1660604922113 Cg1104 World

Passion Powers ABB to Serve World Needs

April 19, 2011
The Global Economy Is Headed in the Right Direction

Sometimes traditional values and talents from the past are just what you need to survive and prosper in the future.

"ABB has a great legacy of accepting new challenges and programs, and it likes attacking projects that are difficult to do to set the pace in industry," said Joe Hogan, ABB Group president and CEO, in his keynote address today, opening ABB Automation and Power World 2011 this week in Orlando.

This restless aggressiveness is mighty good news for a world facing a boatload of vast and complex energy, infrastructure and economic challenges. Hogan and ABB's president and CEO for North America, Enrique Santacana, outlined many of these global issues and described how the company is responding to solve them.

"At last year's ABB Automation and Power World, we knew the recession was over, but the coming recovery was still hard to see; unemployment was still over 10% in the U.S., and we had a lot of excess manufacturing capacity," explained Santacana. "This year, we're seeing that the recovery is really gaining momentum: U.S. unemployment has decreased to 8.8%, investment in manufacturing is increasing, and there's a lot more enthusiasm about the future."

Santacana added that this growing optimism is checked somewhat by the massive U.S. fiscal deficit, which will likely remain a persistent problem for at least several years. "This is something we haven't faced before, so we'll need to proceed with caution and continue to invest in the fundamentals of our business, in ABB's products and services, so we can continue to thrive in the future," he added. "Of course, these three fundamentals are productivity, grid reliability and energy efficiency, especially in power solutions."

Hogan added that the main economic trends ABB observes are:

  • Global economy headed in the right direction
  • Energy efficiency requirements continuing to grow
  • Industrial productivity needs expanding across the globe
  • Less labor arbitrage available to firms worldwide
  • Rising commodity prices driving increased capital and operational expenditures, especially in mining and oil and gas applications
  • Increasing need and demands for renewable energy
  • Rapidly emerging smart-grid technologies.
"Inflation will haunt all of our businesses—and efficiency is the only way to address that." ABB CEO Joe Hogan on the pressures that increasing demand for energy and other commodities will place on the global economy.Besides improving its own solutions and introducing many new products, ABB has invested more than $5 billion in the past year alone in buying and investing in companies that can help it achieve these fundamental goals. Its recent acquisitions have included Baldor Electric, Ventyx, K-Tek, Insert Key Solutions, Obvient and Jokab Safety. At the same time, ABB is in the midst of building a new high-voltage cable plant in Huntersville, N.C., and its ABB Technology Ventures unit has made investments in ECOtality's electric-vehicle charging technology, Power Assure's energy-efficient solutions for data centers, Industrial Defender's cyber security offering and Trilliant's smart-grid management technologies.

"The question is how do we help drive the productivity that the world requires, especially in developing countries," explained Hogan. "The economic rebound in 2010 has created the strongest environment we've seen in four years, so I'm confident that we'll be able stay on this growth plane in the future."

One of the main reasons this upturn will continue, Hogan reported, is a strong and increasing demand for commodities such as copper, aluminum, oil and natural gas. This will push up prices and fuel capital expenditures and operational expenditures in extracting, processing and delivering these materials—all of which ABB and its end users are preeminently qualified to do, Hogan said. "In the next 10 years, demand for copper is expected to increase by 32%, demand for aluminum will go up 87%, and demand for oil will increase 8%. Already, prices are almost as high as they were in 2008. Previously, it always seemed like North America, Europe and Japan were the main consumers of these commodities, but now the whole world is involved, so demand is much greater."

To build new infrastructures and capabilities to serve the needs of their own consumers, ABB's customers are ordering significantly more automation products. In fact, Hogan adds that orders are up everywhere, including a 25% increase in Europe, 31% in Asia, and 41% in North America.

"With $6.6 billion in revenue, North America is still our largest market, and it's even expected to outgrow China in absolute terms in the next five years," Hogan said. In fact, he reported that U.S. gross domestic product (GDP) is expected to grow by $500 billion from $17 trillion to $17.5 trillion in the next five years, while China's GDP is expected to grow by $440 billion from approximately $7.5 trillion to $8 trillion. "This is why we're so committed to North America, and why we invested $5.5 billion in it from 2009 to 2010."

"For example, Baldor is such an amazingly customer-focused firm that we believed our two companies belonged together, that our two cultures will work especially well together, and that this acquisition really is a merger of equals. We will maintain the Baldor, Reliance, Dodge and Maska brands and not smother them within ABB's brands. Baldor is the supplier of choice in North America, and we want to embrace that spirit and bring it to the rest of ABB in North America."

In addition, Hogan added that ABB will unveil its new synchronous reluctance motor technology in Europe on June 1 and introduce it to the rest of the world later this year.

Other new ABB products and technology initiatives include:

  • Solar inverters
  • More efficient motors
  • Faster, more dexterous robots, such as the IRB 460
  • Green transformers
  • Further development of HVDC technologies and smart grid enablers
  • New-generation AC and DC drives
  • Reinvigoration and re-launch of its Symphony distributed control system for the utility industry.

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