Released May 13, 2014 | JOHANNESBURG
en
Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Siemens AG's (NYSE:SI) (Munich, Germany) Vision 2020 market strategy was inspired by growth fields in which the company sees its greatest long-term potential, along the electrification, automation and digitalization value chains. Its publication will be studied and absorbed by competitors, especially as Siemens is calibrating its targets against their profit margins.
The new strategy is the result of an in-depth analysis begun in August 2013. Electrification, automation and digitalization were identified by Siemens as fields where it will be able to achieve long-term growth and high profitability with its products and technological know-how. To these ends, the company recently purchased the major part of Rolls Royce's (Friedrichshafen, Germany) energy business for $1.32 billion. Siemens is also making its organization flatter and more customer-oriented.
"Our Vision 2020 addresses our company's long-term perspectives along the modern electrification and automation value chains," said Joe Kaeser, the president and chief executive officer of Siemens. "By expanding share-based employee participation in our company's success, we're creating a sustainable ownership culture at Siemens."
The company aims to increase the number of employee shareholders by at least 50% to more than 200,000. To support this target, Siemens will make up to $550 million available annually, depending on company performance, and expand its share plans for employees below the senior management level. In addition, a launch of the previously announced $5.5 billion share buyback program is soon expected.
Siemens claims to be No. 1 in a number of markets connected with electrification and automation. The growth fields in the two areas include the markets for small gas turbines and offshore wind turbines, both of which are seeing demand growth, driven by the need for secure and sustainable power supplies. The process industry and unconventional oil and gas production also offer growth potential.
The company is realigning its organizational structures to fully exploit the potential of increasing digitalization, and not just in manufacturing. Data-driven services, software and IT solutions are of decisive importance to Siemens, as they have a substantial influence on all of the company's future growth fields.
Starting October 1, 2014, streamlining will see the sector level in the organization eliminated and business bundled into nine divisions, a reduction from the current 16. The streamlining is expected to increase productivity by about $1.4 billion annually and will become fully effective by the end of fiscal 2016.
From 2015, the divisions will be assigned target profit margin ranges, excluding power purchase agreements (PPA). These target ranges are oriented on the profit margins of each division's main competitors:
For related information, see May 8, 2014, article - Siemens Agrees to Acquire Rolls Royce Energy's Turbine Business for $1.3 Billion, and May 9, 2014, article - Siemens, Mitsubishi Heavy Industries form Joint Venture for Iron, Steel and Aluminum.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The new strategy is the result of an in-depth analysis begun in August 2013. Electrification, automation and digitalization were identified by Siemens as fields where it will be able to achieve long-term growth and high profitability with its products and technological know-how. To these ends, the company recently purchased the major part of Rolls Royce's (Friedrichshafen, Germany) energy business for $1.32 billion. Siemens is also making its organization flatter and more customer-oriented.
"Our Vision 2020 addresses our company's long-term perspectives along the modern electrification and automation value chains," said Joe Kaeser, the president and chief executive officer of Siemens. "By expanding share-based employee participation in our company's success, we're creating a sustainable ownership culture at Siemens."
The company aims to increase the number of employee shareholders by at least 50% to more than 200,000. To support this target, Siemens will make up to $550 million available annually, depending on company performance, and expand its share plans for employees below the senior management level. In addition, a launch of the previously announced $5.5 billion share buyback program is soon expected.
Siemens claims to be No. 1 in a number of markets connected with electrification and automation. The growth fields in the two areas include the markets for small gas turbines and offshore wind turbines, both of which are seeing demand growth, driven by the need for secure and sustainable power supplies. The process industry and unconventional oil and gas production also offer growth potential.
The company is realigning its organizational structures to fully exploit the potential of increasing digitalization, and not just in manufacturing. Data-driven services, software and IT solutions are of decisive importance to Siemens, as they have a substantial influence on all of the company's future growth fields.
Starting October 1, 2014, streamlining will see the sector level in the organization eliminated and business bundled into nine divisions, a reduction from the current 16. The streamlining is expected to increase productivity by about $1.4 billion annually and will become fully effective by the end of fiscal 2016.
From 2015, the divisions will be assigned target profit margin ranges, excluding power purchase agreements (PPA). These target ranges are oriented on the profit margins of each division's main competitors:
- Power and Gas, 11 to 15%
- Wind Power and Renewables, 5 to 8%
- Energy Management, 7 to 10%
- Building Technologies, 8 to 11%
- Mobility, 6 to 9%
- Digital Factory, 14 to 20%
- Process Industries and Drives, 8 to 12%
- Healthcare, 15 to 19%
- Financial Services, 15 to 20% (return on equity)
For related information, see May 8, 2014, article - Siemens Agrees to Acquire Rolls Royce Energy's Turbine Business for $1.3 Billion, and May 9, 2014, article - Siemens, Mitsubishi Heavy Industries form Joint Venture for Iron, Steel and Aluminum.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
