Prepared For Growth

Prepared For Growth

For ABB Inc. President and CEO Dinesh C. Paliwal, the top priority is to improve operational performance.

Since Jan. 1, 2004, Dinesh C. Paliwal, a member of the executive committee of Zurich, Switzerland-based ABB Group and chief of its worldwide automation division, has also been president and CEO of ABB Inc., the name given to the $20 billion firm's North American operations, which include 20 U.S. manufacturing plants. As part of what he calls "the new ABB," Paliwal's charge is to grow markets for automation products and technologies and power-distribution products and technologies. The challenge for Paliwal, a globally experienced executive who was educated in India and the U.S., is made tougher by ABB's loss of corporate focus in the 1990s, its financial losses in recent years and some still-unsettled asbestos liability.

IW: To what extent is the asbestos liability issue, stemming from ABB's 1990 acquisition of Combustion Engineering, constraining your ability to grow ABB Inc.'s North American market positions?

Paliwal: We have a plan, which has already been approved by the bankruptcy court, the district court and [now] the Third Circuit Court wants some fine tuning. I think the marketplace and the employee base have factored in that this [liability] is considered solved. When do we expect it to be over? I don't know. I don't guess anymore.

IW: What are your immediate and longer-term goals for ABB Inc.?

Dinesh PaliwalPaliwal: The immediate goal in North America -- [of which] the U.S. is 80% -- is to improve the operational performance. We have not made money in the U.S. in the past few years. 2005 will be a profitable year. People did a super job in 2004 of turning around things.

North America has started working as a single-P&L boundaryless organization [and] we need to further strengthen [the] mindset that it's not U.S. versus Mexico versus Canada. It's all North America. It's a very significant culture change that we are trying to bring about.

The business in North America is not new greenfield plants, like [in] China and India. It's all about installed-base serving. You take maintenance over. But you [also] bring in the best-in-class practices of the chemical industry or the electrical utility industry. I moved the global president of the service business to Norwalk, Conn. He is European. But [customer service] is what he has done for 30 years of his life. I think that will be very beneficial to the marketplace, which also means we will be generating hundreds of new jobs in the service industry, where performance, productivity and energy savings will be key.

And we want to continue to play the leadership role with FERC [the Federal Energy Regulatory Commission] and NRC [the Nuclear Regulatory Commission] in Washington and various large utilities in defining the energy bill and how we get this thing going.

Long term, I believe if we are able to execute on the short term, we are targeting doubling the volume of sales in North America in five year's time. Having said that, we need obviously to hire hundreds of new employees. And in our business, we cannot just pick anybody. That is quite a bit of a human resource challenge, which we will go about. It will not be just organic growth. We are here to make some interesting, small, growth acquisitions.

IW: What's the greatest personal challenge -- the toughest part -- of being a CEO in a global business environment these days?

Paliwal: The biggest challenge I face is how do I translate a very strong mandate of my own vision of corporate governance, business ethics and zero-tolerance for non-compliance. One or two or three incidents can kill years and years of good work [in] the marketplace and [with] customers. Second, global diversity is something either you [as a CEO] are prepared for or you suffer. It can be frustrating for some people, operating in a global domain. I have fun doing that because . . . I have developed over the years a knack for multiple cultures and how you deal with people. More transparency -- this is something I push all the time. More trust in people. And continuous communication of what you stand for.

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