Technology changes promise ‘to reinvigorate manufacturing’

Siemens USA CEO offers a personal perspective on the manufacturing industry at Hannover Messe speech.

By Eric Spiegel, president and CEO, Siemens USA April 27, 2016

Editor’s Note: At the dinner following the annual Siemens press conference at Hannover Messe, Siemens USA president and CEO Eric Spiegel shared his thoughts on American manufacturing its future from a very personal perspective. What follows are excerpts from that presentation:

This is the first time that the United States has been the partner country for Hannover Messe, and it’s the first time a U.S. president has visited. There are a lot of U.S. companies here. And this gives us a great opportunity to showcase what we’re doing around the world for our U.S. customers.

Today I live near our U.S. headquarters in Washington, D.C. But I was born in the state of Ohio in a town called Youngstown, and when I growing up, people called Youngstown something else. They called it ‘Steel Town.’ This is because, for a good part of the 20th Century, Youngstown was the second-largest steel-producing city in America. In fact, both of my grandfathers came over from Germany to work in those steel mills. The work back then was dirty, dark and dangerous. But it allowed my grandfathers to earn a good living and join the middle class. One day I thought I’d work in the steel industry too. But before I was old enough, those steel mills closed. A lot of U.S. manufacturing jobs moved to other countries – and that hit towns like Youngstown really hard. So I think my grandfathers would be really proud to see me working for a large Germany company that’s helping to reinvigorate manufacturing in places like Youngstown and across the U.S.

Today, the United States is our largest market. Last year we had well over $20 billion in revenue, including export revenue of $5.5 billion and we invested more than a billion dollars in research and development in the U.S. We have over 80 manufacturing and industrial sites, and more than 50,000 employees in the U.S.

So Siemens is very bullish about the future of manufacturing and the overall business environment in the U.S. And we’re also particularly bullish about the application of a new type of manufacturing in the U.S.—or Industrie 4.0, which Hannover Messe is focused on this week.

The U.S. is now approaching its 10th anniversary of when the iPhone was introduced. During this time we’ve seen smartphones thoroughly transform our consumer and retail worlds. But manufacturing software has been become much more sophisticated too.

Looking now 10 years into the future, we’re going to see industry make the leap to smart factories. Industry 4.0 will be powered by advanced robotics. It will be powered by machines connected by cloud software. But what really makes Industry 4.0 unique is the ability to use software programs to visualize and design products.

The most effective way to design products—even factories and shop floors—is no longer by investing in all the material and building expensive models. It’s on a computer screen. And the U.S. has a rich environment for this new type of manufacturing to flourish.

Whereas a country like Germany leads in machine tools and robotics, right now the U.S. stands out as a leader in software innovation. More than 75% of software revenues are generated by U.S. companies, and many of the largest companies in the world. Google, Apple, Microsoft, Facebook, are basically software companies. This is where the value is migrating.

But there is one big obstacle that U.S. manufacturing has to overcome. Although some U.S. companies are moving rapidly towards Industrie 4.0—and I’ll mention some—most firms are still running on aging technology. Today, the average age of U.S. assets and equipment in operation are more than 35 years old (and) $65 billion worth of automation systems are reaching the end of their useful life. And only 5% of U.S. companies have implemented a big data analytics strategy.

So the U.S. industrial base is ready for a big overhaul.

The result for customers is a fully flexible production line that can change the configuration of products routed through the industrial process without interruption.

And we are already helping some companies lead the way into this Fourth Industrial Revolution.

With Ford, we partnered with the automaker to develop software that helps engineers simulate the entire assembly process for vehicles at different plants. This has contributed to Ford’s emergence as a leader in designing flexible production.

Henry Ford once famously offered its Model T "in any color you want, so long as it’s black." Today, with the help of our software, Ford’s F-150 pickup truck—America’s best-selling vehicle—is built to customers’ specifications in millions of possible configurations-what we like to call mass customization.

So I’ll end there except to say that we have a very aggressive agenda to help our U.S. customers—large and small—to gain the competitive advantages attached to digitalization."

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See additional stories from Hannover Messe 2016 linked below.