Every time I go to a press conference, I am reminded about the Jimmy Buffett song, “Fins to the left, fins to the right, you’re the only game in town.”
ABB’s automation management staff met the press this morning. First they fed us, to sort of take the edge off. I guess the idea was that the feeding frenzy would be less intense if we all were torpid after a good big breakfast.
Dinesh Paliwal, who is not only the head of ABB’s global automation business, but also head of ABB’s businesses in the Americas, and a member of the ABB Executive Committee (and clearly a candidate for bigger things at ABB, don’t you know…) was first up. Dinesh repeated over and over his mantra that ABB is in North America. He noted that he has moved to Connecticut, that he has moved the ABB automation global headquarters to Connecticut, that he has moved the ABB Americas business unit headquarters to Connecticut, and that ABB understands the North American market is their biggest and their highest installed user base.
This is a huge change from just a few years ago, when everything ABB did in North America was calculated to make operations run from Switzerland. And it shows. Dinesh noted that ABB has posted 9 straight quarters of both revenue growth and profit growth ending Q4 of 2004. He is, of course, under the gag rule until the Q1 2005 numbers get released next week, but *nod nod* and *wink wink* we shouldn’t expect bad surprises then.
He noted that the ABB breadth of product line is matched by nobody except maybe Siemens, and that’s true when you add in the power gen product lines. Of course, Emerson makes motors and controls for the power industry too, don’t forget. And Emerson Process Management is the big tail that wags the Emerson dog…amounting to over 20% of corporate revenues and earnings.
Dinesh claimed double digit growth in North America in 2004, 21%, vs “3-4% for the market as a whole.”
Now, not every company can be, as they all claim, “the leading player in (insert name of market vertical)” so what is going on here is that everybody, ABB included, is playing fast and loose with the statistics. Of course, Mark Twain was right about them, when he quoted Benjamin Disraeli, “There are three kinds of lies: lies, damn lies, and statistics.”
But what this means is that ABB is finally back. After nearly going under, it is refreshing to see happy faces uniformly at the top.
Next up in the box was Greg Scheu, senior vice president for automation products. He is responsible for drives, motors, and instrumentation products. 2004, according to Greg, was the first full year return to profitability for the instrumentation group since the consolidations that killed ABB’s heritage brands like Taylor, Fisher and Porter, K-Flow, Kent, and all the others.
The drives business is growing at 3-4 times the market, which should make Siemens nervous.
When asked, Scheu admitted that “maybe we were a little in advance of the market” in getting rid of the hugely successful brands they acquired. They’ve decided to go back and try to rebuild the continuity to save whatever brand identity they have left.
Roger Bailey, his opposite number for Process Automation (ABB’s systems business) was blunter. “To be honest,” he said, “until the introduction of the System800xA last year, I think many of our employees were reluctant to admit that the Mod, Harmony, and other products were really ours, because they didn’t know how we were going to handle legacy systems. Now they know, and I think you will see a change.”
Process automation, too, is growing “faster than the market.” Who isn’t? Every other big automation company is reporting the same thing, so somebody is either lying or losing market share. ABB believes that they are taking market share from the smaller players, the tier 2 automation suppliers.
Interesting, the orders Roger reported on included several QC systems and a Technical Information System, using the System800xA platform…not exactly process control, now is it? This at least bolsters ABB’s claim that the System 800xA is more than a control system, that it is a platform for information management from the plant floor to the enterprise.
Competitively, on large projects, ABB is using its contracting division in Italy to compete with the traditional A/E firms and act as a full service MAC. MAC, you will recall, is the TLA being sponsored by Emerson and Siemens, “Major Automation Contractor.” ABB clearly has jumped on the bandwagon.
Last, from ABB’s biggest “niche” business, Bo Elisson, group vice president of Manufacturing Automation, reported on robots. Although he clearly differentiated himself from the “we are North America” drumbeat (“We are global because our customers are global,” he said), he noted that the group did 35% of its business in North America in 2004, including several large refurbish projects in the automotive market. He also noted that the NON-AUTOMOTIVE share of his robot sales was up to 34%, mostly through partner sales, which increased 82% in 2004. So robots aren’t just for making cars anymore.
Last, the conversation turned to ABB’s Performance Services business. Dinesh noted that ABB is “number one in performance services in Europe, and we want to bring that same skillset to the Americas.” He described five pharma plants in Munich for which ABB does contract O&M and performance enhancement.
This puts them squarely in Emerson’s sights in the US and Latin America.
ABB, like Emerson, doesn’t seek to run the plant, just the maintenance, calibration and operating performance aspects.
And a fine time was had by all.