ABB to close 15 plants in dollars 500m shake-up

ASEA Brown Boveri, the Zurich- based engineering giant, is to close 15 manufacturing plants in Europe and North America over the next 18 months as part of a dollars 500m restructuring plan. ABB has already said that it intends to cut 7,000 jobs this year on top of 5,000 lost by the end of June.

The group yesterday announced a reorganisation into three regions - the Americas, Asia and Europe. The top management board has been cut from 14 members to eight, each having responsibility for a region or product area. Previously, the board included directors with responsibility for single countries or for overseeing functions such as research and development.

Percy Barnevik, ABB's chief executive, said the reasons for the restructuring included the creation of the North American Free Trade Area, the increasing integration of Western European markets and the opening up of Eastern Europe.

He also cited the long recession. 'The recession made the changes bigger and deeper than you would have had before,' he said.

Mr Barnevik said he was looking for a return from the restructuring charge over the next one to three years. 'The new organisation will strengthen the operating advantages of our matrix and enable us to react even faster to market developments,'

he added.

ABB said Europe represented the main share of sales and employment, and that regional issues were becoming increasingly important.

It said there would be growing economic integration between Eastern and Western Europe and the prospect of cross-border opportunities in sectors including energy and transportation.

A spokesman declined to comment on the potential effect of the changes on the UK, where ABB employs about 11,500 people across a number of sites and product sectors.

Last week ABB announced flat interim pre-tax profits of dollars 497m and said that there would be little improvement for the rest of the year. Pre-tax profits for the year, before non-recurring items, are expected to be about the same as last year's dollars 1.11bn.

ABB said short-term prospects in Western Europe remained poor and the emerging economic recovery in North America had had minimal effect so far. The group said Asia Pacific was the region with the fastest growth and would probably remain so for decades to come.