ABB Celebrates Turnaround

June 1, 2006
“The industry must be like the redwoods in California. They have a shallow root system but they are tremendously intertwined so that when a storm comes, they can stand because they depend on each other.”

“The turnaround is complete,” proclaimed Dinesh Paliwal, ABB president of global markets and technology, at his keynote address to the annual users conference May 8-10 in Houston. ABB (, the heavyweight Swiss-based automation provider, recorded double digit growth in 2005, and was rewarded with a doubling of the share price and an upgrade of bond ratings by Moody’s and Standard & Poor’s. Further, the asbestos lawsuit problems inherited from the acquisition of Combustion Engineering (since sold) have been resolved. “Now we are aiming for profitable growth for us and our stakeholders by fine-tuning our organization,” Paliwal continued.

Cited as examples of growth and progress are partnerships with Carnival Cruise Lines, the U.S. Postal Service, DaimlerChrysler, Pemex in Mexico and HydroQuebec in Canada. Addressing the service aspect of the business, Paliwal noted, “We must have one standard of service no matter where customers may be.” So ABB is forging all of the North American service organizations into one. Now customers just have one 800 number to call for all service requests.

“We want to shape a performance culture,” added Paliwal. He said that this will happen through focus on core values. The most significant is “people power.” ABB is moving to strengthen its people assets through hiring talented people, while creating an environment of diversity and respect. Next is a focus on building the health of the people. Management underwent mandatory health awareness training and more than 7,000 employees have completed online health and safety training. The next value is bias for action. Paliwal cited the charitable spirit of ABB’s employees, matched by donations from the ABB Foundation.

The conference themes were collaboration and migration, and keynote speakers carried it along. Alan Boeckmann, chairman and chief executive officer of Fluor Corp. (, Irving, Texas, told about 2,500 attendees, “To meet today’s challenges, companies need to increase collaboration. Risk allocation is the first key collaborative item. Owners have shifted this to contractors. If a contractor misses or underestimates a project, then the contractor could possibly find itself out of business.”

Boeckman called for a collaborative effort to spread the risk, noting that all parties must work closely on capital projects even earlier in the process. “Contractor, owner, technology provider, must all estimate the risks,” he said. “Then there must be greater use of partnerships and alliances. Put professionals in charge, those who understand the requirements and challenges of a project. Contractors need to be compensated for additions and changes to the scope of the project.”

Boeckman noted that “the industry must be like the redwoods in California. They have a shallow root system but they are tremendously intertwined so that when a storm comes, they can stand because they depend on each other.”

In another keynote, Rory Johnson, director of design and process engineering at Weyerhaeuser (, Federal Way, Wash., advised being mindful of the importance of automation and how it influences decisions. “It’s hard to remain competitive just by reducing costs,” he said. “Automation can be an important component of cost reduction, plus providing a technology-based advantage we’re all seeking. It plays a critical role in uptime, safety and environmental regulations.”

“The knowledge gained from good automation strategy can hold costs down in the bust times, as well,” Johnson said. “Engineers need to spend time optimizing controls and sensors and less time on answering alarms, tuning and repairing and replacing equipment as mean time to failure increases. The Holy Grail is set it and forget it.”

ABB Chief Executive Officer Fred Kindle gave the closing keynote, reinforcing Paliwal’s earlier remarks on the positive results and outlook for the company. “We were facing serious problem four years ago, but met the challenge,” Kindle stated. The key word is execution, he said, but also noted that “the real important thing is the motivation of the people. If people start smiling and feel proud, then progress can be made.”

Linda Sanford, senior vice president of enterprise on demand transformation and information technology at IBM Corp. (, Armonk, N.Y., reported on a survey of nearly 800 chief executive officers conducted globally by IBM account executives. CEOs surveyed believe that they must radically transform business operations. The common denominator among the responses was the need for innovation, and the executives believe that collaboration and partnering are the keys to innovation.

Post survey analysis showed a strong link between collaboration and financial performance. Sanford left one final thought: Don’t mistake collaboration for consensus building. That latter method can both slow down the process and water down the outcomes, she said. Collaboration is involving people, soliciting ideas and taking the best that filters through the process.

Gary Mintchell

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