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Siemens Strengthens Iron and Steelmaking Portfolio

Published on May 11, 2010 at 11:16 AM

Siemens VAI is strengthening its portfolio for iron and steelmaking. In future, it will not only develop and manufacture products and solutions in China and India, but also launch them onto the world market from these countries. Werner Auer, CEO of Siemens VAI, told the press on Tuesday, "Since the economic crisis, the competition in plant engineering has intensified significantly.

Chinese and Indian companies are bringing their own plants onto the market successfully and ever more frequently." Whereas hi-tech countries in Europe, the USA and Japan are continuing to focus on the efficiency and flexibility of their production processes, China and India want to produce, above all else, steel with simpler and cheaper plants to develop their infrastructure. "Almost half of total world investments of almost 21 billion euros are already being invested in such plants," Auer said. Siemens is going to develop plants specifically for this segment of the market, and will also transfer the responsibility for design, production and marketing from Europe to China and India. Auer emphasized: "We are responding to the changes in the steel market, and strengthening our leading position for the long-term."

China and India nowadays produce more than half of the world's steel. Tim Dawidowsky, previously responsible for Siemens's mining and steel business in China, explained that "we are expecting annual growth of over ten percent in Asia", whereas the demand for new steel works is continuing to fall in Europe, the USA and Japan. As a result of continuing high growth rates, established local companies have started to offer plants themselves, some of which cost up to 40 percent less than those from European suppliers. Auer added "Examples from many industries in China and India show that today's local companies can be our competitors tomorrow, and that they will be offering the technologies which are currently the strengths of European plant constructors."

Whereas operating costs and specific production quality, safety and environmental requirements influence plant engineering purchasing decisions in the traditional steel markets, "in the new markets, we have to focus on meeting local requirements with standard solutions", Dawidowsky added. This requires closeness to the customer. "We will only be successful if we are perceived as a local enterprise."

Siemens VAI will take on the challenge of the competition, and offer new technologies and system solutions, which will be competitive in China, India and other comparable countries with a high demand for steel. As Auer stressed "We shall develop the portfolio appropriate for these countries, and get to grips with the local competition, while at the same time retaining our own in-house plant engineering and process know-how."

To this end, Siemens VAI will be investing some 35 million euros in China and India over the next two or three years in order to expand its local production, engineering and project handling. Within the scope of the worldwide competence and production matrix, both countries will also be given responsibility for the development and design, engineer to order, production, project handling, commissioning and service of a total of 11 plant components for the steel industry. "In India we shall be concentrating on selected raw steel production technologies, whereas China will be responsible for new developments in the field of rolling. Both countries will also be responsible for the worldwide marketing of their products which meet the new and specific market requirements," Auer continued. This differentiates our strategy significantly from other market players. "We are putting the business responsibility where it originates and where it can and should grow."

Siemens VAI already has a broad base in China comprising three works and approximately 1,600 employees, who make and assemble mechanical and electrical plant components for the entire VAI Metals and Mining portfolio in Shanghai. Engineers in Beijing and Shanghai, as well as employees in 20 sales offices distributed throughout China are supporting the business. In India, more than 800 employees are working in Kolkata and Mumbai, the focus being on engineering and project management as well as on their own manufacturing of mechanical components in the rolling business.

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