ABB reports $2.6 billion in orders in China for 2004

Leupp highlighted ABB in China’s 2004 annual results:

1. Organic growth. ABB has historically achieved double-digit growth rates in China, and expects to grow 20 percent per year until at least 2008. In 2004, ABB’s orders grew 62 percent to $2.6 billion from $1.6 billion in 2003. ABB’s divisions, Power Technologies and Automation Technologies, reported 98 percent and 44 percent growth respectively. The surge in Power Technologies’ orders stems largely from the $390 million HVDC order booked in 2004.

2. New investments. ABB has invested more than $600 million in China and plans to invest at least $100 million starting new product lines and factories in China in the run-up to 2008. Leupp said new production lines were completed or under construction and branch offices increased to 30 from 23, including offices in cities like Hohhot and Urumqi to support China’s "Go West" initiative. ABB already has its single largest investment in Chongqing, considered the "gateway to the West."

3. Cost migration. ABB has long had special teams buying materials locally and using them to build products in China. Because these suppliers are close to ABB factories and customers, the company can deliver with unparalleled speed. Leupp said solid progress has been made to extend the use of this network to other parts of ABB, specifying ABB’s motors and drives business as a case in point.

4. New research and development center in Beijing. ABB’s R&D center in Beijing will open on March 30. It will be a part of ABB’s global network of labs and focus on power transmission and distribution applications, manufacturing technologies and mechatronics – like robotics. Between 50 and 100 research engineers and scientists will work closely with customers, and collaborate with local universities and other top research institutes like Massachusetts Institute of Technology and Cambridge University, with which ABB works in partnership.

5. Developing local talent. An important part in ABB’s five-point plan, it involves hiring an additional 5,000 employees – highly talented and well educated – in the run-up to 2008. ABB hired around 1,000 new employees in 2004.

"In general, after rolling out this 5-point strategy for profitable growth, we are pleased with the results," said Leupp. "However, there is much work to be done and good potential for the future."

Major orders and achievements

• $390 million order from the State Grid Corporation of China to supply a 3,000 megawatt (MW) high voltage direct current (HVDC) link between the Three Gorges and Shanghai
• $60 million in contracts to supply 500 kV gas insulated switchgear and 12 sets of power transformers for the right-bank power plant of the Three Gorges
• $41 million in orders for switchgear, transformers and power distribution management systems for two petrochemical plants in Shanghai operated by CNOOC-Shell Petrochemical Company and Shanghai SECCO Petrochemical Company respectively
• $24 million mining automation order from Huainan Mining Group for mine hoist equipment, including advanced drive systems and Extended Automation System 800xA, for eight of the group’s coal mines
• $20 million order from Jiangsu Shagang Group for drive systems and power supply equipment for a greenfield heavy plate rolling mill in Jiangsu province
• The 3,000 MW, 940-kilometer HVDC link between the Three Gorges and Guangdong was completed by ABB in record time and handed over to the State Grid Corporation on June 6
• New protection relay factory in Xiamen, distribution transformer factory in Shanghai; launched marine, crane, life sciences businesses