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Turbocharging – inspired by our customers Activity Report ... ... Marine In 2014 the marine and shipping industry saw some continuation across the board of the challenges faced in

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  • Turbocharging – inspired by our customers Activity Report 2014

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    Editorial

    As we reflect back on the year of 2014, it has given us a renewed focus on our vision to be our customers’ very first choice. We have lived this vision through new initia- tives and developments across ABB Turbocharging throughout the year. Although many markets in which we operate remained slow, as in 2013, we have been driven by our commitment to move our business forward to support our customers in achieving their goals.

    Despite a demanding twelve months, we had a number of highlights. For low-speed engine applications, the A200-L has continuously grown ABB’s market share offering operational flexibility and allowing for dual ratings. The A100 series has received market-wide acceptance in four-stroke turbocharging. Last year also saw Power2®, our two-stage turbocharging solution on an additional engine platform in series delivery and we will see in 2015 additional engines being launched. The TPR 56 with VTG was delivered as a serial product in the traction market in China – offering fuel savings and operational robustness at varying load profiles and across different cli- matic environments. In addition, there was increased market interest in 2014 for our VCM® technology, a major element of our growing portfolio of products and services.

    The maintenance of our products in operation for efficiency, safety and uptime is key, and our Service Business fared well over the year as a result of our tailored offer- ings, with our long-term agreements such as OPAC once again receiving increased customer interest. One particular highlight is our upgrades business, 2014 was the second year of offering these packages, which grew strongly, showing that the market is keen to improve the performance of long-life assets. ABB turbo chargers are a good platform to adapt for future needs, backed up with the strong technical knowledge of our people.

    In the industries where we are present, marine and power generation remained slow, as in 2013. Oil and gas (on- and offshore) which in recent years propelled the business also showed a clear slowdown towards Q4. Low oil prices will be an advantage to some customers where fuel is a key element of their costs and this will create strong headwind where oil price defines their top line.

    Contents

    Editorial 2

    2014 highlights in products and services 4

    Our work in 2014 5

    Adapting to the market 8

    Key facts 2014 11

    Perspectives on 2015 13

    Our thoughts on the road ahead 16

    Organization 18

    The focus of our investments in 2014 and 2015 is on people and seg- ment specific products and ser - vices: making a real difference to how our cus- tomers’ engine products perform in the field.

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    For our business overall, 2014 ended on a comparable level versus 2013. Our differentiated, segment based development of offerings, as outlined in 2013, is now supported even better by an organizational set-up focusing our energy and attention on specific market segments. In 2014 and 2015, our investment is focused on people and segment specific products and services: making a real difference to how our customers’ engine products perform in the field. Over the past year, we maintained our focus on offering and developing leading edge technologies. We plan to continue this through further expansion in 2015, proactively addressing the needs and concerns of engine builders and end users in the development of specific solutions.

    As a business we have faced another unpredictable year, but the expertise of our people working in close cooperation with our business partners has led to advance- ment in initiatives to overcome the challenges of 2014. It is difficult to predict 2015 with any degree of certainty, we anticipate that some pressures across our industries will continue, however we also see opportunities over the coming months. The impact of the Swiss Franc no longer being pegged to the Euro, may create additional chal- lenges, but we move ahead confident that our new global organizational structure will steer us in the right direction.

    I would like to thank our customers and business partners for their loyalty through- out the year, and of course our own people who have committed to our mission to make a real difference in how our customers’ engine products perform. We look forward to continuing our journey with you through 2015.

    Oliver Riemenschneider

    Offering and developing leading edge technologies was our continued commitment throughout the year.

    ABB Turbocharging extended Management Team in 2014.

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    Service. 22 percent increase in Maintenance Management Agreements and Operation Performance Packages since 2013. Service agreements now cover 15,000 turbochargers. 80 turbocharger upgrades completed in 2014. First US MMA packages sold. 7 new Service Stations opened. Products. Over 550 A200-L turbochargers specified or ordered. Power2 achieves commercial success. Successful Valve Control Management (VCM) test on full gas engine. Release of first type TPS-H for gas compression. Milestones. 90 years of the Test Center. Investment. 13 MUSD investment into the Test Center.

    2014 highlights in products and services

  • Marine In 2014 the marine and shipping industry saw some continuation across the board of the challenges faced in 2013, as well as some new opportunities. The start of the year saw increased activity in ship - building orders, although this created overcapacity which had a noticeable im - pact in Q2, as new orders for all vessel types fell to levels below 2013. The over - capacity issue is not likely to end soon, creating increased pressure for suppliers in the marine market.

    The medium-speed marine market saw a significant slowdown in drilling ship new buildings. We have however seen high

    production volumes in 2014 of auxiliary engines, which puts some further pres- sure on ABB in this area of the market due to com petitive pricing. In 2015, some slowdown of large bore engines is anticipated.

    The low-speed market was relatively depressed throughout most of the year, although there were some positives. Freight rates having lowered at the start of the year did show some improvement later into 2014. The dramatic fall in oil prices may shift operators’ focus away, to some extent, from fuel consumption concerns. This will help the industry and has also created some market potential

    as customers show increased interest in engine dual rating allowing them greater flexibility although with significantly higher costs.

    Furthermore, the trend for ever larger container ships is continuing – 2014 saw the launch of the largest vessel currently in service with 19,000 TEU capacity and the largest engine in operation boosted by ABB designed turbochargers. Already work is under way on a vessel even larger illustrating that ship operators are still focused on economies of scale in managing their overall costs.

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    Our work in 2014 Turbocharging solutions for the marine, offshore, power generation and rail markets continued to be our focus in 2014.

    19,000 TEU CSCL Globe with ABB designed turbochargers docked in Hamburg, Germany.

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    Despite challenges faced by the marine industry, 2014 saw fast uptake for ABB Turbocharging’s latest generation prod- ucts with over 550 A200-L turbo chargers specified or ordered in 2014. Also further success with latest technologies was achieved in 2014, with the delivery of Power2 for Wärtsilä’s first commercial order for two-stage turbocharged diesel engines.

    Offshore The year started well, there was invest- ment activity and continued planning of exploration for deep sea fields. Q1 saw positive orders for offshore vessels. From the mid-point of the year this changed, with falling oil prices which have been key in shaping industry dynamics. From the summer peak to end of year the price drop was around 60 percent, directly impacting the ordering activity which fell quite significantly in the second half of the year.

    Consequently, we started to see that some projects were stopped or delayed. Some new exploration activity has been postponed or cancelled altogether. As a result, the industry has seen the first round of seismic ships, and drill ships unemployed, previously having been very

    hand faced similar obstacles in winning new projects, with no real change from a year ago. The weak Eurozone, and lack of positive legislation compounded the financial issues. Consequently we saw order intake drop from Q2 onwards, as well as relatively short lead times.

    In the medium-speed market, the pattern was similar with a strong Q1 tailing off over the year due to market volatility and difficulties in securing investment. Those projects that did go ahead created new challenges for suppliers with re - quire ments for tight delivery time scales, so a real need for flexibility to meet customer needs. The positive news is that Wärtsilä managed to sell the first W20V32TS diesel power plant project consisting of five engines. The W20V32TS is Wärtsilä’s first two-stage turbocharged serial engine re leased into the market, with the application of our Power2 550-M.

    Our continued focus on VCM led to the signing of a development agreement with Caterpillar Energy Solutions

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