ABB lowers targets, downsizes and regroups its power business
ABB has announced major reorganization of the company business into four divisions, with its entire power business grouped into a new Power Grids division. While the new strategy sets lower targets and implies further job cuts, the new management comes under pressure from shareholders to meet the set expectations.
ABB has announced major reorganization of the company business into four divisions, with its entire power business grouped into a new Power Grids division. While the new strategy sets lower targets and implies further job cuts, the new management comes under pressure from shareholders to meet the set expectations.
According to the second stage of ABB’s next level strategy, the new Power Grids division is projected to have annual sales of approximately $12.6 billion and 39,000 employees.
The strategy also announces a reduced sales growth target of 3-6 percent per year, reduction of costs by $1billion and freeing up $2 billion from working capital to be used for acquisitions and R&D investments.
At the same time, company management is placed under increasing pressure to reassure the shareholders favouring a split-up of the business into power distribution and automation company, with Nordea already publicly voicing this demand and media speculations that Cevian could push for the same scenario.
In an interview for Manager Magazine, ABB CEO Urlich Spiesshofer denied feeling higher pressure, placing trust in the new measures which are expected to create more returns for shareholders and seeing Cevian’s investment as a sign of the company moving forward.
However, the restructuring of company business, cutting administrative costs and integration of activities in many areas across the group will take its toll on employees, implying new job cuts, which Spiesshofer could not deny.
“We now have 1,500 fewer employees than at the start of the year, and we will continue to take advantage of natural staff fluctuation,” Spiesshofer said expressing belief that with the market growth, new jobs will be created.
Source: ABB, Manager Magazine
Photo: ABB
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