Growth strategy at ABB

At the presentation of its annual results, ABB announced that it would be altering its strategy in an attempt to increase revenues. Although earnings before interest and taxes (EBIT) were up 23 per cent, the company revealed that compared to 1999, revenues were down six per cent, while profits had fallen three per cent.

“Our continuous shift towards higher-margin businesses and continued cost reductions helped us improve earnings,” said ABB’s president and CEO J├Ârgen Centerman. “But that is not good enough. Revenue development is still well below our potential.” ABB is targeting a minimum average revenue growth of six per cent per year through 2005 (excluding major acquisitions and divestments).

Central to the company’s new strategy is a move to transform its operation along customer lines. ABB has created nine group divisions – seven customer divisions, and two divisions to drive performance improvements. ABB said the organizational transformation into a customer-centric structure would be self-financed at the divisional level and would not incur any restructuring changes. The new organization will be implemented in most markets by mid-2001.

Centerman explained: “Our number one growth opportunity lies in our existing customer base. Today, some 30 per cent of ABB’s annual sales come from our top 200 customers aloneellipseWith our new structure, they will have easy access to our entire range. And even small increases in sales to these customers would mean substantial growth in volumes, margins and cash flow.”

H Power signs LOI

Fuel cell development company H Power has signed a letter of intent with Air Products and Chemicals Inc. to create a business alliance to serve the emerging market for sub-kilowatt portable and mobile hydrogen-based fuel cells.

The two companies will jointly gather and analyse the power requirements and market opportunities for hydrogen-based fuel cell systems. They will also conduct an analysis and development effort to pursue the market for hydrogen-based fuel cell power systems used in high-value, critical-service telecom back-up power applications.

H. Frank Gibbard, H Power’s CEO, said: “These letters of intent are expected to expedite the commercialization of hydrogen-based fuel cells by coupling Air Products’ hydrogen distribution infrastructure with H Power’s fuel cell systems. They constitute a first step towards the realization of a worldwide hydrogen economy.”

The work by H Power and Air Products and Chemicals, a major international gas and chemical producer, is expected to lead to the creation of a strategic plan and an initial product offering, to be followed by beta testing at various customer sites.

Inefficiency and slack demand forces Cooper plant closure

Cooper Energy Services has announced that it is to close its Springfield, Ohio, engine plant and suspend manufacturing operations for its Superior gas engine product line due to a lack of demand for the product and the inefficiency of the plant.

Cooper said that it is pursuing the possibility of the gas engine product being manufactured and marketed by other companies. It will continue to offer aftermarket parts and repair services for Superior engines through its network of service centres around the world.

“Our engine business has suffered in recent years due to competitive pressures and the relative inefficiency of the Springfield plant,” said Cooper Energy Services president Franklin Myers. “While we think our new Superior 2400 series high-speed engines have a lot to offer, unfortunately demand has not been sufficient to cover overheads and contribute to our profit objectives.”

Customer commitments for orders in progress will be honoured and manufacturing of engine parts is to be outsourced or transferred to other Cooper Energy Services locations.

Coactive and MTC team up

Coactive Networks and Metering Technology Corp-oration (MTC) have signed an agreement to integrate their technologies to deliver an internet-based meter reading and output control solution for low-cost mass deployment by utilities.

The agreement will see the pairing of Coactive’s flexible telemetry gateway with MTC’s intelligent metering technology. The resulting technology will enable utilities to improve load management, efficiency and energy conservation, while ensuring better price control for consumers.

TXU sells North Sea assets

US-based power company TXU has announced that it is to sell its North Sea natural gas assets to Consort Resources of the UK for $201m. The move is part of plans to raise up to $1.5bn by selling off assets in Europe and up to $500m from the sale of US assets this year.

TXU bought stakes in a number of North Sea gas fields as part of its expansion into the UK energy market several years ago. The company said that it was selling its interests and licenses to develop the fields at a profit in order to concentrate on its core businesses.