The shifting of production of power transmission and distribution equipment to its export markets has become a corner-stone of Zurich-based ABB Asea Brown Boveri’s future strategy. Consequently, ABB may expand its production facilities in the Middle East where it already employs about 5,000 people, ABB Middle East & North Africa manager Peter Felix says.
‘More people are likely to work in our local plants in the future because we are increasingly manufacturing products locally,’ Felix says. With a few exceptions, all transmission and distribution equipment for the Middle East market will eventually be manufactured there, he predicts. ABB is already looking for possible production sites in Pakistan.
ABB reported profits of $322 million in the first six months of 1994, a rise of 31 per cent over the corresponding period of 1993. It attributes this to lower labour costs since it began shifting its production away from Western Europe. However, order intakes from the Middle East have lagged behind last year, when the region accounted for almost 10 per cent of all contracts won (MEED 25:3:94, page7).
‘We haven’t reached 10 per cent yet. So far, our order intake in the region is about 3-5 per cent of the total, but I am positive this will change,’ Felix says. None of the large power generation projects the company has been targeting have come off the ground, he explains.
Despite this, the company has secured a number of smaller contracts, including a $81 million contract to convert a power station in Jebel Ali to combined cycle. ABB’s transport and industrial plant divisions have secured the $200 million Izmir metro project in Turkey and are finalising a $100 million oil and gas contract in Saudi Arabia.