Mission Completed!

When Per Brekke, Managing Director of ABB in Vietnam by March 2003 leaves his position for a job back at ABB in Norway, it will be with a nice sense of “Mission Completed”.
     Per Brekke arrived Hanoi in January 2000 with his main assignment to evaluate what to do with ABB’s ailing factory in Vietnam, ABB Transformers Ltd… He advised to restructure the company and on 1 June, 2002, ABB Transformers became a 100 percent ABB owned company, which last year made its first operational profit.
     “I am confident that the company is now on the right track,” says a visually pleased Per Brekke.
     ABB first established a Representative Office in Vietnam in 1993. A celebration of the ABB’s 10 year anniversary in Vietnam is planned for September this year.
     The transformer factory was established one year later, in 1994, in a joint venture with a state owned company under the Ministry of Industry – the same ministry which operates the Electricity of Viet Nam, EVN, which is the main customer of the transformers. ABB had 65 percent and the Vietnamese partner 35 percent of the shares. Since the beginning, the company has manufactured transformers, both big power transformers for tens of thousands of Volt and smaller distribution transformers which are today installed all over Vietnam, breaking down the high voltage power to the general consumer level of 220 Volt.
     However, as the years passed, the company never managed to break even. Instead it accumulated an increasing amount of debt – when Per Brekke arrived the debt was 10 mill dollars. All the loans were obtained in international banks with ABB as the guarantor.
     “Closing down was definitely an option. But when I started looking into what could be done, I decided to work out a five year plan for the company to become profitable instead. The 10 mill dollars debt required a refinancing of the company. This ABB accepted – on the condition that we could negotiate a settlement with our Vietnamese partners to take over their share of the company.”
     “To make a long story short, it took 18 months of negotiations before finally on 1 June 2002 the company became 100 percent owned by ABB.”
     Initially, the former partner wanted ABB to pay back the full amount paid in for their 35 percent share when the company was established back in 1994, but eventually they settled for less.
     “The main problem was to make the Vietnamese side realize, that they owned 35 percent of a “negative equity” – their money had simply disappeared,” Per Brekke explains.
     “After our independence I was a bit nervous to see, whether this would have any negative influence on our relationship with the client, EVN, but this has not been the case.”
     The client relationship to EVN is complicated by the fact, that EVN has two transformer factories themselves. To overcome this situation to some extend we focus strongly on quality. What constitutes quality in a transformer is a minimal loss of power and a long life with minimal maintenance. ABB obtains all these qualities by a combination of technical design and choice of materials.
     “Basically, if one of our transformers are installed and serviced as prescribed they will work trouble free for 20 years,” says Per Brekke.
     “Based on positive feedback from customers we will maintain our quality strategy even if we today are not getting fully paid for it. I believe it will pay off in the long term and that there in the future will be a more equal playing field between State Owned Enterprises and private sector.”
     “The competition with the state owned companies is, however, leveled out somewhat by the fact that the very high growth in the electricity consumption in Vietnam gives us all a bigger cake to share,” Per Brekke explains.
     “In 2001, the electricity consumption increased 15 percent from the previous year. In 2002, the increase was 17 percent up from the 2001 level. This is remarkably high compared to developed markets like Europe, where the growth is only about 1,5 – 2 percent per year.”
     But ABB is more than transformers.
     Per Brekke’s other task in Vietnam has been to locate projects within key ABB competence areas like automation of primary industries such as cement factories, paper mills, steel plants and the oil and gas industry including the downstream petrochemical industry and transmission and distribution system for the energy sector.
     “Last year, we obtained an order to install automation and control systems in a cement factory in Vietnam valued at 17 mill. Dollars,” Per Brekke says.
     “When it comes to projects like this, ABB has special competence centers around the world. Our highest expertise within cement is for instance in Schweiz, in this region we have our best experts in industrial automation in Singapore, in Sweden we have our center for power systems, etc. We call them technical lead centers,” Per Brekke explains.
     When ABB in Vietnam identifies a project, they call in the experts to do the technical talking. This way the clients get the best expertise available combined with the convenience of dealing with local people who understands their local conditions.
     “Here in Vietnam we have currently five projects in the pipeline for the industrial sector at different stages, and I believe three of them will come up for decision making during this year,” he says.
     Leaving Vietnam, Per Brekke can look back at a total of fourteen years working in Asia. During the relatively quiet years of 1984 and 85 before the big boom in Asia he lived in Kuala Lumpur. When the bubble burst, he was based in Manila.
     “I think it was good that I had tried to live elsewhere in Asia before coming here in 2000,” he says.
     “Living here is one of the nicest places in the region, but I don’t think I would have been able to understand the way business is being done here and decisions are being made if this had been my first Asian posting.”
     Currently, ABB is expanding fast not only in Vietnam but all over Asia. In China, the company has 25 joint venture companies. In Thailand and Malaysia the company has well established factories and is active within other sectors as well.
     “We have just opened a representative office in Phnom Penh and I expect soon to see a permanent office opening up in Laos,” Per Brekke says.
     “ABB was previously concerned with building up assets in the countries, where we are operating. At that time it was also often a wish of the various governments, but today the clients seem less concerned with this. Today it’s more important that we are present with sales and marketing staff.”
     In Vietnam, ABB has today 275 people employed. Some 240 work at the transformer factory while the rest work in sales marketing and administration in one of the three ABB offices in Vietnam: Hanoi, Ho Chi Minh City and Danang.
     Back in Norway, Per Brekke – today 61 years – will wind down for his retirement in a few years time working with management and project developments.
     “I have been promised a job without direct profit and loss responsibility – which will be quite nice for a change,” he laughs.
     “I’ll miss it. But maybe I’ll be invited back in September for the anniversary celebrations.”

One Comment on “Mission Completed!”

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