Automation Leader Shapes Growth Strategy around Reforms
STORY INLINE POST
Q: How will ABB meet the financial and operational goals that it has set for itself by 2020?
A: ABB is a relatively young company, having only been formed in 1988. Nonetheless, it has vast experience since it was created after the merger of two organizations with a very old legacy, ASEA of Sweden and Brown, Boveri & Cie of Switzerland. Both companies started operating in the late 1800s at the dawn of the electric power industry. ABB is now a US$40 billion global company that has been able to consistently follow its growth plan. We now have over 140,000 employees and we are active in more than a 100 countries. The actions of our parent companies also mean we have had a presence in Mexico for 75 years. In 2014, ABB put a lot of effort in developing a new strategy that contemplates three major aspects: profitable growth, relentless execution, and business collaboration. More detailed strategies have been defined in each area in order to set a clear path to our objectives. In the case of profitable growth, ABB has acquired several large companies in the last couple of years, such as Baldor, Thomas & Betts, and Power One. The integration of these companies has set the base to achieve the growth we are looking for. Our main priority right now will be to investigate the ways in which we can maximize the benefits of these acquisitions. The company plans to grow ahead of the market by driving its PIE (penetration, innovation, and expansion) initiatives on penetration of existing and expansion into additional high-growth market segments. We are now mapping all the market segments we attend around the world in order to comprehend exactly where ABB stands and to identify areas of opportunity. The results of these studies are truly amazing, as we can see which ABB products are not performing or hold only a small market share. We have also fully realized ABB’s tremendous growth potential and we are working to act on it.
Q: Now that you have identified these limitations, how will the company exploit its latent capacity?
A: Growth for us means expanding and improving every single segment that we serve. With regards to Mexico, we have long worked with CFE and PEMEX. Our background has provided ABB with a leadership position in the oil and gas, power, and automotive industries, but our current strategy is more aggressive and we now want to reach our full potential in all the main industrial sectors of the country. Since our technology and services are among the best in the world, we are able to successfully compete with local peers. We have seen that Mexico’s industries, such as oil and gas, automotive, aerospace, and mining, are getting stronger and could all greatly benefit from ABB’s solutions.
Q: How will the recent package of reforms influence the strategic priorities of ABB in Mexico?
A: The recent events in the oil and gas sector, like the drop of the oil prices, are impacting the investment budget for projects. We are participating with PEMEX in several important projects, and at the same time we are now putting a lot of focus on the results of Round One. We know that many companies are buying the geological data and that they are preparing themselves to aggressively enter the bidding process. Similarly, we are positioning ourselves to pursue all opportunities arising from the Energy Reform, and this Mexico moment could also be the moment for ABB, because no other company can match our expertise and leadership in integrated power and automation solutions for the energy sector. In fact, it is very motivating to see all the large oil corporations of the world showing interest in coming to Mexico.
Q: What was the contribution of Mexico to ABB’s results, and how relevant is the country becoming in ABB’s operations?
A: North and Latin American countries are seeing a swift growth of their industries so we want to make sure that ABB is there to contribute to that growth. In Mexico we see an enormous potential for growth due to the strategies the government has implemented. The Energy Reform is likely to double the contributions of the oil industry to the country’s GDP in the coming years. We are about to see a serious expansion of Mexico’s energy sector and ABB is keen to participate in its development. Last year, we managed to increase our participation and saw a good number of large projects and investments return, especially in the infrastructure segment. This was rewarding taking into consideration how rough 2012 and 2013 were for the company. On the products side, we have seen a good penetration for our low and medium-voltage solutions as well as with our discrete motion products. These projects have greatly contributed to the success of our Q1 results for 2015 in Mexico, which marked a 60% year-on-year growth in the country.