Siemens' Plan for Staying Ahead of Change

Dennis Sadlowski, head of Siemens’ industrial efforts in North America, sat down with Walt Boyes, editor in chief of Control, to discuss the latest developments for the company in the U.S. market. Watch the video.

“Our users tell us there’s lots of change going on in automation, and there’s lots of change going on at Siemens too,” said Sadlowski. “Now, we’ve seen many changes in the 160 years we’ve been in business. However, I think the changes we’ve seen in the last six months are more numerous and more significant than any we’ve seen in the past 20 or 30 years.”

Sadlowski reported that Siemens AG was reorganized in January 2008 into three sections—healthcare, energy and industry. Healthcare and medical solutions made up 14.2% of the firm’s sales through Sept. 30, 2007, and totaled about €4 billion. Energy conversion and power distribution contributed 27.8% and totaled about €20 billion. Its industry sector reached 51.3%, for total sales of about €40 billion. This industry division consists of industrial automation, drives and automation, industrial solution services, building solutions, mobility and Osram lighting.

Sadlowski went on to describe three of the main “megatrends” facing the world, and then showed how industry―and Siemens―are responding to them. The first is urbanization. He reported that 2007 was the first year in which more people worldwide are living in cities rather than in rural areas, and that there will likely be 350 million people living in mega-cities by 2015. The second megatrend is demographic growth and aging; life expectancies are expected to increase from 46.6 years to 80 years in developing nations in coming years, and the world population is expected to reach 8 billion by 2025. The third megatrend is climate change. “Global atmospheric CO2 concentrations are the highest they’ve been in 350,000 years, so manufacturing must find a way to become sustainable,” Sadlowski said.

To address the needs produced by these global trends, Sadlowski said that Siemens has drafted an "answers" campaign and has program strategies for addressing each of these trends. For example, Siemens’ healthcare division plans to help control increasing healthcare costs and help provide care for the 165 million people in China and India who reportedly will need daily healthcare services by 2020. In the energy market, Siemens has become a leader in offshore wind energy equipment. It now makes the largest and most efficient gas turbine and is offering new performance contracts to help save energy costs.

“We’re also increasing our manufacturing of gear motors for the wind market in Elgin, Ill., and we’re making blades for the turbines in Iowa,” said Sadlowski.

Siemens also maintains a huge commitment to technical development, which includes devoting 48% of its R&D budget to high-impact, high-profit areas. “While we know that supply chain or quality problems can take time to solve, we’re committed to R&D because a miss there can put you out of the running for a decade,” said Sadlowski. “This is why it’s so important for us to get feedback from our customers and have market-ready innovations done right on a regular basis.

“Though most marathon runners stay in the pack because there are other people and encouragement, it’s a much greater challenge to get out in front of the race,” Sadlowski continued. “It can be lonely, and there are more questions about whether you’re on the right road or if you’ve taken the right turn. However, we’re often in this position, and we enjoy it because we can help set some trends, though we don’t want to get too far in front either.”

Sadlowski also stressed Siemens’ participation in educational programs, university partnerships and science, technology, engineering and mathematics (STEM) curricula. He reported that Siemens presently is working with both the Massachusetts Institute of Technology (MIT) and the University of California Berkeley on more efficient energy production and core-generation technologies.

“We’re also developing product life-cycle management (PLM) tools, and our Entry-Level Leadership Development Program (ELLDP) is attracting students who rotate through a number of Siemens programs, which helps build future technology leaders,” said Sadlowski. “Also, our Siemens Science Days program is active in many local high schools and grade schools, where it encourages students to get into science-related fields.”

Finally, Sadlowksi concluded that Siemens is committed to the highest performance and the highest ethics. These include acting responsibly, seeking excellent results and innovating to create sustainable value.