Caution, Optimism Combine at ABB Event

Global stimulus packages aimed at infrastructure improvement augur well for ABB, executives say, despite current slowdown in orders.

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ABB Ltd. ( held its Automation and Power World annual user conference March 24-26 in Orlando, Fla., amidst both caution and optimism. The “Power” part of the name was added this year as the Zurich, Switzerland-based company decided to combine its power and automation events. This made sense, given that much of the ABB message over the last two years has been the convergence of power control and process control.

The optimism part of the conference derived from ABB’s position as a provider of electrical power solutions combined with automation technologies, which places it in the forefront of companies that stand to benefit from infrastructure improvements planned as part of global economic stimulus packages. The caution part lies in the slowdown in orders and projects the company has seen over the past couple of quarters, which the company believes may extend for another quarter or so.

The Oralando event was in part, the public coming out for new Chief Executive Officer Joe Hogan. After a career at GE, part of which was in the automation business of GE Fanuc, Hogan joined ABB just last September. Foremost on his mind—and all the officers—was the current state of the economy, and ABB’s performance and prospects.

ABB had a very good 2008 and expects to hold its own in a trying 2009, executives told attendees at the event. The company has a good order backlog and a strong cash position—both of which management believes will help it weather this uncertain economic climate. The ABB executive team has initiated a cost cutting program, but one area is being spared the knife—research and development. R&D spending is projected at slightly more than last year, but Chief Technology Officer Peter Terwiesch was quick to add that the output of the group is also increasing.

Alligator shadows

Hogan likened the economic climate to his early morning run along the golf course prior the conference opening day. “I started thinking, there are alligators in Florida. I wonder where they live. Hmm, I wonder if they would be along the ponds at the golf course. Then every long shadow I saw seemed to be an alligator. Economists are like this right now. All they see are the long shadows, but they don't know what's real.”

Hogan and Terwiesch repeatedly stressed their optimism about the global stimulus packages under development by many countries. In the United States, ABB management has established a team to learn how to deal with the U.S. government and how to help customers get in on the stimulus money. Much global stimulus spending is targeted at the power infrastructure, for which ABB is ideally situated to supply the products and services needed.

In a presentation to the press, Terwiesch stressed ABB’s strength and opportunities in electrical power (transmission, distribution, energy savings and the like), as well as the growing importance of integration—safety/control system integration and power/automation integration. ABB is, of course, poised to exploit both of these latter trends, as well.
Attendance and attitude were both alive and well at the conference. Total attendance was more than 3,300. If the normal rule of thumb applies, about half were employees. That still means major attendance by customers, and ABB managers were smiling about the turnout.

“Smarter” grid

Enrique Santacana, chief executive officer of the North America Region for ABB, granted a private interview with Automation World, and recapped some of the themes. Asked about the so-called electrical “Smart Grid” mentioned frequently in the news, and ABB’s role in it, Santacana responded, “Don’t call it smart grid, but smarter grid. It's not about new equipment, but adding sensors, software, information, communications—much like we do in process control already. What we’re really talking about is putting in an architecture over the grid with interoperability and standards. One benefit will be better end-user decisions on how and when to use electricity. A second benefit is reliability of the grid. Third is extending the life of equipment. Fourth, utilize less peaking generation, a big source of greenhouse gas. Plus, renewable energy sources such as wind power can be better integrated into the grid. This will use more power electronics to stabilize variability of the source. With the [ABB] 800xA [control] platform, we can integrate power management with control. This is an exciting area for us.”

Responding to a question about joining the two ABB conferences, he said, “Putting power and automation conferences together means putting power customers and automation (manufacturing) customers together, too. And the manufacturing people are actually customers of the utility people. This conference gives them a chance to talk and discuss the impact each has on the other.”

The state of the economy is on everyone’s mind. Santacana said, “Regarding the economy, the government needs to spend fast. And the banking situation must be stabilized. The biggest part of our drop in demand is due to projects on hold because of the inability [of customers] to get credit. Mexico and Canada are still strong markets for us. Our slowdown is mostly related to the commercial and residential construction slow down. This affects products such as distribution transformers.”


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