"One ABB" Is Working

May 18, 2010
ABB Talks about the Company's Successful Development of Engineering Centers in India and China

Walt Boyes, Control's editor-in-chief, caught up with Veli-Matti Reinikkala, president of ABB Process Automation and a member of the ABB group executive committee, for a far-ranging interview at this week's ABB Automation & Power World in Houston.

"I am the most pessimistic of us," Reinikkala said, "and I think we are starting to see the recovery. Our base orders are increasing. We've had increases in bookings since October. Our order funnel spreadsheet lists are getting longer, and the probability of order numbers are getting higher. We had a great March."

"It was odd," he said. "We had expected that the capex business would go way down, and it did. What we didn't expect was the opex and the services business would also go way down. It was as if our customers decided not to spend any money at all. We would talk to customers, and they'd tell us there was no money for anything right now, and for us to just tighten the belt and wait. They didn't buy spares. They used up what they had on hand. They didn't do any upgrades. They only did with what they had to. We had expected that the services business would stay up and maybe increase a little, but it didn't. Now it is coming back," he said.

"They are very good, and they are getting better." ABB's Veli-Matti Reinikkala commented on the company's successful development of engineering centers in India and China."It is good to have external things to talk about," Reinikkala said. "For a while we were only talking about internal stuff."  Reinikkala went on to talk about ABB CEO Joe Hogan's much publicized "One ABB" initiative. When Hogan took over as CEO in late 2008, he found that ABB was still in great part made up of the fifteen or sixteen companies that had been acquired in the 1990s and early 2000s. He immediately began a program to reform this and find synergies between groups and divisions. "Joe installed setups between divisions and key partners that have made working together possible," Reinikkala said. "One ABB is working very well. It is a process, and it is ongoing, but it has been worth it."

"This is different from the reorganization of the divisions we did recently," Reinikkala said. "For example, moving instrumentation into the process automation group—it was a decision that, after we did it, we realized we should have done it long ago. It has given us the ability to offer a more complete solution and offer it to a higher level at our end-user customers. And it is the reason we acquired Ventyx—to be able to offer an end-to-end solution."

ABB is finding that its engineering and R&D centers in India and China are becoming more important as the company continues to globalize. "We have brought them up to a world-class level for both integration and product development," Reinikkala said.  "We seem to do software better in India and hardware better in China," he went on, "but we now have more engineering staff in India and China than in Europe." When asked if he noticed any deficiencies in their education or preparation, as some of ABB's competitors have noted about their own Chinese and Indian engineering groups, Reinikkala said no. "They are very good, and they are getting better," he said.

After nearly 10 years, ABB's technology partnership with the Dow Chemical Company is still bearing fruit. "We're both very happy with the partnership," Reinikkala said. "The Dow Chemical Company gave us some excellent features for the System 800xA, and great insights into how control systems could be made to work better. Our partnership is still going strong."

Boyes noted that in the list of combined process control and power control wins that Peter Terwiesch, ABB CTO had shown during the press briefing, none of the projects were in North America. "I don't think it is because things are done differently here," Reinikkala said. "I think that in some parts of the world there is much less infrastructure, so they can take chances more readily. What we've seen is some North American companies have ordered systems outside North America, and we believe that when they see that the designs work the way we say they will, they'll bring them here as well."

Reinikkala went on to predict, "As we move forward with the 'smart grid,' we'll see opportunities for making smart substations, and then we'll see more of the integrated automation and power projects."