Directorate of distance education

ABB annual sales percentage by segment (1991)
History
Prior to the merger, Asea AB and BBC Brown Boveri Ltd. Were 
widely regarded as national industrial treasures in their respective 
countries. Each firm had earned that respect by developing and supplying 
products for nearly a century.
Brown Boveri, primarily a manufacturer of heavy-duty transformer 
and generators, had large customer bases in Germany and the United 
States. But the engineer-led firm had been experiencing declining profits 
since the late 1970s. An analyst’s report identified “empire-building” 
subsidiaries as a major problem. Lacking a clear corporate strategy, many 
Brown Boveri subsidiaries independently engaged in R&D, marketing, 
and production. Such duplicative costs contributed to “dividend-free” 
years in 1986 and 1987.

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In the late 1970s Asea AB was slowly growing, a dominant force 
in the Swedish electrical engineering and power plant market. That 
changed in 1980. Barnevik took over the firm and began to behave in 
a very un-Swedish manner. First order of business? Slash overhead at 
Asea headquarters. In the first 100 days Barnevik reduced Asea’s main 
office staff from 1,700 to 200. (This was to become a Barnevik trademark. 
In subsequent acquisitions the first order of business was always the 
severe reduction of headquarters personnel.) Responsibility was shifted 
downward as numerous profit centers, with specific target goals, were 
established. Throughout the 1980s other Scandinavian firms were acquired 
(Stromberg-Finland, Flotech-Denmark, Elektrisk Bureau-Norway) in 
an effort to widen Asea’s electromechanical product line as well as its 
distribution channels. Further expansion took Asea beyond Europe to 
Asia and North America. In eight years Barnevik tripled Asea’s sales and 
increased earnings fivefold. 
While on this acquisition growth binge Barnevik was contemplating 
the future European landscape. A borderless Europe would open protected 
markets. For Asea that meant an opportunity to wrest part of the power 
plant market away from domestic firms. This realization eventually led 
Barnevik to approach Brown Boveri. The Asea/Brown Boveri merger, 
domiciled in Zurich, Switzerland, became official January 5, 1988.
After the merger Barnevik rationalized, or streamlined, the ABB 
workforce and then launched a series of acquisitions. In 1989 ABB entered 
a joint venture with Italy’s state-owned Finmeccanica and completed a 
buyout of Westinghouse Electric Corporation’s United States power 
transmission and distribution business. The following year saw ABB: 
(1) Assume control of Combustion Engineering, an American boiler 
and nuclear plant builder; 
(2) Move into Eastern Europe with a majority position in Zamech, a 
Polish turbine maker; and 
(3) Establish links with an East German electrical-equipment supplier, 
Bergmann-Borsig. 
In 1991 ABB acquired Bergmann-Borsig and continued its 
aggressive investment in Central and Eastern Europe by entering into 
approximately thirty joint ventures. By 1992 ABB held roughly 1,300 

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subsidiaries spread across Europe, Asia, North America, Latin America, 
Africa, Australia, and New Zealand. In 1993 it was reported that ABB 
would expand further into Asia and Eastern Europe.