Energize speaks to Leon Viljoen, CEO of ABB

February 5th, 2014, Published in Articles: Energize

by Mike Rycroft, features editor

Leon Viljoen has re-joined ABB again after an absence of thirteen years, this time as its CEO. Energize spoke to him about the company’s plans for the foreseeable future.

Leon Viljoen

Leon Viljoen

How has your experience of this new position been so far?

I have enjoyed it tremendously. I worked for ABB previously, I studied through ABB, then left in 2000 and now I am back with ABB. I think it is a very exciting company with a great future. We’ve got a growing market, we have opportunities in upgrading and extending the electrical infrastructure in Southern Africa. There are huge opportunities for growth. From that perspective, I’m enjoying what I am doing. The company has  a good strategy that was set by my predecessor, and we are following it, we are tweaking it here and there in response to circumstances but in general we are going ahead.

How do you see the prospects for the industry in South Africa?

I think our industry is positive, our industry is growing, not just in the South African market but we see growth in a lot of southern African countries. When we as ABB think about southern Africa, we really think about south of the equator. That’s really where our responsibility as ABB South Africa lies, we are the hub country for the cluster.

I believe that business needs to get  more involved in discussions with the government in determining the direction and future of this country. I sometimes get the feeling that business is quick to blame and point fingers, but doesn’t get involved in enough discussion. Because of the interaction I’ve had so far with the government I believe they are prepared to listen if you come with facts and you come with suggestions and things like that. Complaining the whole time gets us nowhere, and that for me is one of the items that’s missing in South Africa.

How do you see development of the market in neighbouring countries?

What is important for me is that ABB saw Africa as the next huge opportunity many years ago, opened a lot of offices, perhaps too early. Some of these offices have been downscaled, but not closed, so we have a presence in Namibia, Zambia, Botswana, Zimbabwe, Mozambique, Uganda, Tanzania, Kenya, DRC, Angola, and Mauritius. All these offices are functional. I think it is extremely important to have offices in those countries, because to try and parachute into those countries doing business like that doesn’t work, you need to be present there. I don’t believe we will move manufacturing into Africa, I think those offices are more sales and service offices. For me service is a local business, you need to be in these countries to provide service.

Maintenance and service – do you see that as an important developing market for Africa and Southern Africa?

We see service, specifically in southern Africa as a big potential market. There is a large installed base of ABB equipment throughout southern Africa, and the expertise is being lost as far as dealing with this equipment is concerned. So for us there are good opportunities for getting into not only the maintenance but also the upgrading and everything that goes around equipment service. We have a number of full service contracts, where we have actually taken over the maintenance staff of customers, and where we are running maintenance at a full service level. Our latest contract is Namibian smelters in Namibia, where we have a full service agreement, which is based on us doing the maintenance, and some of the replacement and refurbishment, with very strict measures (KPIs) in place, where we either get a bonus or a penalty on a yearly basis based on the levels achieved.

How would you say service and maintenance in Africa differs from other countries such as Europe in terms of the level of technology or age of equipment?

That’s a difficult question. There are certain parts of the world, where equipment is kept in service for many years. In a lot of countries the equipment is probably not maintained as well as it has been in Europe, due to lack of skill. That is where we believe there is a market for us, where customers haven’t got the skills, either by training people and giving them the skills, or for us to do the work. So we see huge opportunities, both on the training side  and on the contracted maintenance side. I think that generally there is a shortage of skills, and this is becoming more and more prevalent in South Africa, for  a lot of our customers the skills base is not what it used to be. We are planning on opening a complete new training facility in South Africa, for HV and MV equipment, within the next 12 to 18 months, because we see opportunities to train people.

The transformer total health care program was launched a while back with a lot of publicity, and it seems like ABB has put a lot of effort into getting this off the ground. Has it been well received by the industry?

I think the initial uptake has been reasonably slow. We see that not only in transformers, but also in HV and MV switchgear, drives and motors. ABB has an extremely good product offering and it’s really due to a lack of understanding of exactly what can be achieved with these offerings. It’s really up to us to sell the concept, and to demonstrate what can be achieved, for us to be successful. We have over 2000 service offerings within ABB on a global basis, what we have done per country is to determine what our customer base is and what we believe is applicable to the infrastructure in the country. Based on that we put together a country-specific portfolio of service offerings, which we are now presenting to our customers. There has been a lot of back office work done, and it is now up to us to take the products and service offerings and make sure that they are implemented to the satisfaction of the customer. I would estimate that we are capable of handling 80% of the work locally at the moment, and 20% we can’t handle and needs upskilling. We need to upskill our own people to be able to do that.

To what level is ABB South Africa allowed autonomy in that respect?

From a service level we go to the highest level locally, and we will do the training in South Africa, so we have full autonomy on the service side, and have the expertise locally to carry out this function. The programme is driven locally. There are things driven from head office, in the sense that we must grow the market. They put the products in place and do the development,  but how the rollout is done is a local matter, it is up to us in SA to make sure that we understand the market, we know what they want and to ensure that we are able to give the market what it wants.

There are a lot of infrastructure projects on the cards for the next couple of years. How is ABB gearing up to get involved in that market?

ABB has traditionally, and I believe still has, a leading edge as far as products are concerned. We are continuously developing new products for transmission and distribution, and from a product perspective I think we are in an excellent position to capitalise on all infrastructure spend in southern Africa. From a project and execution perspective we are ensuring that we are upskilling our people continuously to ensure that project execution is done correctly and in time.  I think that has been an area where we have needed some improvement. We need a solid base of people, and what we are going to do is bring in a pool of people directly from universities, technicons, and FET colleges from next year, put them on contract, train them and give them the skills, and take the best of the group and put them into the company. That way we will have trained a group of people that we want to start off with. There is a skills shortage and we need to have a pool of project managers, project engineers and project controllers to ensure that we can execute the projects from South Africa.

A lot of the distribution network projects will require expansion of existing old technology. How does ABB’s product portfolio cater for this?

We are upgrading quite a lot of systems, specifically MV systems, where we have the ability to replace or upgrade certain equipment, and we have a product offering that allows us to take an old circuit breaker out of a MV panel and replace it with a new one, in the same panel. Those service offerings are available, and we have done them. We’ve replaced a huge amount of switchgear that’s been in the system for 40 or 50 years, with new circuit breakers using the same panel, and we upgrade them so that there are minimal interruptions at the customer side.

ABB is a leader worldwide in HVDC, and there has been a lot of talk about HVDC going into Africa, particularly where there’s cross border connections, and I have heard that Eskom is also looking at using HVDC to extend the existing network. Would ABB establish a local HVDC expertise team if this comes about?

If we speak about FACTS devices, and HVDC is one of them, we have a centre of excellence in Sweden, that we work extremely closely together with and we have for many years. We were involved in the Columbus stainless steel SVC and the Saldhana SVC many years ago. We have project managers and some technical expertise locally, but the lead will come from Sweden. I don’t see us building up that expertise for the southern African market. We will build up enough technical expertise to support the centre of expertise in Sweden. That for me is the beauty of being part of a multi-national organisation, where together we have the skills of knowing the customer and understanding local conditions as well as project management skills locally, with the real high tech skills coming from Sweden. We did it successfully in Namibia with the HVDC link.

ABB did two PV projects for Eskom at power stations and then you are also involved with the first round of the REIPPP. Where do you see ABB going in the renewables market?

The renewables market, specifically the solar PV side, is key to ABB. We are currently executing five large solar projects on phase one of the role out, but we are also doing a lot of smaller installations, such as that for the Department of Environmental Affairs. We won the order for the building automation, and based on that we also won the rooftop solar project. From the renewables side, all our products fit in extremely well, particularly with the acquisition that ABB made of a smaller inverter manufacturer, as we now have the full range of inverters to do projects from small sizes up to the MW projects that we are currently busy with. I think our range of products fits very well into the solar PV market, and we are also able to call on expertise from ABB Spain on the bigger projects. We are ensuring that knowledge transfer takes place to South Africa during the project, so that we can handle future projects ourselves. There has been a lot of transfer of knowledge from a technical perspective and from a project management perspective. There are huge challenges on all these projects, they are very tight in the sense of time duration, and they are mega projects. For us the smaller projects are a huge opportunity, not only in South Africa, but also in southern Africa.

We are also looking at the IPP market, but only as far as control and instrumentation is concerned. There are a have a lot of power plants worldwide where ABB has done the control and instrumentation work. So although we don’t have our own generation section, the C&I portion we can definitely do.

Where is ABB going locally with smart grid?

If you have a look at smart grid, we are really talking about intelligence in the grid. We believe that we are the leader in automation, and for me smart grid is exactly that, taking power and power equipment and making sure that automation is applied to those sectors of the network. In the old days you had power stations which fed down to the consumer, it was one-way traffic. Today you have renewables and other items in the grid, where even a household or a factory will feed power back into the grid, and it is not one way flow anymore, and that requires intelligence to manage the flow of power. All our products are designed to have that capability, so from a product perspective we are in the best position to enter this market and from our automation and control side we have the products that allow the power products to speak to one another, and to control centres. We are speaking to people like Eskom and others and getting involved in where the industry is going with smart grid in South Africa.

The ABB headquarters in Longmeadow was planned as an energy efficient green building. Has this been successful?

I think it has been very successful, but for me green needs to be defined. If you have a look at the building, we have energy saving lighting systems, we have a grey water recycling system, we have solar water heating, we have natural lighting etc., but for me one of the big benefits is that we have combined most of our activities in one centre. We used to have factories spread all over Gauteng, and if you take all the travelling required between the buildings, the energy used and the resultant CO2 emissions, which have now been eliminated by having one centre at Longmeadow, that is as big a benefit as the green building. The building is saving us a lot of money but consolidating divisions into one building is saving more money and it allows people to work together as one company. We have already extended this principle to other sites. The Cape Town office has been designed along similar lines by the same developer, and internationally ABB is following similar practices in all their buildings.

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