The Middle East has historically occupied a strategic position as a geographical, cultural, religious and political crossroads between East and West. The opening of the Suez Canal in 1869 had a tremendous impact on world trade, reducing transit time dramatically and opening up trade between East and West. Today, the Middle East still provides a major trade route, in addition to which, it is an important market for raw materials, manufactured goods and a potential field for capital investment. ABB established its footprint here in 2011 with the India pulp and paper business. In an interaction with Mr G Srinivas Rao, Vice President, Head of Sales & Marketing, Pulp & Paper, Minerals & Cement, ABB Limited, India, we gained a better understanding of how ABB’s operations evolved in the Middle East market, the challenges and opportunities, the strategic importance of the region – how it impacted the growing business, and also, how it will be leveraged in future plans.
Paper Mart: In our recent interactions with ABB India’s Paper division, we have learned that the Middle East is one of the strategic focus regions for your company. Please take us through the developments in the region in the last two years.
G Srinivas Rao: From 2011, the Middle East region has been serviced by ABB India’s pulp and paper business team, owing to our complete automation and electrification competency together with our longstanding experience in all kinds of machines, paper grades, and most importantly, our focused service support. Our focus is to implement a one-point automation and electrification agenda, a unified approach for bringing together DCS, QCS, CD actuators, WIS, drives (paper machine and stand-alone), chemical delivery systems, instrumentation, power management system and advance process controls. Moreover, we have been working at providing value added features such as optimization services [fingerprint etc], manufacturing execution solution (CPM) on a single platform of Industrial IT 800XA. This provides the customer a single window to view information related to automation and electrification for better control and improved decision-making, which in turn improves their profitability while reducing carbon footprints.
We identified our existing installation bases in order to implement our plans of proven migration and upgradation of processes for old DC drives, DCS and QCS (wherever applicable), our various value added services such as remote diagnostic support, annual maintenance contracts, optimization services etc for improved plant performance and plant asset life cycle management.
We have reinforced local sales through regional support to fulfill our long-term goal of serving customers with improved support time and easy accessibility to the ABB team in India.
We are also looking at providing our composite solutions which involves complete plant engineering, supply of all electrical & instrumentation equipment’s, drives and automation, supervision of erection, testing and commissioning to all our customers in MEA region. We are executing few jobs in India in similar lines.
PM: Highlight the key challenges you faced while working in this region and also, tell us what ABB has achieved in this market?
GS: From the time we started our operations in the Middle East region, our main challenges have been the islanded approach for DCS, QCS and drives (PM and stand-alone), the lack of systematic approach to migration/upgrade from the older version of systems to improved state-of-the-art systems, and local sales support for understanding customer needs and explaining ABB competencies available that meet and exceed their expectations. To overcome all these challenges we first set up a local sales support team in 2011, then followed it up with regular program with customers to explain the benefits of a unified approach, migration activities and our value added offerings.
Working closely with customers helped us win their confidence and the proof for this was in some of our business wins in the region which included:
1. Upgrade of drives at two customer sites in Kuwait
2. Sectional drive for PM3, rewinder drives upgrade, converter duty transformer, AC motor for paper machine drives and MV motor for customer in Saudi Arabia. As PM2 also has ABB drives, common spares and service support can be availed of from one party, reducing the total cost of maintenance.
PM: Since the Middle East market is part of your responsibility along with India, how important is it from a strategic perspective and also, please throw some light on your future strategy for the region?
GS: It is very important for us to understand both these markets, as each presents a different set of opportunities and challenges. In the Middle East market, the main product is tissue grade, while in India writing and printing, and the packaging industry are major players in the market. In fact, India’s largest paper company, BILT uses ABB’s composite solution for mill electrification, drives and motors. Certain key issues such as raw material, water and energy are focus areas for both markets. As true and committed business partners, we have been focusing on these key issues and have developed products and services, which can help customers optimize their operations. These products and services range from energy-efficient large transformers to motors, variable frequency drives (VFD), optimization services and equipment performance management through condition monitoring, fingerprinting etc. These solutions also help customer-compliance with government schemes such as perform, achieve and trade (PAT), renewable purchase obligation (RPO) and environmental mandates. Our offerings are built on best-in-class technology, application knowledge and an in-depth understanding of operational needs delivered through experienced/certified resources.
PM: ABB has introduced annual maintenance contracts (AMC) for process automation. Kindly elaborate on this and other new developments at ABB?
GS: Considering the current market scenario and the rising demand for cost optimization of production, it is extremely vital we utilize available assets in the best possible manner to provide the end user maximum efficiency. We have a range of services and solutions for the pulp and paper industry, which enhance asset life, along with improving performance, so that the overall spares requirement is lowered, breakdowns are reduced and productivity is improved. AMC is one such service where we offer our customers a planned way of maintaining their assets. Currently we have more than 30 AMCs running in India and a couple of them in the Middle East market. We also have a RDS facility, which enables us to connect to customer systems from even remote locations across the world, check on them and resolve software-related issues without any delay. Through this facility we have been able to deliver results beyond customer expectations. We expect these kinds of service offerings to grow in the future. In addition to AMCs and RDS we also have solutions such as advance process control, fingerprint, consulting, full services and enterprise asset management services.
PM: In the last decade the Indian paper industry has invested in technology upgradations and has plans to invest more in coming times. What plans does ABB have to support this market sentiment?
GS: ABB has played a very important role in upgradation activities, for instance, drive upgrades from DC to AC, migration from older generation DCS and QCS systems to latest state-of-the-art systems. The main requirement in an upgrade project is the time required to upgrade and the time taken to convince the customer about the performance improvement potential that these services offer. Any delay or non-performance in upgradation projects causes huge production losses. We have implemented many upgrade projects, including ITC PM2 drives upgrade in just four working days, well before the date committed to the customer. We have similar success stories with orders from Sabah Forest in Malaysia, where we replaced Honeywell DCS and PMS systems with ABB Industrial IT 800XA systems. We also have a proven process for upgrading any older generation ABB system with competitive systems within a short duration.
For any required upgradation, you need to deploy a team with domain expertise, experience and very sound technical know-how. ABB is the most preferred automation and electrification partner because of our pulp and paper industry experience [of over 100 years] and our market leader position in the business. BILT, the only Indian paper company that ranks among the top 100 in the world, required a comprehensive solution to modernize their mill, everything from complete electrification to drive systems delivery. What BILT wanted was a seamless integration of the different components to enhance efficiency and save costs. What they got from us was ABB’s PMC800, a global drive standard solution for paper machines that ensures energy savings, and reduced maintenance, which translates to cost savings for the customer.
We are also executing a similar order for JK Paper wherein they are adding a new paper machine with a capacity of 165,000 tons per year, a pulp mill that will produce 215,000 tons of wood pulp per year, and a 55 MW power plant. ABB scope involves complete design engineering, supply erection and testing of complete plant electrics, power management system and DCS for pulp mill. This expansion project is one of the largest in the Indian Paper industry involving close to USD 400 million.
PM: Recently ABB acquired L&W. What is your strategy for L&W products and services in the Middle East market? Also, at present, what services are you offering to this market from L&W?
GS: Lorentzen & Wettre is now strengthening its position in the Middle East market. Through this acquisition we will be able to market our products (equipment for quality control and process optimization) from ABB India, with key people who know the Middle East market and of course, the products. L&W is a supplier to all the main paper producers and converters in the Middle East region.
We also offer our AMC (Annual maintenance contract) to the MEA region, just as we have provided AMC for drives, DCS and QCS since 2011 at UPM and renewed the order for 2012. RDS is also part of the scope and benefits from this offering are visible in timely problem solving. We have also signed an AMC in May 2012 with a company in Egypt.