ABB yesterday announced a strategic realignment of its global transformer manufacturing, engineering and service footprint to enhance competitiveness in a dynamic market environment marked by increasing competition and consolidation in the rail industry. The move is part of the ‘Power Up’ transformation program in ABB’s Power Grids division.
In the United States, ABB will consolidate its power transformers manufacturing footprint by investing in its South Boston and Crystal Springs units and discontinue production at its unit in St. Louis, which will continue to focus on engineering and service activities. In addition, ABB will establish new traction transformer manufacturing facilities at its South Boston unit to serve rail industry needs. ABB will also expand its medium and large power transformer factory in Varennes, Canada, to better serve the Canadian market.
Reuters is reporting the reorganization comes as ABB seeks to justify its decision last year to reject calls from its second-largest shareholder to spin off its Power Grids, the company’s biggest but least profitable business. Power Grids has seen a 9% drop in orders, with a profit margin of 9.9%, which is below the company’s other business units.
Reuters is also reporting 120 jobs in St. Louis will be moved to South Boston, and more than 500 new jobs will be created over the next two years. Analysts told Reuters the restructuring will cost ABB between $60-$80 million.
In Europe, production of traction transformers will be consolidated in Lodz, Poland, which will become the main manufacturing hub for rail customers in the region. ABB plans to continue manufacturing prototypes and smaller quantities at its facility in Geneva, which will remain the center of excellence for this technology and be an innovation center for energy efficiency and sustainable mobility solutions. Capacity will also be expanded for power and distribution transformers at the Lodz unit, bringing economies of scale and making it a major transformer hub for ABB.
In Asia, Middle East and Africa, to serve growing market needs and enhance customer proximity, ABB will expand its traction transformer operations in India, supporting the government’s ‘Make in India’ initiative. The company will also invest in upgrading its Datong traction transformer facility in China to improve efficiency and meet growing demand. Earlier this year, ABB inaugurated a new traction transformer facility in South Africa, in line with the government’s local procurement requirements.
“This footprint optimization will enhance competitiveness and strengthen ABB’s global leadership in transformers by better aligning the business to reflect changing market dynamics,” said Claudio Facchin, President of ABB’s Power Grids division. “The realignment is part of our ‘Power Up’ transformation program and ABB’s Next Level strategy.”
(Photo by Laurie Skrivan, St. Louis Post Dispatch)
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