ABB to realign around digital industries

ABB will reorganize its global organization into four business units and sell its power grids business to Hitachi, company officials announced Dec. 17.

The reorganization, scheduled to take effect April 1, 2019, will create four business units that company officials said would better position ABB to meet the customer needs in a changing digital landscape.

“To support our customers in a world of unprecedented technological change and digitalization, we must focus, simplify and shape our business for leadership. Today’s actions will create a new ABB, a leader focused in digital industries,” said ABB CEO Ulrich Spiesshofer.

ABB will organize itself into four business units: Electrification, industrial automation, robotics & discrete automation, and motion.

“Our four newly shaped businesses, each a global leader, will be well aligned to the way our customers operate and focus stronger on emerging technologies such as artificial intelligence,” said Spiesshofer. “The continued simplification of our business model and structure will be a catalyst for growth and efficiency in our businesses. Our businesses will be further supported through the transfer of experienced resources from today’s country organizations.”

By streamlining the organization, eliminating regional executive committees, and reallocating resources, ABB officials said the company expects to reduce costs by about $500 million annually and expects to grow to a $550 billion business by 2025, an increase of $140 billion from today’s revenues.

“Today’s announcement marks the beginning of a new chapter in ABB’s history. Building on our technology and global talented employee base we will further strengthen our focus in digital industries, delivering competitive returns for shareholders, including our committed dividend policy,” said ABB chairman Peter Voser. “Over the past five years, the deliberate execution of ABB’s strategy laid the foundation for our businesses to compete in the fast-changing digital industries and deliver profitable growth.”

Tarak Mehta, the current president of the electrification product division, will head the electrification division. It will focus on renewables, e-mobility, data centers and smart buildings.

The industrial automation division will include ABB’s industry-specific integrated automation, electrification and digital solutions, control technologies, software and advanced services, as well as measurement and analytics, marine, and turbo-charging offerings. Peter Terwiesch, president of the industrial automation division, will lead the division.

The robotics & discrete automation division will focus on enhancing ABB’s existing position in the robotics market and will combine machine and factory automation solutions by further integrating with B&R, which ABB acquired in 2017. Sami Atiya, president of the robotics and motion division, will lead the group.

The motion division will focus on electrical motors, generators, drives, and service, as well as integrated digital powertrain solutions, including ABB’s acquisition of Baldor. Morten Wierod, managing director of business unit drives, will lead the division.

ABB’s $11 billion sale of the power grids business to Hitachi was announced as a further part of the company’s streamlining effort.

“In the fast-changing world of energy infrastructure, with a shifting customer landscape and the need for financing and increased government influence, ABB believes Hitachi is the best owner for Power Grids,” company officials said in a press release. “Hitachi will accelerate Power Grids to the next stage of its development, building on the solid foundation achieved under ABB’s previous ownership.”

ABB will retain a 19.9% share in the company, which means it will receive approximately $7.8 billion from the sale once it clears regulatory approval. The remaining shares will be part of a later transaction.

Bob Vavra, content manager, CFE Media, bvavra@cfemedia.com.

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