'Should ABB's head office shift to Asia in 20 years?'

Q&A/ Hubertus von Grunberg

Global engineering leader ABB, which has been on an upswing in recent years, owes some of that to the growth momentum in Asia. China and India lead the show with Chinese volumes two-and-a-half times India's, but the Indian growth rate exceeds China's. To underline the growing importance of India, the ABB Group held its board meeting for the first time here recently. Group Chairman Hubertus von Grunberg, an engineering veteran and a doctorate in physics, outlined the group's vision for India to Subir Roy.

The impressive growth that ABB is clocking has thrown up a skills issue. Are there enough engineers to sustain this growth?

What keeps us from utilising our global potential and doing our job to the fullest is not money, management decisiveness or readiness, but the availability of engineers on a global scale. That is the scarcest resource. Since, here in India, the high-class technical universities are pumping youngsters out at an incredible volume compared to back home, we need to tap this flow in order to halfway fill our needs. That requires us to shift jobs here or to train engineers here and get them to other countries, or to take them for training to Switzerland. But using those engineers for non-Indian goals cannot materialise to the degree hoped for because you present this marvellous growth rate of 40 to 50 per cent (ABB India), which is fantastic. I would be the last to constrain your growth. I cannot steal the talent from you by being selfish for Europe. So, there is a struggle for global engineering talent and India is one of our key providers for it, for both Indian and global assignment.

You have joined the ABB board recently. What do you bring to it?

There isn't too much I have to change fundamentally. My role is to help accelerate decisions, globalisation. I have spent eight years away from Europe, four in the US and four in Brazil and it makes you a different corporate and global citizen. Germany and Switzerland are not the hub of the world as they used to be. Yesterday at a 'meet ABB young high talent' gathering I asked, what is the balance of business in global power going to be in 20 years, what disadvantage will a global organisation 20 years down the road have by still insisting on a European head office instead of moving the head office to a country like this? If the majority of business and young talent is here, if the engineering centres have to be here because of you, then if you stubbornly maintain the headquarters in Zurich or Manheim... The question is, should headquarters not be where the majority of business is. I am not answering that question, I am just asking it in order to get people to awake and learn.

I am bringing this vision to ABB to make sure that it does not miss the boat in the future, it gets the direction right in time for where the future is going to be. I am bringing the power of strong decisionmaking. I am a hard hitter, I am impatient. When business gets close to 20 per cent growth, a German says be careful. But when I come to India and meet you people, you run 40 per cent growth successfully at a profit and a wonderful return on capital. I go back and say, India is running at 40 per cent, why are you afraid of 20 per cent? They are the role model.

ABB has a $15 billion firepower to make acquisitions and is looking at the developing economies too. You have also given yourselves a timeframe beyond which you will give back the money to the shareholders if you cannot profitably use it. Please elaborate.

Giving back some of the money to the shareholders is not a horror story. But Fred Kindle (president and CEO) and I feel that before we give money back, we have to look at more profitable ways of keeping our shareholders' money. Fred proudly announced $100 million for India just now to cover two to three years. But Ravi (Uppal) and his colleagues in other countries will not be able to absorb this cash amount that you referred to. So priority number two is M&A.

I cannot say which is the target, I can say we look every way, in this country too. We would not go hush-hush, the party would have to like us and we want to do it in a friendly way, and they will have to fit our core capabilities and technologies. We would not go astray, diversify and buy women's apparel all of a sudden (laughs), we would want to be in energy and automation and possibly a little into robots. And we have told Ravi and Biplab (Majumder) to come with proposals if they have any. Right now there is no definite project and nobody in this country should be scared we are coming after them.

What is your strategy in China?

In China, it is different. India is a democracy. In China we have to follow different rules. We have to work through Beijing and the central government, and we have to ask for permissions. India right now grows faster than China and we see you coming strongly, catching up with China.

Are you also looking for the same type of business acquisitions in China?

In our search, we are concentrated on the two mega-divisions: energy and automation, and robotics. We are also looking in Europe and the US. We could do medium-sized deals, more than one. Medium size is a billion (dollars) or two. But they need to be accretive. We will not go for deals solely in order to make headlines for your esteemed paper.

How different are your India and China strategies?

They are not that different; we want to grow in both countries. If I were to leave any one of the two mega-countries alone, I would create an automatic stronghold for my fiercest competitor and he comes after me with the economies of scale. You have mega projects coming in India for HVDC (high-voltage DC). We have such projects in China too. The explosive growth of our engineering centres in your country is even more impressive.

India has become the hub of software development in the world and software has, for any one industry and also our industry, increasing importance. What are we mainly doing at our R&D centre here? Software, software, software. This puts you in a very special position and we want to take full advantage of it. Also the free flow of capital, the possibility of redistributing dividend, and the democratic setup of India have certain incentives for us.

Other than adequate engineering skills, are there any challenges you have to address in India?

Yes, we also need some expatriates at times and we need comfortable housing conditions to be able to attract people for the interchange of technology. We need easy interchange of talent and the friendliness of India to people coming in from other parts of the world. But that exists and the country is beautiful and it opens arms for foreigners. I need infrastructure in housing, transportation; I need a free economy in which we can prosper. We (ABB global) have a slight majority holding in ABB India and we want to be welcomed as a good corporate citizen. The government gives us a framework for feeling well in this country and it should please continue to do so in the future so that we grow and grow and grow.