ABB keynote speeches

May 9, 2006

Alan Boeckmann

Boeckmann is Chairman and CEO of Fluor Corporation. His talk was entitled "Collaborating for Success." Boeckmann proudly said that in the interest of making money and avoiding risk, Fluor has reduced the number of approved suppliers they use from 13,000 to 1500. Fluor, he noted, is a procurement driven company, and procurement drives the engineering process. This is also true at Dell, where engineers can only design from the limited palette of components the procurement ...

Alan Boeckmann

Boeckmann is Chairman and CEO of Fluor Corporation. His talk was entitled "Collaborating for Success." Boeckmann proudly said that in the interest of making money and avoiding risk, Fluor has reduced the number of approved suppliers they use from 13,000 to 1500. Fluor, he noted, is a procurement driven company, and procurement drives the engineering process. This is also true at Dell, where engineers can only design from the limited palette of components the procurement department lays out for them. Since my Dell laptop mysteriously died while I was gone last week, and is a big box of rocks at the moment, I question how well that works in a critical service chemical or petroleum plant design. Clearly, if you want state-of-the-art best-of-breed for EVERY component in your plant, you should not do business with Fluor. If you can deal with good enough, Fluor's your man. Boeckmann whined several times about increasing pressure from owners to cut costs, and the fact that for the first time in a generation, EPCs are being asked to shoulder an acceptable level of risk, instead of doing the "scarecrow point" from the Wizard of Oz movie anytime something went wrong. He noted that he is dealing with more competition, high costs and lack of availability of people, materials, and stuff, in a boom he estimates to continue to 2010. He also noted that more than half of his suppliers are low cost country sources, LCCSs, but did not note how well the EPC procurement driven model is handling quality standards that by all indications are lowering dramatically when this method is used. He noted that Fluor, in a spirit of generosity, has trained over 250,000 indigenes (as he put it) to Fluor's standards of excellence in design and craft positions. Mark Taft quietly brought us back around to the real issues after Boeckmann finished by noting, "Business is all about people..." I make no secret of the fact that Mark Taft is one of my favorite people. I cover ABB professionally, but Taft has something extra. He made a very quiet point of that this morning, by wearing both his Habitat for Humanity Hammer pin and a HfH tie...and didn't say a word about them. But I will note them.

Dinesh Paliwal

Dinesh Paliwal is becoming President of about damn near everything at ABB. I wonder if he sleeps, with all the hats he is wearing. One of the four strongest top leaders of automation companies (in my opinion, which it seems Fred Kindle, ABB's Chairman, shares) Dinesh talked about "Performance Culture" and how ABB is performing. "We made money in the USA for the first time since 1988," he said. The litigation about asbestos is over, and the Lummus litigation is on track to go away too. Bond ratings have been raised to investment grade, and sales are double digit growth. Dinesh noted that he has a "bias for action." This, he says, is what makes a performance culture work. He went on to take notice of the fine performance of the ABB employees during Hurricane Katrina and Rita and the tsunami in East Asia in 2005. Employees slept on factory floors, in ships, on boxes...helping to get clients up and running again, to provide electricity and water to refugees, and the ABB Foundation raised and matched $500,000 from ABB employees for Katrina etc. relief. Dinesh will be leading a discussion on the effects of globalization on Thursday. It is of note that both Boeckmann and Paliwal talked about the growing disparity between rich nations and poor ones, between rich people and poor people. They didn't say much about how to do something to end this increasingly divisive problem, but at least they tried to bring it to top of mind.

Rory Johnson

The last keynote speaker this morning was Rory Johnson, the automation leader at Weyerhauser, who works in the most beautiful corporate headquarters of any company in the USA. If you've never seen this magnificent Frank Lloyd Wright designed building in Federal Way, WA you should, and if you have, we drool together over the magnificent place to work Wright created. Johnson talked about something really important: far more important than assigned risk to EPCs. He talked about using the control system to be the medulla oblongata of the plant...the autonomic nervous system, that keeps the heart beating and lungs blowing, and all the normal functions within limits. He pointed out, as I have, that this allows the operators, engineers and managers to focus on what they go to work for: to make paper...and money. Beginning with their relationship with ASEA over 20 years ago, they have been evolving at Weyerhauser a strategy for continuous innovation in a single integrated control system that controls the paper machine, the sensors and control loops, the variable speed drives and other automation systems, and the plant quality and maintenance database as an integrated whole. According to Johnson, ABB's flexibility is the key to their having been able to do that to the present day. He left us with some words of wisdom: --Don't be afraid to push the design envelope --Beware of salespeople who push "rip and replace" upgrade strategies --Put the supplier to the test to recommend a single automation solution.

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