Asea Brown Boweri seeks to expand RI operation<\/p>\n
By Sona Vora Blessing<\/p>\n
ZURICH, Switzerland (JP): Asea Brown Boweri's (ABB) presence
\nin Indonesia dates back to before the merger of its parents BBC
\nBrown Boweri and ASEA in 1988.<\/p>\n
Both were active in the country for many years through
\nrepresentative offices and local partners. Today, the Zurich-
\nbased ABB has become one of the world's leading companies as well
\nas one of the world's largest electrical engineering groups. It
\noperates in Indonesia through various platforms.<\/p>\n
These include a joint venture with the state-run PT PAL, which
\nowns a large shipyard in Surabaya, and through a joint venture
\nwith CCM, owned by the family of Murdaya Poo; it also has an
\nagency agreement with PT AB.<\/p>\n
Goran Lindahl took over as president and chief executive
\nearlier this year when he replaced Percy Barnevik.<\/p>\n
He was previously executive vice president and a member of the
\nGroup Executive Committee, responsible for the power transmission
\nand distribution segment, with additional operational
\nresponsibility for the Middle East and North Africa.<\/p>\n
Lindahl seems well settled in his new role at the helm of the
\nFortune 500 and $35 billion group that has interests in electric
\npower generation, transmission and distribution; industrial and
\nbuilding systems; and rail transportation.<\/p>\n
Bullish on Asia, the 54-year-old Swede explains the company's
\nplans for Indonesia, his vision as president and CEO, and why he
\nbelieves ABB will not make forays into areas such as aerospace
\nand aeronautics.<\/p>\n
Q: What are the main projects ABB has undertaken in Indonesia.
\nand how much has been invested in Indonesia?<\/p>\n
Answer: The main projects implemented by ABB in Indonesia have
\nbeen in power generation (Mrica Hydro Power Plant, Muara Tawar
\nCombined Cycle, Tanjung Priok Combined Cycle, Paiton Thermal
\nPower Plant) and in the transmission and distribution field - it
\nhas set up 500KV transmission lines.<\/p>\n
ABB has invested over $200 million in developing its asset-
\nbase in Indonesia, and it is committed to further investments.
\nABB hopes to not only expand its existing ventures, but intends
\nto identify new areas of operation as well. ABB's presence in
\nIndonesia today includes some 1,500 employees.<\/p>\n
Q: What has ABB's track record been in Indonesia? And what is its
\nprojection for the future?<\/p>\n
A: The order volume varies from year to year depending on the
\nnumber of large projects secured, from $500 million to $1 billion
\nper annum. The local added value business is steadily increasing
\nwith the continued expansion of our local operations and has
\nreached $100 million per annum.<\/p>\n
Q: What is your vision as CEO of ABB?<\/p>\n
A: I will encourage growth and management through innovation.
\nResearch and development will remain a high priority, with
\ntechnology innovation a key for growth in both mature and
\nemerging markets. In 1996, our R&D expenditure amounted to
\n$2.6billion, double the 1988 level. ABB's strong technology base
\nsupports the technology-sharing that is key to our local
\nmanufacturing and service build-up in emerging markets. Today
\nsome 20,000 people are involved in R&D on the corporate and
\nbusiness levels.<\/p>\n
Innovation is key to growth in other ways as well. The large
\nmarkets of the industrialized world, the dynamic emerging markets
\nof Asia and Latin America, and the transition economies of
\nCentral and Eastern Europe all have something in common: rapid
\nchange.<\/p>\n
For ABB, innovation must be a core part of our activities. We
\nmust continue to shift away from just reacting to the present and
\nwork harder to shape the future, creating tomorrow's markets, not
\njust competing for today's.<\/p>\n
In Asia, we have managed to move from an export-based business
\nto a more local value-added one, developing the kind of personal
\ncustomer relationships that are vital to doing business
\nsuccessfully in the region.<\/p>\n
Our ambition is that by 2000, Asian orders will surpass $15
\nbillion. Latin America is already close to $2 billion in orders,
\nand the Middle East and Africa are approaching $2.5 billion,<\/p>\n
Q: What were the major obstacles you think ABB faced in the
\nemerging markets? Which will it still encounter in the future?<\/p>\n
A: I've always been interested in Asia. When I started to work
\nthere, and when I started to really push our business in Asia-
\nPacific, I found that wherever I went, I stumbled over business
\nopportunities - in India, Indonesia, Thailand and China. There
\nwas business, business, and business! And the problem then was
\nsecuring resources.<\/p>\n
What could we offer? We didn't have the sales people in place.
\nWe had organizations everywhere, but far too few sales people. We
\ndidn't have locally added value. Everything was imported and that
\nwas of gold-plated design not fitting the local needs. Those were
\nthe real bottlenecks. The hurdles for our penetration were
\nresources, human resources, and that we did too little inside
\nthese countries.<\/p>\n
That's why we started to discuss joint ventures with local
\npartners. Through them we would have access to existing
\nfactories, engineering offices in order to ensure a quick start-
\nup, because you start with an already established set-up and not
\nfrom scratch. So that was the real move that I tried to initiate.
\nI felt we succeeded fairly well in getting that going.<\/p>\n
The hurdles today are two-fold and partly the same as before.
\nThe resources again. It is not a matter of expatriates, because
\nthey also enable a quick start. They come with the technical
\nknowledge, they know our products and they start up local
\nbusinesses. But now it is more a question of how can we groom the
\nlocal people, so they can take over. We do that in many places
\nand they are coming up the line, slowly, but surely. These people
\nknow the establishment; they have a local angle, local values and
\nan understanding of the local culture.<\/p>\n
There are many people on the way up. This is critical. We need
\nto train more people in management issues. We need to train them
\nin our technologies and in our processes to bring them up to
\nmanagement positions. To facilitate this we have an extensive
\nexchange program where we take people from the emerging markets
\nto Europe and North America.<\/p>\n
The other part of the hurdle is slightly different. We have
\none thing in common in our group and that is broken English. No
\ntwo people, or very few, have the same English. So what is said,
\nis perceived differently from one individual to another. We tend
\nto use words differently.<\/p>\n
So how can we create respect for these different perceptions?
\nThe idiosyncrasies do not mean the individuals have different
\nviews, it's only because they come from different environments.
\nEach individual gives different meanings and words different
\nemphasis. Therefore we need to have people who take that into
\naccount, that people perceive a situation, language,
\ncommunication, everything, differently.<\/p>\n
We must try and find out why we have those differences and
\nfind a common understanding. That's the second hurdle, which I
\nwould say is extremely important today. In the beginning it was
\nmore to get the business moving and then you didn't have to care
\nso much about perceptions. It was better to get it done, than to
\nbe 100% right. But now we have to refine.<\/p>\n
Q: Are there differences in your approach to Asia as compared to
\nLatin America and Africa?<\/p>\n
A: You know it is not a case of either or. We have to be
\neverywhere. We are a global company and must have a presence
\neverywhere. In the West, typically, it may be 1 percent to two
\npercent if we are lucky. But then if I look at Latin America,
\nthey also have tremendous growth potential. You have in Latin
\nAmerica almost 500 million people. So the need is there. Now it
\nis a matter of demand.<\/p>\n
They have sorted out their debt crisis with North America.
\nNow they are starting to get loans from the International
\nMonetary Fund and World Bank to support their development. And
\nthat is finance which will be used to build infrastructure there.
\nMore hydropower plants, more steel plants, oil and gas sector
\nexploration, and so forth.<\/p>\n
These are also local needs, and ABB can serve them locally. As
\nregards Africa, it has a fast-growing population, also in the
\nArabic countries of northern Africa and the Middle East, which
\nwill boost the demand for infrastructure equipment.<\/p>",
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