Just as the world takes up the mantra that digitalisation is speeding up as the pandemic propels a shift to remote working, some of the biggest engineering groups are in the throes of divesting marine technology divisions.

The sale of Rolls-Royce Commercial Marine for $665m to Norway’s Kongsberg Group in April last year was the first major divestment in the sphere. But it was not unexpected, as the business had struggled for some years.

Now Swiss technology group ABB’s new chief executive, Bjorn Rosengren — appointed in February — is looking to deliver a radical decentralisation strategy that it is believed will include disposals worth between $1bn and $5bn.

Reduction in orders

While cost-saving synergies of NOK 500m this year from the Rolls-Royce merger have not been derailed, Kongsberg Maritime reported a 22% reduction in new orders in the second quarter of 2020. The downturn in shipping business led it to make hundreds of staff redundant.

New ABB chief executive Bjorn Rosengren is looking to slim the Swiss giant's portfolio of business areas. Photo: ABB

Volkswagen Group has indicated a desire to sell MAN Energy Systems, although it also said it will postpone doing so until after a restructuring — including the loss of 2,600 jobs — has been completed to ensure the future viability of the engine technology manufacturer.

ABB’s portfolio optimisation plan includes breaking its existing four strategic divisions into 18 autonomous businesses, with the review looking at everything from marine technologies to data centre power systems, according to Rosengren in a Financial Times interview.

Eero Lehtovaara, head of regulatory and public affairs at ABB Marine & Ports, stressed to TradeWinds that he has no inside knowledge about the restructuring but said one of the maritime unit’s strengths was that it worked across many fields, giving it an opportunity to adapt technologies from the rest of ABB to shipping “without having to reinvent the wheel”.

Rosengren has previously taken a decentralisation approach to increasing margins at Swedish engineering group Sandvik and, before that, at Finnish engine manufacturer Wartsila.

His cost-cutting drive aims to lift ABB’s Ebitda margin to 15%, but some analysts fear it will take the group’s focus away from growth just as there could be a boom as the world seeks to recover from the pandemic.

Wartsila warned that the virus crisis and low oil prices pose a threat to shipping's decarbonisation as it reported a 27% reduction in order intake in the second quarter.

But it added that government relief packages linked to developing greener infrastructures are “anticipated to incentivise the decarbonisation of the maritime sector” and increase interest in electric propulsion systems and digital solutions.