drives business is growing at 34 times the market, which should make Siemens nervous. When asked, Scheu admitted that "Maybe we were a little in advance of the market" in getting rid of the hugely successful brand names they acquired. They've decided to go back and try to rebuild the continuity to save whatever brand identity they have left.
Roger Bailey, his opposite number for Process Automation (ABB's systems business) was even more blunt. "To be honest," he said, "until the introduction of the System800xA last year, I think many of our employees were reluctant to admit that the Mod, Harmony, and other products were really ours, because they didn't know how we were going to handle legacy systems. Now they know, and I think you will see a change."
Process automation, too, is growing "faster than the market." Who isn't? Every other big automation company is reporting the same thing, so somebody is either lying or losing market share. ABB believes that they are taking market share from the smaller players, the Tier-2 automation suppliers.
Interesting, the orders Roger Bailey reported on included several QC systems and a Technical Information System, using the System800xA platform. This bolsters ABB's claim that the System 800xA is more than a control system, that it is a platform for information management from the plant floor to the enterprise.
On large projects ABB is using its contracting division in Italy to compete with the traditional A/E firms and act as a full service MAC. MAC, is the TLA (Three-Letter Acronym) being sponsored by Emerson and Siemens, "Major Automation Contractor" ABB clearly has jumped on the bandwagon.
Bo Elisson, from ABB's biggest "niche" business, and group vice president of Manufacturing Automation reported on robots. Although he clearly differentiated himself from the "we are North America" drumbeat ("We are global because our customers are global," he said), he noted that the group did 35% of its business in North America in 2004, including several large refit projects in the automotive market. He also noted that the non-automotive share of his robot sales was up to 34%, mostly through partner sales, which increased 82% in 2004. Apparently robots aren't just for making cars anymore.
Winding down, the session focused on ABB's Performance Services business. Paliwal noted that ABB is "number one in performance services in Europe, and we want to bring that same skillset to the Americas." He described five pharma plants in Munich for which ABB does contract O&M and performance enhancement.This puts them squarely in Emerson's sights in the U.S. and Latin America. ABB, like Emerson, doesn't seek to run the plant, just the maintenance, calibration and operating performance aspects.