A conservative approach

The fact that Patrick Kron, the CEO of Alstom, has decided to adopt a more conservative approach should not come as much of a surprise to industry insiders

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The company has enjoyed a very rough ride over the past couple of years, so it’s understandable that management would try to steer away from rocky seas in the near future.

A few years ago it seemed as if Alstom’s trouble would never end. The wheels at the huge European engineering conglomerate were apparently coming off at a frightening speed. The company eventually had to be bailed out by European regulators, but Alstom’s shares took a severe beating in the marketplace. At the time deaths at the shipyard where the company was constructing the Queen Mary II only added to its woes.

The task of restructuring the failing company rested on the shoulders of French born Patrick Kron. He joined Alstom in 2003 after a period of five years as Chief Executive Officer of Imerys. He was appointed CEO of Alstom in January 2003 and became Chairman of the Board of Directors in March of the same year.

His strategy can be summarised in a conference call where he discussed the company’s 2010/11 financial year. He said, “The first one is to adapt our geographical presence to the evolution of the market and the second is to keep pushing in R&D to offer the best-in-class products and technologies.”

Under his leadership Alstom slowly re-emerged from the maelstrom in which it was embroiled. Record performances for the company followed in 2008 and 2009, but after that the economic recession in Europe started to hit Alstom badly and during 2010 and 2011 the company experienced a significant decline in their order book.

In November 2011 it was announced that 3,500 people would lose their jobs in the ongoing restructuring process.

More recently Alstom’s fortunes seem to have improved, both orders and sales were up by eight percent during the last financial year and the company was able to turn a loss of €628m into a profit of €178m.

A company spokesperson said recently that in future Alstom would adopt a conservative approach when it comes to product development and concentrate on ‘proven technology’.
The new approach was explained by the company’s VP for gas turbines, Juerg Schmidli, at a press conference in Cologne which coincided with the European Power-Gen exhibition and conference.

Schmidli said that the company had to choose between evolution and revolution and decided to choose the more conservative way.

“We plan to improve our existing range of offerings in steps by evolution and not by launching new products at this stage.” He added.

He went on to say that in future new developments at Alstom to optimise economics, enhance environmental performance and improve efficiency would be based on ‘operational experience’.

According to Guy Chardon, Alstom Power Turbo System’s general manager and VP, recent problems with their GT26/24 gas turbines were now something of the past and restructuring plans at the company were virtually completed.