Asea Brown Boweri seeks to expand RI operation

Asea Brown Boweri seeks to expand RI operation

By Sona Vora Blessing

ZURICH, Switzerland (JP): Asea Brown Boweri's (ABB) presence
in Indonesia dates back to before the merger of its parents BBC
Brown Boweri and ASEA in 1988.

Both were active in the country for many years through
representative offices and local partners. Today, the Zurich-
based ABB has become one of the world's leading companies as well
as one of the world's largest electrical engineering groups. It
operates in Indonesia through various platforms.

These include a joint venture with the state-run PT PAL, which
owns a large shipyard in Surabaya, and through a joint venture
with CCM, owned by the family of Murdaya Poo; it also has an
agency agreement with PT AB.

Goran Lindahl took over as president and chief executive
earlier this year when he replaced Percy Barnevik.

He was previously executive vice president and a member of the
Group Executive Committee, responsible for the power transmission
and distribution segment, with additional operational
responsibility for the Middle East and North Africa.

Lindahl seems well settled in his new role at the helm of the
Fortune 500 and $35 billion group that has interests in electric
power generation, transmission and distribution; industrial and
building systems; and rail transportation.

Bullish on Asia, the 54-year-old Swede explains the company's
plans for Indonesia, his vision as president and CEO, and why he
believes ABB will not make forays into areas such as aerospace
and aeronautics.

Q: What are the main projects ABB has undertaken in Indonesia.
and how much has been invested in Indonesia?

Answer: The main projects implemented by ABB in Indonesia have
been in power generation (Mrica Hydro Power Plant, Muara Tawar
Combined Cycle, Tanjung Priok Combined Cycle, Paiton Thermal
Power Plant) and in the transmission and distribution field - it
has set up 500KV transmission lines.

ABB has invested over $200 million in developing its asset-
base in Indonesia, and it is committed to further investments.
ABB hopes to not only expand its existing ventures, but intends
to identify new areas of operation as well. ABB's presence in
Indonesia today includes some 1,500 employees.

Q: What has ABB's track record been in Indonesia? And what is its
projection for the future?

A: The order volume varies from year to year depending on the
number of large projects secured, from $500 million to $1 billion
per annum. The local added value business is steadily increasing
with the continued expansion of our local operations and has
reached $100 million per annum.

Q: What is your vision as CEO of ABB?

A: I will encourage growth and management through innovation.
Research and development will remain a high priority, with
technology innovation a key for growth in both mature and
emerging markets. In 1996, our R&D expenditure amounted to
$2.6billion, double the 1988 level. ABB's strong technology base
supports the technology-sharing that is key to our local
manufacturing and service build-up in emerging markets. Today
some 20,000 people are involved in R&D on the corporate and
business levels.

Innovation is key to growth in other ways as well. The large
markets of the industrialized world, the dynamic emerging markets
of Asia and Latin America, and the transition economies of
Central and Eastern Europe all have something in common: rapid
change.

For ABB, innovation must be a core part of our activities. We
must continue to shift away from just reacting to the present and
work harder to shape the future, creating tomorrow's markets, not
just competing for today's.

In Asia, we have managed to move from an export-based business
to a more local value-added one, developing the kind of personal
customer relationships that are vital to doing business
successfully in the region.

Our ambition is that by 2000, Asian orders will surpass $15
billion. Latin America is already close to $2 billion in orders,
and the Middle East and Africa are approaching $2.5 billion,

Q: What were the major obstacles you think ABB faced in the
emerging markets? Which will it still encounter in the future?

A: I've always been interested in Asia. When I started to work
there, and when I started to really push our business in Asia-
Pacific, I found that wherever I went, I stumbled over business
opportunities - in India, Indonesia, Thailand and China. There
was business, business, and business! And the problem then was
securing resources.

What could we offer? We didn't have the sales people in place.
We had organizations everywhere, but far too few sales people. We
didn't have locally added value. Everything was imported and that
was of gold-plated design not fitting the local needs. Those were
the real bottlenecks. The hurdles for our penetration were
resources, human resources, and that we did too little inside
these countries.

That's why we started to discuss joint ventures with local
partners. Through them we would have access to existing
factories, engineering offices in order to ensure a quick start-
up, because you start with an already established set-up and not
from scratch. So that was the real move that I tried to initiate.
I felt we succeeded fairly well in getting that going.

The hurdles today are two-fold and partly the same as before.
The resources again. It is not a matter of expatriates, because
they also enable a quick start. They come with the technical
knowledge, they know our products and they start up local
businesses. But now it is more a question of how can we groom the
local people, so they can take over. We do that in many places
and they are coming up the line, slowly, but surely. These people
know the establishment; they have a local angle, local values and
an understanding of the local culture.

There are many people on the way up. This is critical. We need
to train more people in management issues. We need to train them
in our technologies and in our processes to bring them up to
management positions. To facilitate this we have an extensive
exchange program where we take people from the emerging markets
to Europe and North America.

The other part of the hurdle is slightly different. We have
one thing in common in our group and that is broken English. No
two people, or very few, have the same English. So what is said,
is perceived differently from one individual to another. We tend
to use words differently.

So how can we create respect for these different perceptions?
The idiosyncrasies do not mean the individuals have different
views, it's only because they come from different environments.
Each individual gives different meanings and words different
emphasis. Therefore we need to have people who take that into
account, that people perceive a situation, language,
communication, everything, differently.

We must try and find out why we have those differences and
find a common understanding. That's the second hurdle, which I
would say is extremely important today. In the beginning it was
more to get the business moving and then you didn't have to care
so much about perceptions. It was better to get it done, than to
be 100% right. But now we have to refine.

Q: Are there differences in your approach to Asia as compared to
Latin America and Africa?

A: You know it is not a case of either or. We have to be
everywhere. We are a global company and must have a presence
everywhere. In the West, typically, it may be 1 percent to two
percent if we are lucky. But then if I look at Latin America,
they also have tremendous growth potential. You have in Latin
America almost 500 million people. So the need is there. Now it
is a matter of demand.

They have sorted out their debt crisis with North America.
Now they are starting to get loans from the International
Monetary Fund and World Bank to support their development. And
that is finance which will be used to build infrastructure there.
More hydropower plants, more steel plants, oil and gas sector
exploration, and so forth.

These are also local needs, and ABB can serve them locally. As
regards Africa, it has a fast-growing population, also in the
Arabic countries of northern Africa and the Middle East, which
will boost the demand for infrastructure equipment.