Siemens in the Green
Posted by Barry Silverstein on February 1, 2011 10:30 AM
The German conglomerate Siemens has been going green — and making more green (as in money) in the process.
CEO Peter Loscher, who joined the company some three years ago, has been on an aggressive campaign to implement a green strategy at Siemens and reposition the brand.
As a result, instead of marketing telecommunications and information technology products as it did in the past, today Siemens is into wind power, solar energy, and energy-conserving electricity grids — together, a $38 billion business. And that doesn't include the company's leadership in offshore wind turbines.
Bloomberg Businessweek notes in a profile that the company had a 19% increase in new orders year-over-year in the first quarter of fiscal 2011, which ended on December 31, 2010, and a 12% increase in revenue. All three Siemens sectors, Industry, Energy and Healthcare, saw positive gains, but Energy saw new orders increasing a whopping 27% and enjoyed a 14% increase in revenue, with the surge driven primarily by the Fossil Power Generation Division and the Renewable Energy Division.
It's a remarkable turnaround for a company that, just five years ago, was at the center of a major corruption scandal. Regulators determined that Siemens bribed government officials in several countries to win contracts. The company was forced to pay $2.5 billion in fines and fees.
In a case of what goes around comes around, Siemens shook up senior management and brought in Loscher to run the company. Loscher was a senior manager at GE, which has an interesting historical link with Siemens. In the late 1800s, Thomas Edison asked Werner von Siemens if he would invest in his company, and Siemens accepted. The company was eventually named General Electric, so Siemens effectively helped launch GE.
Now, it seems, Siemens is becoming the GE of Germany. Loscher has instituted GE-style management practices, and he has also put an emphasis on green technology, not unlike GE. As much as 25% of Siemens' current employees are "green-collar workers," as Siemens calls them, and the wind-energy division saw the biggest increase of any of the company's divisions. Interestingly, Siemens competes directly with GE in the energy, transportation and healthcare technology segments.
Siemens is selling everything from energy-efficient light bulbs to factory control systems to high-speed trains. While it is largely a brand known in the business-to-business space, consumers will begin to recognize the Siemens name as its sustainability-focused products begin to show up in retail markets. Awareness is also the goal of the company's current series of television commercials in the U.S., called "Somewhere in America." The series features answers to big problems, such as the spot above commercial focusing on energy and sustainability.
As for the future, the resurrected German company's prospects look bright. Jutta Rosenbaum, an investment manager at Aequitas, a unit of Allianz, tells Bloomberg Businessweek, "Siemens is reaping the rewards from its restructuring but also from its prescient strategy. Siemens is very well positioned to achieve above-average growth."
Kermit the Frog once said, "It isn't easy being green," but for Siemens, being green is keen.
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