ABB announced Dec. 20 that it's reorganizing three divisions to complete a business model change for engineering, procurement and construction (EPC) at the end of its 2017 transition year. These shifts will cost its power grids, industrial automation, and oil and gas EPC businesses about $75 million each.
“We're taking decisive actions to complete our EPC business model change as we end our transition year," says Timo Ihamuotila, CFO at ABB. "These actions are in line with our strategy to shift our center of gravity towards strengthened competitiveness, higher-growth segments and lower risk.”
In its Power Grids division, ABB has agreed to form a joint venture with SNC-Lavalin for electrical substation EPC projects. SNC-Lavalin will have majority and controlling interest, and the new entity will leverage ABB’s power technology leadership and SNC-Lavalin project expertise to capture opportunities for profitable growth.
In its Industrial Automation division, ABB previously announced an oil and gas EPC joint venture (JV) with Arkad Engineering and Construction Ltd., an integrated EPC contractor for energy in Saudi Arabia. This transaction was scheduled to close on Dec. 31.
Meanwhile, ABB’s oil and gas EPC business will be transferred into the new JV company, in which Arkad will have majority and controlling interest. The new firm, Arkad-ABB S.p.A., will provide a full range of integrated EPC services for oil and gas plants. It will build on more than 50 years of experience in oil and gas EPC, and the successful delivery of more than 300 projects globally.
Finally, in its Robotics and Motion division, ABB has decided to wind down its turnkey full train retrofit business, beyond meeting current contractual commitments. Robotics and Motion will continue its role as innovation partner for the rail industry.