Promoting The Top Line At Abb

Percy Barnevik has done a fantastic job, he says. And my ambition is to build an even better company.

My Lindahl, who is 52, says he plans to impose his own personality on ABB just as Mr Barnevik did during his nine years at the helm. He takes over after a long career in engineering marketing, which culminated last year in the signing of the contrast for the US$5bn Bankun hydro-electric scheme in Malaysia, ABBs biggest-ever order.

Unlike Mr Barnevik, an economist by training who was marked out for high office at an early age and will stay on as non-executive chairman, Mr Lindahl has had to work his way up to the boardroom.

 

Where Mr Barnevik tends to dominate those around him through sheer force of intellect, Mr Lindahl is more down to earth and more of a team player.

Mr Barnevik, who formed ABB out of a merger of Swedens Asea and Brown Boveri of Switzerland in 1988, spent much of his time shaping the unified company - closing excess capacity, building a managerial and financial structure and expanding its reach outside western Europe.

Mr Lindahl seems to see his job as putting more commercial energy into this formidable machine. Where Mr Barnevik put much emphasis on long-range planning, Mr Lindahl is more concerned about bringing home the bacon.

My priority is to promote the top line. Then, the bottom line will also grow. Sell, sell, sell, he says.

But the two men also have much in common. Neither is a stranger to the constant international travel which is required at a company with 215,000 employees in 1,000 subsidiaries in over 140 countries.

Both are Swedish and both have spent most of their working lives with companies linked to the Wallenberg family, which controls 16 per cent of ABB, the single biggest stake.

Time will tell whether Mr Lindahl can emerge from Mr Barneviks shadow.

His first real test may not come until next year, when ABBs profits are expected to start growing again as a result of economic recovery in Germany.

If they do not, investors could demand changes in direction.

Mr Pierre Tissot, analyst at Lombard Odier, the Geneva bank, says: It is too early to notice any changes in strategy, but there are differences in style. Barnevik stressed the long-term perspective and focused on macroeconomic factors. Lindahl, by contrast, is more down to earth and focused on our needs.

Although Mr Lindahl shares Mr Barneviks view that the companys future growth will come mainly from emerging economies, there is a slight change in emphasis.

Where Mr Barnevik spoke repeatedly about the importance of eastern Europe, the former Soviet Union, and east Asia, mr Lindahl puts Latin America at the top of his list for growth markets, though he adds that Asia remains very important.

Mr Lindahl plans to continue Mr Barneviks strategy of expanding ABBs manufacturing operations in developing countries, while reducing the workforce in western Europe and north America.

Partly, it is a matter of seeking low-cost production and partly, building strong local businesses in growing markets, says Mr Lindahl.

The new chief executive has set a demanding target of increasing the annual order intake from $36bn last year to $50bn in 2001. Without such an increase, ABBs workforce may have to be reduced, he says, since productivity has to keep on increasing if ABB is to compete successfully.

Mr Lindahl has fixed targets for ABBs margins, which have been under pressure in recent years because of competition from other international companies including Germanys Siemens and GE of the US. The difficulties are particularly acute in power engineering, where margins have been squeezed by overcapacity.

Mr Lindahl declines to say what his margin targets are, but he wants to see a substantial improvement on last year, when operating profits amounted to just 8.8 per cent of sales.

However, with a return on equity of 22.2 per cent, the shareholders would not, for the moment at least, have cause for complaint.

Mr Lindahl expects to see growth across all the companys activities, including power generation, electricity, transmission and distribution, industrial plant and buildings and financial services. Of course, some will grow more, some less, he says.

In developed countries where large new industrial investments are rare, he expects to see growth from service and renovation contracts.

There are also good prospects in fields where new technology is being introduced - for example in electricity metering and distribution equipment.

In the developing world, the oil, gas, and the petrochemical industries are placing substantial orders, such as the $ 500m contract for Indias first private-sector oil refinery at Jamnagar.

Mr Lindahl is ...acute aware of the concern such big schemes generate among environmentalists, not less because of the criticism made by pressure groups of the Bakun project.

But he says that abstaining from economic development is not a solution. For example, the availability of electricity is a basic need for people all over the world.

However, companies such as ABB have a responsibilities to meet high environments standards with their products, wherever they were supplied, says Mr Lindahl. Of course, we should not sell crap anywhere. He also welcomes debate with environmental group because it forces people sharpen their arguments. So we will find better solution for processes and projects.

But he says ABB can only supply what its customers order. It cannot change the world on its own. We can only do whats in our competence.