In what he views as a “paradigm shift in the global economy” towards sustainability and green technologies, Peter Loescher, president and CEO of Siemens, predicts that when today’s global economic crisis ends, the US will become one of the world’s most advanced markets for green technologies.

He also told business leaders in a July industry forum at the US Chamber of Commerce in Washington, DC, that global action to solve collective challenges related to climate change will not slow down because of the current worldwide economic crisis.

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Climate change and energy security have become critical issues for governments. Consequently, projections indicate that efficient technology will become a $3000bn market by 2010 – amounting to more than a quarter of current US GDP.

“Our view at Siemens is that more industrialisation and more growth will arise from the current crisis. And the colour of this industrialisation will be green,” says Mr Loescher.

 

Current opportunities

The industrial giant is wasting no time in jumping aboard the green technology gravy train. Worldwide, Siemens is poised to take advantage of the market for green goods and services through its expanded investment in the US, China, Europe and the Middle East.

In fiscal year 2008, Siemens’ environmental technology business generated about $26bn in revenue. Last year for the first time, Siemens began reporting its green technology activities separately from its other business units and Mr Loescher is targeting an increase of the turnover in this field to more than $34bn by 2011.

Siemens expects to win new orders of about $21bn in this sector in the three fiscal years to 2012, which will be generated by government stimulus programmes already announced around the world. Green technologies should account for 40% or about $8bn of this total, a figure that would significantly increase the share of the company’s revenues from its environmental portfolio in the future.

“We believe sustainable technologies will become the basis for robust long-term growth for companies that invest now and do not wait until the economy rebounds,” he says.

In China, investments in green technologies account for about 50% of the Siemens-relevant share of China’s stimulus programme and for about 60% of the corresponding share of Germany’s stimulus programme.

“China has a stimulus programme of [between] $400bn and $500bn, which it is implementing right now,” says Mr Loescher. “Its major focus is around its rail infrastructure, energy, energy transmission, smart grids and how it can make a change to an ecological perspective.”

In the US, president Barack Obama is calling for a quarter of US energy to come from renewable sources by 2020. This year, the Obama administration earmarked roughly $8m for high-speed trains and more than $4bn for smart-grid technologies – both areas where Siemens has a strong position.

“The US is already one of the most important markets for Siemens,” says Mr Loescher. “What’s good for Siemens is good for America.”

Mr Loescher emphasises how he would like to see Siemens increase its engineering capacity and product solutions in the US, particularly since he sees the American spirit of entrepreneurialism and innovation driving the US into becoming a world leader in sustainable technologies.

 

US expansion

Siemens has been active in US markets for more than 100 years. In the past five years, the company has invested more than $25bn in the US to bolster its technology offerings that include wind energy.

Today, Siemens is the largest producer of wind turbine gear drives in the US and this year the company added a second $20m-plus plant in Elgin, Illinois, for its Drives Technologies business to cope with increasing demands in alternative and renewable energy sources.

In May, Siemens announced a $50m investment in a 914-square-metre facility and adjacent 244-square-metre service and repair facility to be built on more than 40.5 hectares north west of Wichita, Kansas.

Kansas, located in the US wind corridor, is ranked third in the nation for wind energy resource potential. The facility will be Siemens’ first US plant for manufacturing nacelles, the structures that house the turbine components that generate electricity, including the ­gearbox, drive train and control electronics. It will complement the company’s 183-square-metre wind turbine blade plant in Fort Madison, Iowa.

Siemens also operates a wind turbine R&D centre in Boulder, Colorado, and a Houston-based wind turbine service operation.

Mr Loescher sees his company continuing to grow in the US due to increased economic investment in the sector, the large US market, its sophisticated supply chain channels, and intellectual property and patent laws. Siemens has already filed 14,000 patents in the US and has 70,000 employees there.

“The US is a true platform for global business,” says Mr Loescher. “That is why Siemens is involved in the fabric of that country.”

 

Future concerns

But Mr Loescher warns that the time span of stimulus packages in the US is limited, while China has a 25-year agenda. In the US, the agenda is to link this burgeoning sector to private industry.

“This is an opportunity for companies that are positioning themselves in this area,” he says.

“I have no doubt that at the end of this economic crisis, the US will have a significantly more mobilised infrastructure and will also put the industrial agenda back on the [political] agenda.”

Mr Loescher hopes, however, that local, national and international regulation, as well as growing impediments to free trade, will not quash the momentum that has begun.

 

COMPANY PROFILE

 

SIEMENS

Headquarters

Munich, GermanyFounded

Began as small communications company in Berlin, Germany, in 1847Employees

Approximately 430,000 employees in nearly 190 regions worldwideR&D facilities

Main research and development centres in Germany, Austria, the US, China and IndiaWorldwide turnover

Revenue of €77.3bn