ABB Media Event

May 9, 2006
Unfortunately I wasn't on my best behavior at the ABB Media Event, since walking in, I noticed that they were announcing to all the media a new product I'd been promised an exclusive for Control and the other Putman magazines on...but I did take really diligent notes. The bottom line, according to Dinesh Paliwal, is that ABB is back. The stock is up over 100%, asbestos is gone, Lummus is in the final stages of reorganization, they've made a profit for the first time since 2000 with 100% organic...
Unfortunately I wasn't on my best behavior at the ABB Media Event, since walking in, I noticed that they were announcing to all the media a new product I'd been promised an exclusive for Control and the other Putman magazines on...but I did take really diligent notes. The bottom line, according to Dinesh Paliwal, is that ABB is back. The stock is up over 100%, asbestos is gone, Lummus is in the final stages of reorganization, they've made a profit for the first time since 2000 with 100% organic growth and 14 consecutive quarters of both bottom line and top line growth, even through not so good economic times for part of that. This, he averred, was due to the inherent strength in the corporation. Orders are up 21% globally, 26% in North America. Now this may be deceiving a little bit, because ABB North America seamlessly integrates its Canadian, US and Mexico units into a single P&L.. but what this means is that Canada and Mexico are buoying sales for North America. Revenues in North America are up 11% and there have been 9 successive profitable quarters. Paliwal again reviewed ABB's good corporate citizenship, which I talked about earlier today. Succeeding in North America is critical to ABB, there is greater potential in the NAFTA market than even in China, Paliwal said. He was told years ago by a European ABB board member, "Don't you know that 75% of european companies don't make money in the US?" And why is that, your helpful editor inquires? Well, Paliwal dropped the subject quickly but the answer is clear. Most European companies have not a single clue how sales and marketing are done in North America, and that there are significant differences between states, not to mention between the US and Canada and Mexico. Once upon a time, your humble editor had a very long, beer-fueled conversation with the President of the US subsidiary of a German company (who shall remain nameless to spare them the embarrassment-- ask me at a party some time). After a very long discussion about the differences in selling field sensor devices in the US and Germany, the executive said, "Well, it shouldn't work that way, therefore it doesn't work that way." What is clear is that Dinesh Paliwal doesn't agree with that executive, and if Dinesh doesn't agree, ABB doesn't agree. Dinesh has gone out on a big limb and pegged his ability to rise in the ABB organization on his bet that the North American market can do what he says for ABB: -It is the largest market in the world, still -It is the largest economy in the world -it is the largest ABB installed base in the world, with 10 of 30 ABB Group Accounts located in the US. Paliwal went out of his way to get us to notice that the entire ABB Executive Committee, many members of the Board of Directors, and most of the highest technical managers are in attendance this week. "We're listening," he repeated. The ABB folk went through a litany of new projects: Dupont/First Chemical-- Pascagoula: ABB provided almost instant replacements for 300 drowned transmitters in the days after Katrina Two of the big oil sands projects: CRNL Horizon (that would be Al Chan) and Devon Energy (as previously noted, Trent Mullin is here at the meeting) have made big purchases...Chan buying field instruments from ABB, and his DCS from Emerson, so he can do that best-of-breed stuff that Fluor doesn't want you to do, because the EPC doesn't make as much money. Kimberley Clark- Mexico just bought a big pot full of drives. Noveon Chemical in Louisville, KY upgraded an old DCS into System 800XA ...and then there is Pemex. Pemex is ABB's shining star customer in the Americas. They've forged a significant partnership with both Pemex and Pemex's master contractors like Dragados. ABB's largest Foundation Fieldbus implementation is at a Pemex refinery. Onto non-process related businesses quickly. ABB is still flogging robots, and now into more industries than automotive: Kraft, Estee Lauder, and other non-carmakers are buying robotic systems from ABB. Paliwal, whose heart appears to be in robots, talks about the perfect night shift employee...a robot. He says he is making "robots that see" and "robots that feel" (vision guidance and force control). In Belvidere IL, at the old Neon plant, Daimler Chrysler has installed a robotic assembly line with 780 robots, with 100 percent flexible programming. This plant will be turning out Calibers and the two new Jeeps by the end of the year, with the ability to change models on the fly every 45 seconds. That's right. 45 second model changes. Yeep! Service is now 20% of ABB revenues in North America, and, like every other automation company, they want to increase the blood flow so they can get rid of being paid $/hr for service and concentrate on "value based service" whatever the heck that means. ABB now has one service business, and one 800 number for service for all North America. So, I guess you might be talking to a robots guy to fix your flowmeter? One can certainly hope not. ABB is pushing their "full service" concept: contract management repair and operations for industrial assets. This is a big deal in Europe, so naturally, they think it ought to be a big deal in North America as well. The jury is well still out on this one, even though they've landed three accounts. Only one of them, International Paper, is a traditional US based company. INCO and SAPPI are European companies that want to do in North America what they do in Europe.

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