Following are excerpts from a CNBC interview with Ulrich Spiesshofer, CEO of ABB, from the World Economic Forum 2017 with Steve Sedgwick and Geoff Cutmore.
SS: Let's move on. Let's talk ABB, because the company orders took a hit from Brexit and the US elections last year. The Swiss Group's CEO has said he doesn't see global markets recovering fully this year. Well, let's speak to that man, Ulrich Spiesshofer. Very good to see you, sir, how are you?
US: Good morning.
SS: So look, let's just talk about it, first of all you do not see markets recovering in 2017 to get back to previous growth levels.
US: Yes, look, global markets continue to be characterized by high levels of uncertainty. We don't know yet exactly how Brexit comes out. We're looking forward to get the overall programme of the US government, so there's a lot of uncertainty and that will have a subdued effect on the markets. We are basically flying onside and prepare for a market return later on in the year 2017.
SS: I want to just take a step back, if I can, because you saw a market drop in UK business on the back of Brexit. Because it's very interesting, because a lot of the economists, including Andy Haldane, said, 'We got it wrong, actually UK activity's pretty strong, certainly around the consumer, as well.' So why was it that customers just pulled back from spending big money on capex projects with ABB products?
US: People are just uncertain about the conditions that the ruling will be all about. The Brexit, how it will be executed, and that means a lot of our customers said, 'The project is not off, but we are delaying the project, we wait a little bit until we see.' Given what we do in infrastructure, we are very heavily exposed to capex, and that was the major hit.
SS: Sure.
GC: Interesting, I listened to Bob Dudley on our set talking about capex intentions over at BP. This has been an issue, the reduction in capex spending in the mining and in the energy sector. Do you see it coming back in 2018, if not in 2017? What's your feel? Because obviously it's critical for your industry.
US: If you look at the moment the dynamics, short-term there is definitely still a subdued market sentiment. The first discussions are coming on future projects, the first discussions are coming on adding growth, in terms of capacity. I think this will be more a 2018 thing that we are preparing for. I've met a lot of my customers here. 2017 will be probably a transition year, and '18 we're looking forward to get a little bit more momentum in the market.
SS: How far away are you from where you want to be with your transition programme? I think you started, Ulrich, in 2014, as well, you faced down Cevian, last year, as well, which I think is very interesting. You've done something that not a lot of CEOs have done at the moment, and that is not break up your company. How far are you away from the ABB you want to go forward with?
US: Look, the transformation of ABB is in full swing. The first couple of years we had to do homework, we had to cut the fat that we had put in, we had to put in a clearer performance culture. Now we have four businesses, but which are all number one or two in their respective markets, the way we have shaped the portfolio. We are firing on all cylinders on the digital agenda, the training, you see it even here in Davos, the training is coming very strongly, so we are ready now to reengage on the front end, on the growth side, and that's what you will see at ABB.
SS: I think we've got to leave it there.
GC: I'm afraid we have, yes, yes, we can't-, the next level strategy, I love that, it's a great title for are working of the business, and I think the move to digital is so smart, because you can move up the value chain.
US: Yes, absolutely, and we can add much more value to our customers by providing interesting services. Uptime speed and yield is still very, very important in industry. Digital allows us to get to the next level of productivity improvement that will create wealth. That will create competitiveness, and that also will create jobs.
GC: Ulrich, pleasure to see you, thanks very much for coming by.