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Exclusive Interview: Steve Nicholls of Emerson

Mid East Industrial Automation president talks investment & expansion

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Steve Nicholls, President of Emerson Industrial Automation Middle East and Africa.
Steve Nicholls, President of Emerson Industrial Automation Middle East and Africa.
Emerson has earmarked $30m in capital investment to expand operations in Dubai.
Emerson has earmarked $30m in capital investment to expand operations in Dubai.

Steve Nicholls, President of Emerson Industrial Automation Middle East and Africa, discusses business in the region, government investment and the key to competent expansion

With record global sales exceeding $24.2 billion, 2011 was a good year for Emerson. “Fiscal 2011 was a really exciting year for us, and we’ve seen the same kind of growth in the Middle East over that period,” enthuses Steve Nicholls, President of Emerson Industrial Automation Middle East and Africa.

“Our global business was up 16 per cent year on year, and our industrial automation segment in the Middle East grew by 50 per cent, so we’re very fortunate.”

Fortunate is perhaps a modest way to look at it; a glance at the company’s activities quickly suggests that there’s a little more to Emerson’s success than good fortune.

“We sell to all major business areas, be that oil and gas, petrochemical, power and water, mining, food and beverage and commercial building and infrastructure; frankly, all cylinders were firing in the last couple of years,” says Nicholls.

“All of our businesses have seen significant growth, driven obviously by oil and gas wealth, but also the re-investment that governments are putting back into infrastructure projects.”

A high level of government spending is providing a stable platform for infrastructure firms to flourish in the region, and the power and water sector is no exception.

“Right now I think there is a significant level of re-investment happening in utilities, with power and water plants – greenfield and new construction – modernisation, upgrades and alternative energy solutions,” says Nicholls.

“There are huge demands in the marketplace right now, both consumer-driven and industry-driven, and I think governments are making wise investments.

“We’d always like to see more,” he says with a smile, “but it’s very healthy right now, and companies like Emerson are taking advantage of that.”

With spending on alternative energy also at an all-time high, fuelling a burgeoning market in the Middle East, Emerson’s offerings in the sector range from alternators and blade pitch control for wind turbines to inverters and variable speed drives for solar installations.

Nicholls is confident that Emerson is well placed to take advantage of an increasing emphasis on renewables in the region.

“I personally hope it does grow in leaps and bounds,” he says. “Firstly from an environmental standpoint, reducing dependence on hydrocarbons to create power is a smart thing. But I think it’s also important to have diversity in power production, which these other technologies provide.

The challenge in the Middle East is that the power is relatively low cost, and it’s always a challenge for customers to look at the capital investment of this alternative technology and make it pay off.”

“But technology is improving – costs are being reduced as global acceptance increases, so I think we’re at a really cost-effective position,” he says. “It’s just a matter for governments, industry and consumers to change their habits; for governments to regulate and mandate new technology, and for industry to accept it.”

Nicholls cites Masdar as a prime example of the government investment in alternative energy, pointing out that the Abu Dhabi-based renewables centre now has a global footprint and is a leader in bringing new technology development to the region.

“I think it’s just a tremendous thing that they’ve embarked upon, and I would hope that other governments follow the lead that Abu Dhabi and Masdar have created in the marketplace.”

But is implementing new technology in the region a challenge for innovative firms, or is it wholeheartedly embraced?

“The region is very receptive – in the Middle East the end users are very much technology pioneers and adaptors, because they need to be competitive on a global market as well, and they can’t be if they’re using old technology,” Nicholls explains.

“They’re very supportive, particularly in grassroots plants when you’re able to design a plant from the ground up, and you’re able to design in a new technology. It’s a little more difficult to implement on rebuilds and retrofits - with space and wiring limitations for instance - but at grassroots plants new technology is readily adapted here.”

It doesn’t happen by chance though, and Emerson works hard to ensure the company is delivering to up-to-date market demands.

“Part of our success is organising user group forums, where we solicit a lot of input from customers on what their needs and challenges are as they operate plants. We take those drivers back to our planners and design engineers, and we provide technology enhancements that allow them to maximise the productivity of their plants.”

In part these forums, which provide the firm with an in-depth knowledge of customer and industry requirements, are responsible for the fact that Nicholls is able to say that Emerson is the number one or two player in most of the company’s business sectors.

“To get that position you need to be technology leaders. You need to be able to provide solutions to customers and solve problems, and you need to deliver on those promises in terms of bringing technology to market and showing the end users – the customers – how the technology can improve their operations.

“So you need to be proactive; you need to be leaders in technology and that’s what differentiates us from most of our competition,” he says. “We’re going to continue to invest. From a capital standpoint, Emerson invested almost $650m last year in capital investment and much of that focused on technology, improving our core base products and bringing new technology to the marketplace.”

A testament to this is that a significant volume of Emerson’s product sales are products that have been in existence for fewer than five years. “If you don’t keep investing, if you don’t keep that capital spend, if you don’t keep providing solutions to customers, you’re not going to maintain that number one or two position,” he says. “And our goal is to be number one in all of our market segments.”

Emerson has had a presence in the Middle East since selecting Dubai’s Jebel Ali as the regional head office back in 1992. When Nicholls first arrived in the region 11 years ago, Emerson boasted 40 employees in the Middle East. Today there are more than 800 and, adding in Africa, more than 1,000.

“It’s been outstanding growth for us, and it’s not just in Dubai,” says Nicholls. “We’ve extended operations in Abu Dhabi – three years ago we opened up a small office and within a year we doubled its size. We’ve just doubled it again in the last few months. We’ve also expanded our facilities in Dammam, Saudi Arabia, and we’ve opened a value-added service operation in Jubail for our valves and valve automation group.”

The company is also developing its footprint in Qatar, working in Ras Laffan Industrial City to service an installed base of process control systems, including motors, drives and other technology.

“We recently also approved a $30m capital investment to expand our operations in Dubai, so right now we’ve appointed an architect, and we’re in the final stages of selecting land.

We will double the size of our sales office in Dubai to almost 20,000 square metres, and quadruple the size of our value added service and assembly operations to 20,000 square meters as well.”

Emerson’s expansion into Iraq is also something Nicholls is keen to talk about. “We’ve opened a legal entity in Basra, southern Iraq, and we’re very proud that we’ve hired 25 Iraqis to start our operation – 100 per cent Iraqi staffed.

Were sending them to various long-term training centres throughout the Middle East and Asia, where we’re bringing them up to date on our products and services and technologies, so that they will go back and be really effective service providers.”

On the subject of encouraging a local workforce, Nicholls also points out that the company’s Dammam offices in Saudi Arabia has achieved more than 55 per cent Saudisation.
“We’re one of the leaders in our industry,” he says, adding: “As a matter of fact, we’re in the highest category of the checklist used by companies like SABIC and Saudi Aramco.

We’re very proud of that, and it’s the result of a lot of hard recruiting and development in the last couple of years with universities – we’re prepared to bring in student graduates and train them, and work with the Saudis – that’s the key to success.”

“We’ve really focused on our staff training in the Middle East. We offer numerous training courses, both soft skills and technology training – we think it’s very important that we assimilate them into our operations and our business as quickly as possible, and we give them the training to aid that.

We’re very proud of the longevity of our staff – I’ve been with Emerson for 30 years, and we have many people in our facilities here in the Middle East with very long service awards. We do want to keep them for life if we can!”

The effort put in to ensuring a high Saudisation rate is already paying dividends for Emerson, in a country that provides some unique challenges to non-local companies.

“Many nationalities can travel to Saudi Arabia for business purposes, but our high Saudisation rate means that we’re not as dependent on a foreign workforce as many of our competitors are.

We’re very happy with our start-up operations in Jubail; we’re producing valves and valve automation products not only for the Saudi market, but we’re starting to ship those out of Saudi as well, into the Middle East. That’s been a double victory for us.”

So with an increasing emphasis on energy efficiency in the Middle East, is it easier now to encourage the implementation of efficiency measures than in recent years?

“Hydrocarbons won’t be around forever, and we need to save our resources,” says Nicholls. “We work with government bodies to try and get new regulations embedded regarding energy efficiency, and we also work very aggressively with end users in the industrial segment to show them how they can save energy within their plants, and save operating costs to increase profitability.

“Ultimately we try and work with consumers to try and change consumer behaviour – it’s consumer behaviour, industrial behavior and government behaviour through regulations, and we try and work all three.”

Keeping up with the Middle East’s rapid expansion projects requires some fairly serious planning and project identification, with Emerson using a team to identify and pursue opportunities for the company.

“We have a very robust project pursuit group of people that take data and transform it into strategies to go and penetrate new opportunities for us,” Nicholls says.

“These projects are touched by all parts of the globe. The plants and end users may be in the Middle East but FEED contractors may be in Europe or elsewhere, the EPC contractors are generally outside the region – there’s a growing dependence on Korean EPC contractors.

So once we’ve identified those projects, we have to build together global pursuit strategies within our organisation, so we’re working arm in arm not only for the end user, but also for the EPC contractors who are developing and purchasing the technology on behalf of the end user.”

So what are growth markets for Emerson at the moment? “I’m particularly responsible for the industrial automation group, and portable power generation is a key market for us here. There’s big acceptance in the region for remote locations and to augment power during peaking periods, so we’re concentrating on that,” says Nicholls.

“We’re also looking at increasing our footprint in high-efficiency motors and variable speed drives; the latest in energy efficient products for customers to save power in the plants.”

Nuclear power is set to be a driving force in the region too, with the UAE’s first power plant – Braka – tipped to come online in 2017, making it the first officially sanctioned nuclear power station in the Middle East.

“Nuclear is an alternative energy solution, and we have nuclear certified products that go into nuclear islands and also balance of plant operations. We also have a particular business segment within our Emerson Process Management group that focuses primarily on nuclear power, and so we bring those experts to the region, connect them to the end users with the contractors, and hopefully win some business.”

Keeping products fresh and relevant is also a constant process for Emerson with, as Nicholls has pointed out, much of the company’s sales made up of products less than five years old.

“As a technology leader you’re constantly looking at new and innovative processes, so we try and stay ahead of the game,” he says. “We invest a lot of money in capital improvements and technology in our products, and we look at acquisitions, too.

Emerson’s acquisition strategy is very aggressive, and we look at acquiring companies that have technologies that would augment our existing base operations, or put us into adjacent space we weren’t participating in before, or even improve our global footprint of operations.’

“Many acquisition targets have operations and facilities in countries that we have not been predominant players in before, and we continue to put significant amounts of investment and technology improvements in those platforms.”

At a grassroots level though, Nicholls cites communication as the key to success. “In the Middle East we host quarterly project pursuit meetings, where we bring in our peers from Asia, Europe and North America, and specifically identify the top 25, 50 and 100 projects, and build strategies together,” he says.

“You need to have face-to-face meetings, and every quarter there’s at least 150 to 200 people in meetings and breakout sessions, really focusing on Middle Eastern activity.”

It’s a strategy that’s clearly paying off, and Nicholls is optimistic about the future of Emerson’s Middle Eastern operations.

“I would like to see, in the Middle East, all of our business platforms reaching that number one position; and I think we can get there. We need to continue to invest in people, in growth strategies and we need to continue our investments in value-added services locally in the region. We need to invest in training our people; we spend a lot of money on that and will continue to do so, and the results are handsomely paying off with the growth that we’ve seen.

“The gross fixed investment in the Middle East has been tremendous in the last few years, and we anticipate with the investment from governments and from oil wealth that’s being reinvested into downstream and infrastructure projects, opportunities will continue to grow for us.”

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