From the Field - ABB Automation and Power World 2011

  • May 11, 2011
  • Feature
May 2011
By Bill Lydon, Editor
April 18-21, 2011 - Orlando, FL
ABB Automation & Power World 2011 had a record number of participants totaling more than 4,200. The event featured over 400 educational workshops and hands-on training sessions, over 45 customer-presented case studies, and an exhibition of ABB and partner products.
Mark Taft, Sr. Vice President and General Manager - Power Generation North America, opened the event. He noted that the conference reminded him of this quote by Thomas Edison, "I shall make the electric light so cheap that only the rich will be able to afford to burn candles.” He explained that this was a paradigm shift at that time and just as we are facing challenges and paradigm shifts centering on energy today. “We are facing a change, in my view, as profound as the one Edison professed,” said Taft. “All of us are going to be affected by this…focus on energy as a raw material…” He described how the power industry will need to adapt to working with renewable sources of energy and transmission. Taft challenged attendees to embrace the paradigm shifts.
Enrique Santacana, Region Manager of ABB North America, congratulated the 2011 Customer Advisory Board for designing Automation & Power World 2011. Santacana reflected on last year, “We thought the recession was over but many of us were not seeing the recovery taking palace and most of our business still lacked demand.” “What a difference a year makes. It is not as strong as we would like it to be but never the less it is going in the right direction. The demand for many of ABB businesses is going up.”   He suggested that there are three fundamentals to focus upon - productivity, reliability, and efficiency. “Particularly at the conference energy efficiency,” noted Santacana.  “We (ABB) have invested over $5 billion in North America on top companies that precisely address productivity, reliability, and efficiency.” ABB is currently building a $100 million plant in Huntersville, North Carolina to manufacture high-voltage transmission lines power cables.
Joe Hogan 2011
For the third year at A&PW, Joe Hogan, CEO of ABB, shared information and thoughts. Hogan reviewed the ABB 2010 business noting a return to organic growth in the second half. There is a return to long term trends of increasing productivity, energy efficiency, and grid reliability. 2010 ended with $31,589 million in revenue, and net income of $2.56 million. ABB renewed merger and acquisition activity with over $6.5 billion invested in key growth areas including the purchase of Baldor. 
Hogan shared ten year economic projections for 2010-2020:
  • 11%  Population Growth
  • 17%  Food Demand Growth
  • 15%  Primary Energy Demand Growth
  • 32%  Copper Demand Growth
  • 87%  Aluminum Demand Growth
  • 8%   Oil Demand Growth
Hogan pointed out that the production in low labor countries will become increasingly less effective citing labor cost increases in China of 20% a year.
Customer Satisfaction Measurement
ABB has put together a customer satisfaction survey to ask customers how they feel about ABB and if they would recommend ABB to others. Hogan stressed the simplicity of the survey to get quick and frequent feedback to understand and address concerns. Hogan emphasized, “Here is my commitment to you, we can’t solve all our problems in a day, but what you will see is urgency and focus and strong communications in what we are doing about your problems.”
Direct Current
“We are seeing an incredible resurgence of DC technology,” said Hogan. He explained the applications driving DC include offshore wind farms, hydro electric, and marine. Efficiencies come from reduction of conversion stages, less size, improved power quality, and other benefits. 
A great example is data centers that today consume 3-5% of all electrical power. There are typically 5 conversion stages (AC-DC, DC-AC) that consume approximately 20% of the energy. Alternatively, the incoming AC can be converted once to DC which is then used to power servers. Hogan noted, “ABB is working very hard to bring that solution to the marketplace.”
Over the last 2 years ABB has invested $100 million in the robotics business. “Now we are seeing this is one of the strongest demand patterns in any of our businesses right now,” said Hogan. ABB has made robots easier to program with the latest version of RobotStudio.
New Motor Design Uses Up to 40% Less Energy
Proving innovation is possible for established products, ABB introduced the new Synchronous Reluctance Motor that uses up to 40% less energy. Another feature is that the windings run cooler which subsequently increases winding life up to 50%. This is a new design concept that uses a radical new internal motor design coupled with unique drive electronics. Sales start in Europe June 1, 2011 and the balance of the world at the end of 2011.
Joe Hogan was very candid about their past decision to discontinue support for Bailey products. Hogan said, “…we did a very poor thing, we did not recognize the value of this asset - Harmony, Melody, and these products that people staked their careers on and lives on for years.” “Early last year we decided to reinvigorate the Elsag Bailey product line.” After 11 years, there are more than 6,000 Symphony installations. The product has been moved into the power division. Joe Hogan clearly stated, “We are committing to backwards compatibility to previous system generations, and continuing the Elsag Bailey tradition of evolution without obsolesce.” “I am telling you the truth - as long as I am standing on this stage we are going to make investments in this product line…if you have an Elsag Bailey installed base we are going to take care of you…” 
Hogan praised Baldor as a customer-focused, leadership company that is a low cost producer of motors. “ABB can learn a great deal from them,” said Hogan. The acquisition allows ABB to offers a more complete line of motor products. The motors and mechanical business in North America will be led by Baldor.   The motor product family will be sold by one sales organization for customers in the United States and Canada. The product brands of Baldor will continue (Baldor, Reliance, Dodge, Maska). The drives business will continue to be led by ABB.
Hogan highlighted the importance of motors in saving energy. Electric motors use 25% of all electricity generated. Motor drive combinations can cut energy costs by up to 70% in some applications.   The average payback on a drives investment is 2 years.
Since May 2010, ABB has been integrating the $1 billion acquisition of Ventyx into the company. Ventyx provides software to utilities and grid operators, giving them the information they need to better match electricity generation with consumption. The real-time information on electricity demand, pricing and availability enables utilities to generate revenue from smart grids. Ventyx's software can also help to integrate large amounts of unpredictable renewable energies, such as wind and solar power. Hogan reported that ABB has already received, “breakthrough orders” from China Power, CenterPoint.   Ventyx fits well into ABB’s Smart Grid strategy.
ABB Technology Ventures
Joe Hogan has been clear that ABB would opportunistically make strategic investments. Hogan reviewed a number of recent investments:
  • Trilliant - Smart Grid Radio Mesh Communications
  • Industrial Defender - Cyber security
  • Power Assure - Data Center Energy Efficiency Software
  • Pentalum Technologies - LIDAR (Light Detection And Ranging Sensors) for Wind Turbine Efficiency
  • Aquamarine - Wave Electricity Generation
  • China Cleantech Fund - Venture Fund for Cleantech
  • ECOtality - Electrical Vehicles Fast-charging
Regarding these investments Hogan noted, “These are to help make ABB a broader company…” 
Thoughts & Comments
Joe Hogan stated in the past that ABB has a strategy that includes acquisitions and he is living up to that promise. In addition, ABB Technology Ventures (ATV) is providing another dimension to bringing technology into the company.
Based on answers to questions I asked Joe Hogan during the event, ABB is clearly pursuing income from services.  ABB has taken the role of MAC (Master Automation Contractor) in some large projects.
There was a lot of excitement and enthusiasm at the conference that stems not only from improvements in the economy, but the company’s market alertness and opportunistic attitude.
Judging from the presentations and discussions with Joe Hogan, he is a straight forward, practical person.   His comments about supporting the Elsag Bailey product line is a good example. The reinvigoration of the Elsag Bailey product line is simply a logical thing to do.
When asked a question about delivery time problems on a specific product he was aware of the issue and stated, “Guilty as charged.” He then described what they are doing to fix the problem.
Joe Hogan is doing a good job of taking a solid, engineering-based company and improving how it interacts with customers and the industry. On April 27, 2011, ABB announced first quarter 2011 results of double digit rise in orders, revenues and earnings.

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