Claude Darmon A joint venture between Franco-British ALSTOM and Swiss-Swedish ABB, ABB ALSTOM POWER started operations in July this year with Claude Darmon as the new company's President and Chief Executive Officer. Nick Salmon is one of the company's two Executive Vice Presidents, along with Alexis Fries, formerly of ABB, and has played a key role in defining the new organisation and setting up the Brussels-based management coordination centre.

    Nick Salmon began his career at the UK's Central Electricity Generating Board and was later project manager in Hong Kong for China Light & Power. He returned to the UK as Director and General Manager of the Power Station Projects Division of GEC Turbine Generators, and following the merger of GEC and Alsthom in 1989, was appointed Deputy Managing Director of the Power Plants activity. In 1993 he joined Babcock International plc as Chief Executive and, after successfully restructuring the business, returned to ALSTOM as President of the Energy Sector in 1997.

    ABB ALSTOM POWER gave World Cogeneration its views on how the company is shaping up.

    Now that ABB ALSTOM POWER has officially begun operations, how would you describe the new company?

    ABB ALSTOM POWER: Well, for a start, ABB ALSTOM POWER is a 50/50 joint company created through the merging of the power generation-related activities of the two former separate organisations. It is incorporated in the Netherlands and has its management coordination centre in Brussels. We are one of the world's leaders in power generation, services and equipment, a 10 billion Euro organisation with a combined workforce of 58,000 people and a presence in over 100 countries. About 40% of our sales are in Europe, 27% in the Americas, 17% in Africa and the Middle East with another 16% in the Asia-Pacific region. So you see, we are a completely global company, more so than any of our direct competitors.

    What do you see as the new Company's particular strengths?

    ABB ALSTOM POWER: We have the advantage of being able to rely on a variety of advanced technologies, from, for example, sequential combustion gas turbines to clean coal technology, all achieved through an extensive R&D spend over many years. We also have comprehensive capabilities in turnkey projects and in providing a wide variety of services for our customers. These are combined with a global sales network and innovative project financing - which may also include taking equity. Even at start-up, the new company is already the world leader in a number of key markets - the number one in turnkey power plants, services, steam turbines, boilers and hydro-power. At the same time, it is also world number two in gas turbines below 10MW and number three for gas turbines with outputs greater than 10MW, altogether a very strong market position in global terms. Our installed generating base is the largest in the world, with 640,000MW accounting for one fifth of the entire world's total capacity, while at the same time we are also currently involved in over 100 major turnkey power projects worldwide.

    How important is the company's previous investment in research and development to ABB ALSTOM POWER going forward?

    ABB ALSTOM POWER: It is absolutely key. We have to provide our customers with the best and most competitive solutions available, and this means that all our research and development efforts in advanced technologies will be linked closely to the requirements of the market.

    Has your approach to the overall organisation been very market-driven?

    ABB ALSTOM POWER: Yes. Our approach has been very pragmatic, retaining and building on the best of our two former organisational structures. We needed a market-orientated organisation so that we could continue to provide the highest levels of customer service through global integration of our capabilities, allowing us to reduce our costs. And we needed to capitalise on the strength of our worldwide sales networks. ABB and ALSTOM already have the best sales organisations in the world in the power engineering sector, so I see this as a unique opportunity to create an unrivalled global for both sales and service.
      We don't see ourselves as a holding company with a range of different businesses, but as a truly integrated organisation. Operating within a single unified structure allows us to develop shared services where these are seen to be effective. We are also adopting a lightweight organisational structure with a maximum of just seven layers of management, limiting the non-production related costs of sales, administration and R&D to less than 10% of turnover. Last but not least, our operations are being geared to reflect the new company's multi-cultural dimension.

    ABB ALSTOM POWER has eight business segments, one is entirely service dedicated. Is this where ABB ALSTOM POWER is targeting future growth?

ABB ALSTOM POWER: This is certainly one of the Company's main growth areas. We believe that there are many opportunities out there in the market. Having a Segment dedicated to service is not only a good means of growing the business - the mindset needed to develop services is very different from the one needed for to develop new products. We have to listen to our customers and strive actively to meet their changing needs.

    The new integrated company organisation will clearly have to operate on an even wider multi-national basis than before. Will this have an impact on your customers?

    ABB ALSTOM POWER: The new company obviously combines the very powerful presence of each of the two former organisations in countries throughout the world. In our biggest nationally-based operations which cover some 14 countries around the globe, the organisation is headed by Presidents. In the 20 or 30 other countries where we have a slightly smaller presence, we have country-based managers. Our presidents and managers will have responsibility for initial marketing efforts, sales-support, and customer relations. We may be a large organisation, but we must retain a strong local contact with our customers.

    What do you see as the main challenges facing the new company?

    ABB ALSTOM POWER: Despite our combined strengths and leading position in global markets, there is absolutely no reason for us to be complacent. This is a fast-changing business, so we must consolidate and build on our present market position. It is vital that we maintain and strengthen our customer-focused approach. Nevertheless, we face a number of challenges.
     First of all, we must develop our market share in the growth areas of our business. Even though the global power market continues to show moderate growth there are a number of specific areas which are expanding rapidly where we should improve our position and increase our market share. This is particularly true for gas turbines, clean coal technology and all types of environmental products.
     Our second big challenge will be to develop our service business, which I already mentioned. We must do this as rapidly as possible, seizing all available opportunities in this changing market. We see our service segment as a key to boosting future profitability.
     We will also have to implement a very strong, competitive improvement programme based on reducing costs by improving quality. We have targeted benefits resulting from synergies of between 500 and 600 million Euros (US$530 - US$640) through a carefully implemented programme for change and integration as well as from improved sourcing and procurement.

    Would you please give us your new address? ABB ALSTOM POWER 489 Avenue Louise 1050 Brussels Belgium Tel: 32 2642 3000 Fax: 32 2642 3601 www.abb-alstom-power.com Thank you.