Business Today

'ABB India will be a key building block of the new ABB'

In December 2018, ABB announced a $11-billion deal to sell its power grid business to Hitachi. In his first interview after the announcement, Ulrich Spiesshofer, President and former CEO of ABB Group, talks to Business Today's Rukmini Rao
Rukmini Rao   New Delhi     Print Edition: May 5, 2019
'ABB India will be a key building block of the new ABB'
Ulrich Spiesshofer, President and CEO of ABB Group (Photograph by Rachit Goswami)

Q. You recently announced the sale of ABB's power grid business to Hitachi. What will be the focus of the new ABB entity?

A: The new ABB will be a leader in technology, focussed entirely on digital industries. At present, we provide a range of offerings for digital needs of industries. One is our industrial automation solutions for process industries which drive competitiveness of our customers. We also provide technology solutions through our robot and discrete manufacturing business. We also have a big presence in the motion business, focussing on motors, drives, mechanical power transmission, etc. So, the new ABB is poised to be the partner of choice, helping customers in different industrial segments tap the opportunities of industrial digitalisation.

Q. So, what has changed in terms of focus? How will the realignment of the businesses help?

A: In power grids, we are selling the last remaining large project in infrastructure. In the future, we will be entirely focussed on digital industries. The new ABB will be much more clearly aligned with needs of customers through its four new businesses. We have also changed our business model. We will fully empower our four businesses to serve customers with less internal interface, more agility, and more speed.

Q. The power business has been an important component of ABB India. What will the Hitachi deal mean for it? How are you positioning the company to tap the infrastructure sector?

A: When you look at what is leaving ABB, it is essentially long distance transmission capabilities, the part of the electricity value chain between the power generation and the sub-station. What stays with the company is the electrification chain after the sub-station to the point of consumption. So, when you look at the local distribution of power, capabilities around local integration of renewables into medium and low voltage offerings, that will remain with us in the future as well.

If we were to look at it like a large facility, a building, anything that's outside the fence of this building will go away. But anything that's inside the fence - whether it's electrification, automation, robotisation or digitalisation - stays with us.

Q. What is your long-term outlook on the mobility space in India?

A:  There are two aspects of mobility. If you look at the rail sector, ABB is already very active there. Today, all metro lines in India have ABB equipment. Even electrification of railroads planned in the next couple of years, and the ones under way, is being supported by us. Prime Minister Narendra Modi has ambitious plans for large electric mobility presence on roads by 2030. Even when we look at our automotive customers in India, all of them are getting ready for major launches in electric vehicles (EVs). ABB is helping with EV movement in a couple of ways. Globally, we are the leading providers of EV charging infrastructure, and I think it's very important that we also do it here for both fast charging and home charging. To make the EV ecosystem work, you need charging infrastructure and grid reinforcement in renewables integration. In grid reinforcement, ABB has super strong offerings (both low and medium voltage) around the local distribution grid. I think India is starting to really gear up, and I think we will be surprised how fast this will scale up in the next couple of years. Because one thing is very clear, electric mobility is not only environmentally responsible, it's also economically attractive. The cost will come down in a significant way over time.

Q. What would you consider as the sunshine segments of ABB India going forward?

A: All of them. If you look at what we have achieved in the last couple of years, we have transformed ABB India as we have transformed ABB globally. Today, we are leading in industrial digitalisation. The manufacturing base in India 20 years ago was not as much as it is today. Now, in India, we have world-class facilities from where we can ship not just within India but also export. So, for us, ABB India has basically four roles. It has to supply in India for Indian customers. It has to supply from India to the world. India also plays a key role for us in terms of business services. We have set up a significant global business services operations that serves half the ABB's world. And four, India is a powerhouse in engineering and digitalisation. We have strongly invested in engineering and digitalisation capabilities. We are also driving robot and AI capabilities in India. And I think ABB India is playing a key role in transformation of India. If I look at the political programmes of what is coming in the next couple of years, with our capabilities, we are an ideal match, and we're really excited about supporting India in the future.

Q. ABB India is still not a significant revenue base for you globally. By when do you see the capabilities that you spoke about translating into a significant revenue stream for you?

A: When I look at markets and countries, I don't look only at the numbers. India is a very significant market for us and there is a tremendous opportunity for us to grow here. As we shift the centre of gravity of ABB, moving away from conventional copper and iron products to software-enabled digital products, India will move much more into the centre of attention because it is a global powerhouse of software digitalisation. So, if you look at the core of the new ABB - a leader for the digital industry - India will play an even stronger role than it is has played historically. ABB India will be a key building block of the new ABB, not only as a key market and an important part of the value chain but also as a hub that can, in a really good time, help us provide customers - both local and global - high quality digital solutions.

Q. India's infrastructure sector still looks patchy. How are you viewing the systemic problems in the sector? Where are the opportunities?

A: Look, if you take the urbanisation trend in India, the number of people who live in large cities has been increasing by 1 per cent every year, which is amazing. So, for large modern cities, you need city infrastructure, and ABB is and will be a key player in that segment, be it in smart buildings that self-optimise and are energy-efficient or local mobility, infrastructure and EV infrastructure that we are already setting up. When we look at a country like India, we look with a long-term perspective and a steady hand. This year we are celebrating the 70th anniversary of ABB in India. ABB is committed to India for a very long term. I look forward to the next 70 years in this country.

I think we will contribute to city infrastructure on the transport side, on data centres, which will be the key. We have just got a very significant new assignment to work for a large global customer operations in India to build data centres and I'm very optimistic on that .

Q. What are the problems that need to be fixed to drive digital growth and realise the potential of companies?

A: I don't think we need fixing because that means something is broken. What we need is to take certain things to the next level.

It's very clear there is technology convergence with big leaps in classic hardware and classic software sectors. We are today a software company, we have an $8 billion software and services business, and more than 55 per cent of our offerings are software-based. I think what we need is an ecosystem of partnerships between traditional software and traditional hardware companies. The second point we need is basic hygiene for the digital industry. That means we need cyber security, cyber security regulations that people can trust. But the most important thing is that we need to take the people with us. We need to make sure that the education system in India is developed at the pace the digitalisation opportunities are changing. We need lifelong education and education for mid-life people working where jobs are changing because of digitalisation. The digital revolution in industry should go hand-in-hand with a self-driven revolution in the education system.

@rukminirao

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