Tom Rodriguez & Jukka Salmi
ABB Global Casting Strategy
Motors and Generators
© ABB Group
December 12, 2012 | Slide 1
Mission Statement
is to be the best (as determined
by our customers) marketers, designers
and manufacturers of industrial electric
motors, mechanical power transmission
products, drives and generators
© ABB Group
2
December
12, 2012 | Slide 2
ABB Value Statement
To produce the highest-quality, energy-efficient
products available in the marketplace and sell them to a
broad base of value-minded customers
Vp = perceived Value
Qp = perceived Quality
C = Cost
© ABB Group
December 12, 2012 | Slide 3
Sp = perceived Service
T = Time
Agenda
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 4
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 5
ABB Overview
A global leader in power and automation technologies
© ABB Group
December 12, 2012 | Slide 6

145,000 employees in about 100
countries

$38 billion in revenue (2011)

Formed in 1988 merger of Swiss and
Swedish engineering companies

Predecessors founded in 1883 and
1891

Publicly owned company with head
office in Switzerland
How ABB is Organized
Five Global Divisions
Power
Products
Power
Systems
$10.3 billion
35,000
employees
$7.7 billion
19,500
employees
Discrete
Automation
and Motion
$8.4 billion
29,000
employees
Low Voltage
Products
Process
Automation
$5.0 billion
21,000
employees
$7.8 billion
28,500
employees
(2011 revenues, consolidated)

ABB’s portfolio covers:

Electricals, automation, controls
and instrumentation for power
generation and industrial
processes

Power transmission

Distribution solutions

Low-voltage products
© ABB Group
December 12, 2012 | Slide 7

Motors and drives

Intelligent building systems

Robots and robot systems

Services to improve customers
productivity and reliability
ABB Structure
Discrete Automation & Motion Division
LV Drives
MV Drives

Revenues - $8.4 billion

Total employees 29,000

Sales in more than 100 countries

More than 70 manufacturing sites
© ABB Group
December 12, 2012 | Slide 8
Motors & Generators
Robotics
ABB-DMMG Structure
Motors & Generators Business Unit (DMMG)
Baldor
LAC Motors
LV IEC Motors
Generators
Service
World’s leading manufacturer of LV, MV and HV motors and generators, and
mechanical power transmission products, serving all industries and
applications, throughout all markets

$4 billion revenue

15 000 people, 45 factories in 13 countries

Complete product offering from sub-fractional HP up to 70 MW

LV, MV and HV induction motors and generators

Synchronous and permanent magnet motors and generators

DC motors, servomotors, gear motors

Mechanical power transmission products
© ABB Group
December 12, 2012 | Slide 9
BU Motors and Generators
Unmatched ability to serve global and local customers
Total offering
ABB
NEMA LV
IEC LV
Motors
Large <
11000 kW
15000 hp
Large >
11000 kW
15000 hp
Gear
Small generators
Generators
Large generators
Gen sets
Mechanical power transmission
Service
© ABB Group
December 12, 2012 | Slide 10
+
Baldor
=
ABB + Baldor
BU Motors and Generators
Manufacturing and logistic center locations
Manufactuing location
Logistic center location
© ABB Group
December 12, 2012 | Slide 11
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 12
How DMMG – Motors and Generators is organized
Five Global Product Groups
Large AC
Motors
Baldor
(NEMA &
Dodge)
Service
BU
Generators
© ABB Group
December 12, 2012 | Slide 13
LV IEC
DMMG - BU Organization and Structure
BU SCM Sourcing Team
Castings and
Fabrications
• Castings
• Iron
• Aluminum
• Aluminum Extrusions
• Welded Structures
• Thin plate
• Coolers
• Machined Shafts
• Forged Shafts
• Forgings
• Barstock
• Accessories
© ABB Group
December 12, 2012 | Slide 14
Raw
Materials
• Copper
• Electrical Steel
• Insulation
• Bearings
Emerging
Markets
• East Asia
• South Asia
• Eastern Europe
DMMG - BU Organization and Structure
BU SCM Castings & Fabrication Team
Castings and Fabrications
Category
Doug Bushey
Category Manager
Commodity
Accessories
Welded
constructions,
machined frames, &
endshields (8mm +)
Commodity Mgr
Roman Szczesniak
Open
© ABB Group
December 12, 2012 | Slide 15
Cast Iron
raw & machined
castings
(large)
>76KG (150 lbs) +
Cast Iron
raw & machined
castings
(small)
<76KG (150 lbs)
Hot rolled
shafts, shaft Thin Plate
& ring
constructions,
Aluminum
forgings
Coolers &
Castings &
including
Fabricated
Extrusions
machining,
Fans
and bar
(< 8mm)
stock
Jukka Salmi
Tom Rodriguez
Tom
Skip Martin
Rodriguez
Sisko Qu
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 16
BU SCM Commodity Strategy
Keep
Production
Running
Global
Market
Forecasts &
Trends
Manage
Supplier
Performance
Manage &
Leverage
Entire
Supply Base
Manage
Costs
Manage
Assets
© ABB Group
December 12, 2012 | Slide 17
SCM Strategy


Keep production running

Ensure availability components

Multiple sourcing

Strategic sourcing
Manage supplier performance

Understand supplier capabilities

Improve quality

Reduce Lead Times

Improve OTD

Ensure ethical standards of practice are being met

Supplier agreements that address these specific items
© ABB Group
December 12, 2012 | Slide 18
SCM Strategy (con’t)

Manage our costs and assets

– Cost structures related to similar parts



All Markets (Americas, Europe, China, India)

Secure Supply Chains from Domestic and Emerging Market sources

Reduce costs while supporting Production Units
Manage & Leverage Total Supply Base

Strategically rationalize our supplier base

Increase Emerging Market spend

Constant communication between all Commodity Teams (Americas, Europe,
China, & India)
Global Market Forecasts & Trends

Cost structure of each region

Track trends in raw material , energy, and scales of economy
© ABB Group
December 12, 2012 | Slide 19
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 20
Casting Overview

Spend Data – Iron

2012 Iron Casting Spend is expected to be 200+ MUSD

80% of our spend is with 20% of our Foundries

Multiple sourcing of parts

Raw material prices continue to trend downward since Q1 2012



Based on Indexes Decline: Brazilian Grade Pig Iron, Chicago Busheling
(Scrap), Energy
U.S. Foundries Running at 90%+ Capacity

Automotive, Agriculture, Construction, Oil & Gas all compete for this capacity

Foundry Capacity continues to shrink in the U.S.
Spend Data – Aluminum

2012 Aluminum Casting Spend is expected to be 15+ MUSD

80% of our spend is with 20 Foundries
© ABB Group
December 12, 2012 | Slide 21
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 22
Supplier Performance
Enter into contractual agreements addressing and
defining clearly the expectations between ABB and
Supplier
•
•
Supplier Performance is measured in 3 critical areas
•
•
•
Cost
•
Review Global Markets
•
Payment terms
On Time Delivery (OTD)
•
-3 days, + 0 days
•
Suppliers OTD Target = 100%
Quality
•
© ABB Group
December 12, 2012 | Slide 23
Suppliers Quality Target = 100%
 ABB
Structure
 ABB
BU SCM Structure
 BU
SCM Strategy
 BU
Casting Overview
 Supplier
 Cost
Performance
Improvement & Development
© ABB Group
December 12, 2012 | Slide 24
Cost Improvement & Development

Continual review of all parts and suppliers

Supplier recommendations for re-design of existing parts

Supplier recommendations on new designs

Consignment and/or Supplier Stocking Programs

Review of payment terms

Reserved capacity

Lead time reduction

Strategically rationalize the supply base

Global Commodity teams

–
Cross communication between PG’s
–
New standard quote template for more consistent quoting
–
Synergy Savings Programs to bring reduce cost
Database of ABB approved Global Suppliers (ProSupply)
© ABB Group
December 12, 2012 | Slide 25
© ABB Group
December 12, 2012 | Slide 26