Siemens, the German juggernaut, has become a global powerhouse in the electronics, energy and healthcare industries. At the cutting-edge of green energy technology, from wind turbines to solar panels, the company has a major presence in the Gulf and the rest of the Middle East. In an exclusive interview, Tamsin Carlisle talks to Peter Loescher, 53, the chief executive of Siemens, on the company's plans in the region, how he dealt with the bribery scandal that rocked the group before he took over in 2007 and the impact of the global financial crisis.
qYou were recruited in 2007 to help Siemens recover from a bribery scandal crisis, then you had to confront the global financial crisis and recession. Which did you find the most challenging? @Body-Answer1H&H: aToday's Siemens is a fundamentally reformed company - in terms of personnel, organisation and leadership culture. We stand for ethical business. The findings of the crisis underline my personal belief that short-term orientation is not the appropriate way of making business. That's why we - independently of the crisis - made Siemens secure against storms and completed our most important tasks before the economy tanked. These efforts included our Fit for 2010 programme, an even stricter business orientation toward the mega-trends and green technologies. So yes, in a nutshell, Siemens's overall strategy is based on sustainability and integrity.
How have you leveraged the two very different types of crisis to make the company stronger? @Body-Answer2 :In a very difficult environment, Siemens has performed very well compared to its key competitors, mainly driven by our energy and healthcare sectors. And we are also much, much stronger in terms of compliance. For example we've achieved a best-in-class ranking in the well-respected Dow Jones Sustainability Index in the compliance segment for the second time in a row, when we reached 100 points out of 100. And this happened after having scored no points in 2007. A robust compliance system and a culture of integrity are today considered to be competitive advantages. Moreover, we are trying to join forces with competitors to set up integrity pacts and collective action for clean business.
As a newcomer at a sensitive time for the company, how were you able to build an effective management team? @Body-Answer2 :Our customers always stood very close at our side and placed their trust in us. And within Siemens the commitment did not only come from the top management but also from almost every single employee - that's what really impressed me. You came to Siemens with a background in health care but Siemens is a broad-based company. How did you deal with that change?
@Body-Answer2 :It is not so much about managing different sectors but about customers and overall trends. Siemens is rigorously orientated to global mega-trends. These include climate change, which will transform environmental technologies into the leading industry of the 21st century. I see two other mega-trends: shifting demographics; and increasing urbanisation. Already, more people live in cities than in rural areas and life expectancy is continually increasing. Large cities have to cope with major challenges. Residents expect a good quality of life. They need clean air to breathe, good water to drink and reliable electricity. People need affordable health care. They also need to be mobile and have adequate transportation. Experts predict cities worldwide will invest about ?27 trillion (Dh120.98tn) in expanding their water, power and transportation systems over the coming 25 years. With our unique green portfolio, we are the perfect partner for sustainable urban development.
Are you happy with the company's structure today? @Body-Answer2 :I think we are already very well positioned. Green, energy-efficient solutions are already generating a third of our total revenue. However, we intend to push even further growth and become even greener. In terms of both operations and regions, where do you see most growth potential for Siemens? @Body-Answer2 :There is no doubt that [more than] half of global growth between 2008 and 2014 will derive from emerging markets such as the Middle East. Siemens is already very well positioned in these countries. We see good chances to further benefit from the massive business opportunities - in particular with green products. For example, Siemens has just received further major orders to supply energy-efficient equipment for expansion of high-voltage grid in Qatar, totalling ?600 million.
What are the main pitfalls that could lie in wait for the company and how do you plan to avoid them? @Body-Answer2 :It is a permanent challenge to stay ahead of the curve. We are leading the pack because we employ the brightest talents, we listen very carefully to our customers and we invest heavily in R&D (research and development) - for example, with our most recent gas turbine. It is not only the largest ever built but also the most energy efficient. We have invested some ?500 million in development and this has paid off. The combined-cycle plant is expected to have a record breaking efficiency of over 60 percent. To be at the forefront of technology we are going to keep investing heavily in R&D.
In doing business with the Gulf region what advantages can Siemens offer? @Body-Answer2 :We combine technological expertise with customer intimacy. Our long and continuous presence here is a source of pride and demonstrates our very strong and consistent commitment to the region. We have offices in every country in the Middle East. Over the years, we have played a key role in helping build the infrastructure of the region.