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Creating sustainable value through technological leadership
02 | 2011
Cover story:
Vertical market report Whats moving the markets from chemicals to automotive, mechanical engineering, food & beverage, and all the way to pulp & paper.
Markets
How businesses and governments develop the scrap of urban prosperity as a source of raw materials worth billions.
Management
How manufacturing companies lower energy consumption with clever consumption management.
Innovation
How a flat glass manufacturer from Eastern Germany produces 20 percent more cost-effectively than his international competitors.
02 Industry Journal | 02 | 2011 | Editors note
Industry Journal | 02 | 2011 | Editors note 03
Editors note
Dear Readers,
On October 1, the start of our new fiscal year, it became a reality: the Siemens Industry Sector now has a new look and a sharper strategic profile. With these organizational changes we are putting an even stronger focus on our industrial customers. Our goal is to further intensify our vertical-market and service businesses particularly in growing verticals such as the mechanical engineering, automotive, pharmaceutical and chemical industries. At the same time, we will expand our leading global role in industrial software. For the service activities of our industry business we have created the Customer Services Division, with about 17,000 employees who will build up our business in technology-based and value-added services. We will now be able to leverage our bundled vertical-market expertise even better for increased productivity, flexibility and efficiency in industrial processes. And we can do a more comprehensive and effective job of offering our vertical-market customers in particular an end-to-end portfolio from a single source, from individual products to specific partial solutions and on to complete system integration and a full range of services all throughout the entire lifecycle of plants and products. You will notice that our Industry Journal has a new look as well. We have added new segments and modified its focus. But we havent changed everything; weve stayed with our old formula for success: a careful mix of articles on concrete topics taken from your market and informative reports that look at details as well as the big picture. I hope you enjoy reading this issue. Sincerely, Siegfried Russwurm
Prof. Dr. Siegfried Russwurm, CEO Industry Sector
04 Industry Journal | 02 | 2011 | Contents
Cover story: Vertical market report
10: Dissimilar siblings Higher flexibility and productivity, fiercer competition, booming emerging countries these are factors occupying the global industry. But apart from those basics, challenges, success factors, and growth perspectives differ greatly. A global report about five leading vertical markets: automotive, food & beverage, mechanical engineering, chemicals, pulp & paper.
Markets
0607: The Big Picture 1021: Dissimilar siblings
The challenges facing the global industries and the factors that connect them. A vertical market report. The AIDA shipping companys new cruise ship offers luxury and technological sophistication.
0809: Spotlight 2227: ExperTalk

ARC analyst Valentijn de Leeuw in conversation with Dirk Hoke, CEO of the Siemens Division Customer Services. News and trends from remote maintenance of fountains to e-planes, and all the way to cost-efficient paper production.
4247: People to watch: Jigar Shah 2833: Goldmine junkyard

Governments and businesses discover electrical waste, old cars, and buildings as valuable sources of raw materials. This brings in billions and spares the environment. Interview with Jigar Shah, CEO of the Carbon War Room, about green technologies, market economy, and Brazilian cows.
6265: People to watch: Ray Kurzweil 3440: Country report Brazil

Brazil counts among the worlds largest economies. Tendency: rapid growth. The U.S. visionary believes in the future of artificial intelligence. His prognoses have proven correct quite often.
41: Facts & Figures

Raw materials: richest countries, rarest metals, biggest squanderers.
76: Publication information
Industry Journal | 02 | 2011 | Contents 05
Contents
48: Save, dont squander Thousands of small and medium-sized business literally put their money down the drain for unnecessary energy expenditure. Slowly it dawns on them that energy savings measures pay off. And that clever energy management is easier than imagined.
66: The optimum is just about good enough The production of float glass for the industry is extremely energy-intensive. The company f | glass produces by 20 percent more economical than its competitors with one of the most innovative flat glass plants of the world.
Management
4852: Save, dont squander
Small and medium-sized businesses could reduce their energy costs dramatically. They often only lack the required knowledge.
Innovation
6670: The optimum is just about good enough
The company f | glass built one of the most innovative and economical production plants for flat glass from scratch within 15 months.
5357: The system consultants

A lot of production plants have up to 50 percent of their normal power consumption during downtime, as well. It does not have to be like this.
7174: Europe gets a green shock

More ambitious climate protection targets can speed up economic growth and create millions of new jobs.
5860: Case study

A Chinese steel manufacturer had to make a tough decision after a fire: repair or replace?
75: Facts & Figures

Growth driver innovations: Best companies, most innovative countries, highest returns, biggest hurdles.
61: Facts & Figures

Energy efficiency: Energy demand and power consumption 2030, price trend in fossil power sources, world champions of CO2 reduction.
06 Industry Journal | 02 | 2011 | Big Picture
Industry Journal | 02 | 2011 | Big Picture 07
The Big Picture

She is 252 meters long, has 1,000 cabins, and can accommodate more than 2,000 passengers the as yet unnamed new club ship of the Aida Cruises shipping company in Rostock, Germany, a subsidiary of the U.S. group Carnival Corporation. The ship belongs to the third generation of AIDA cruise ships. She will be launched in the spring of 2013 and has many innovations and even more innovative technology in store for her future passengers. Much of this innovation comes from Siemens. Two 12.5 MW electric motors from the Siship Drive MV production range for the diesel-electric drive system, for instance. Also the ship automation system Siship Imac that is based on the Simatic PCS 7 control system and manages all monitoring, alarm, and control functions on board. The safety management system, air conditioning plan control, and self-sufficient emergency shutdown system are integrated in it as well. Altogether, data from some 13,000 measuring points are collected. For Siemens and the Meyer Werft (Meyer shipyard) from Papenburg, Germany, where the ship is being constructed, all this is not overly exciting: the new cruise ship is already the seventh AIDA ship equipped with Siemens technology. Among them is the AIDA diva, which was named in 2007 (photo). The smoothly running luxury at sea is a matter of course for the passengers. Because they do not know how much effort, high-tech, and innovation are needed for it.
08 Industry Journal | 02 | 2011 | Spotlight
Spotlight
Remote maintenance of memorials

A memorial site for the victims of the terrorist attack on the World Trade Center ten years ago was inaugurated in New York on September 11, 2011. The monument features two huge fountains with a capacity of 2.3 million liters of water each. Every minute, 120,000 liters have to be pumped and 23,000 filtered. This is made possible by the controller-solution Simatic S7-300 with added features. With sensors, water quality and weather conditions can be monitored at all times to ensure the optimal operation of the fountains via the Internet from the headquarters of the manufacturer Delta Fountains, located in Florida some 1,500 km away. This feature alone leads to savings in maintenance costs of up to 200,000 US dollars a year. Additionally, significant amounts of energy are saved.
Energy-efficient paper production

Producing steam in order to dry paper consumes a large amount of the energy required for paper production. Siemens automation software Sipaper APC (Advanced Process Control) DrySec helps to lower the energy demand by dosing the steam depending on the papers thickness and density. The system calculates the optimal values for the drying process based on these parameters and adapts them to the process. In a pilot project, Rhein Papier GmbH in Hrth near Cologne, Germany, was able to lower their steam consumption for drying by more than three percent and to reduce energy costs and CO2 emissions accordingly. Additionally, Sipaper APC Drysec calculates process variables
that are not monitored, such as humidity and temperature of the paper webs. This enables the localization of errors in the process at an early stage.
The worlds first hybrid plane with an electric motor

meant to be used in large aircraft in the future. It is projected to save 25 percent of fuel and emissions compared to todays most efficient technologies. The plane uses a serial hybrid electric motor as integrated power train. A Siemens electric motor drives the propeller. A small Wankel engine with connected generator provides power. As the combustion motor always runs evenly and on low power, fuel consumption is very low. During start and climbing stage a battery system from EADS provides additional power. The battery is recharged in cruising flight. An inverter from Siemens provides the electric motor with energy from battery and generator.
In cooperation with partners, Siemens has developed the worlds first plane with a serial hybrid electric motor. The motor glider DA36 E-Star is still in the testing stage. The technology is
Industry Journal | 02 | 2011 | Spotlight 09
Greenest foreign company in China

China Central Television (CCTV), Financial Times, and Roland Berger Strategy Consultants have awarded the Best Company Award in Green Competitiveness 2011 to Siemens China. This prize for multinational companies contributing to the economic development of China was awarded in the framework of the Best Foreign Business Ranking during the World Economic Forum in Davos. Siemens was honored with this distinction in recognition of its contribution to a sustainable Chinese economy and society for the second time running. In 2010, for instance, Siemens commissioned the worlds highest-performing High Voltage Direct Current (HVDC) line. It connects the provinces of Yunnan and Guangdong
over a distance of 1,400 kilometers. The HVDC connection enables a highly energy-efficient transmission of power, saving 30 megatons of CO2 emissions a year.
Software from production plants prevents flooding

European research project UrbanFlood to develop a condition-monitoring technology for the early localization of dangerous damages to dykes. In future, the stability of these protecting walls is meant to be closely monitored with sensors. Software is able to predict dangerous situations based on these measurements in order to implement actions. For this research project, Siemens experts are employing software originally meant for the monitoring of production plants, which is now adapted to the characteristics of dykes. They use research dykes, which are destroyed in different ways. Based on the flooding catastrophe in New Orleans, USA, in 2005, an experiment simulated water causing a tunnel in the dyke, for instance. At the moment a two-year trial period is under way in Eemshaven, Netherlands. Here, the software learns under realistic circumstances to interpret the measurement data correctly.
Siemens Corporate Technology Russia is cooperating with partners in the framework of the
A better understanding and evaluation of data

Siemens software solution High Definition Product Lifecycle Management (HD-PLM) is a recently introduced product that enables decision makers to take better and more efficient decisions during a products lifecycle. HD-PLM has been developed to transfer large, distributed, and heterogeneous collections of data into knowledge. Intuitive, visual presentation of product data from various sources can be presented in a customized format. They enable users to understand information better and to classify the meaning of data faster.
10 Industry Journal | 02 | 2011 | Markets
Dissimilar siblings
Whether it is in Asia, the U.S., or Europe and whether it is the production of plastics, cars, or beer similar trends are emerging in every field of industry: higher flexibility and productivity, fiercer competition especially from and in the emerging countries, more sustainability. But apart from these basic similarities, the outlooks, challenges, and success factors differ greatly. The Industry Journal takes a look at five leading vertical markets: automotive, food, mechanical engineering, chemicals, as well as pulp and paper.
Industry Journal | 02 | 2011 | Markets 11
The global economy is undergoing radical change: Many industries note a solid growth. It just does not take place on the traditional Western markets in many cases, but mainly in Asia, Latin America, and Russia. Massive geoeconomic and geo-political shifts are the result. Further challenges for businesses are the globally soaring prices for energy and raw materials, an increasingly fierce competition, and rising demand for new and customized products, and sustainable production methods. The formula for success for the manufacturers of both capital and consumer goods is maximum flexibility, increased productivity, and higher efficiency in all areas. For this, they need cutting-edge production plants as well as excellent engineering and automation software. It is the only way to achieve customized, holistic solutions. Because the software enables the parallel flow of product and production planning for higher efficiency and shorter development cycles. The days of horizontal markets, in which standardized products were sold to businesses in various industries,
seem to be at their end in the industrial business. An era of vertical markets begins, in which international businesses, such as Siemens, focus on individual areas just as highly specialized niche suppliers have always done. Unlike these specialists, corporate companies can meet the individual demand of their customers at all stages and apply best practice examples from other industries. This approach demands an uncompromising customer focus, the reduction of interfaces through personal responsibility for industries on the supplier side, an industry expertise that is far above average, process know-how in great detail, as well as a marked service mentality. More and more often, suppliers try to put themselves in their customers shoes, asking themselves how they could actively contribute to a higher product variety and flexibility of their customers, instead of simply reacting to their requests. Corporate companies with international presence, but also excellent specialists, will probably have the greatest success in times of vertical markets. For mediumsized and highly diversified suppliers, times will probably get tough.
Automotive: Industry in motion

The automotive industry is booming and will radically realign itself in the next few years. New markets are emerging in Asia. Time-to-market, flexibility in production, energy as well as cost efficiency, and not least e-mobility will decide about success.
Impressive 71 million cars were produced around the world in 2010 25 percent more than in the previous year and way more than were expected. Experts predict sales of 75 million cars for this year, and the auditing company PricewaterhouseCoopers prognosticates 83 million sold units for 2012. The automotive industry is doing well again after its dramatic slump in 2009. Since then, the production of cars rose by 24 percent, the one of utility vehicles even by 32 percent. The growth rates are predicted to be an average 5.5 percent per year until 2017. Important drivers of this growth will mainly be China, India, and Russia, but also Southeast Asian states. The number of car owners is rising by more than 35 percent each year in China alone. Alongside them, expanding markets are developing in Thailand, Indonesia, and Malaysia, where production capacities are on the increase, too. As the average purchasing power in those countries is considerably below the one in Western industrial nations, a global trend towards comparatively small and affordable models is on the rise. But in Western countries, the demand for affordable vehicles will rise, too. The speed of innovation increases as well, and so does the demand for customization. Mathematically, there are billions of options of ordering due to the many equipment variations for one car. Such variety demands increasingly complex IT and production concepts for virtual engineering and digital plants. These are images of production plants to be built. With them, production processes can be simulated and procedures optimized to meet the increasingly stringent regulations for energy efficiency, for example. Car manufacturers have to rethink their technological positions, too: According to the study Automotive Landscape 2025 by Roland Berger Strategy Consultants, one in ten new cars around the world will run on electricity and 30 percent will have a hybrid drive in 2025. Even if traditional car manufacturers continue to have a dominant role one in six cars produced globally wore the brand sign of a German group in 2010 a strong competition is developing, especially in China, Korea, and India. A lot of the local manufacturers do not only look at the regional markets any more, but increasingly at Western ones as well with the target of meeting the high European and American standards. The trend towards globalization has reached all manufacturers by now. New plants and production facilities are built mainly where the highest market potential lies. More than 30 new production facilities in the Asia-Pacific region will take up operation by 2017. Siemens as a global partner provides products, systems, engineering, solutions, and services for infrastructure as well as automation and drive technology. The digital plant plays an important role in this as a key technology. With a continuous PLM platform, Siemens is leader here as well (compare box: Flexible production plants).
Automotive
Flexible production plants
Siemens reacted with its industry-leading Product Lifecycle Management (PLM) range to the increasing time and cost pressure in the automotive industry. With it, the gap between product development and production of a car is closed. Digital engineering and the planning of the production in the digital plant become reality from importing data generated in the planning stage to projecting the automation solution and all the way to the use in the operating plant. This means that production processes can be simulated cost-efficiently and flexibly, for instance, or that production plants can be virtually commissioned. The result: New models can be brought to market in shorter time, with a higher degree of customization, and more profitable than before.
Growth of car production* 2010 to 2017**

Brazil
3.1 5.2
+7.5 % +9.3 % +2.7 % +12.5 % + 0.0 % +14.3 % +0.4 %

* in million units ** average growth p.a.
China
14.5 27.0
European Union
16.3 19.7
India
3.0 6.9
Japan
9.1 9.1
Russia
1.3 3.3 4.1 4.2
South Korea
Flexible production facilities are virtually planned and analyzed with the help of PLM solutions in the framework of the digital plant. This shortens the time to market.
USA
7.6 10.8
+5.1 %
Source: PricewaterhouseCoopers
Food & Beverage: Turnover and variety are increasing

Strong and reliable market development as well as an increase in product variety with the costs for raw materials and energy rising at the same time the industry is in a challenging area of tension.
The representatives of the food & beverage industry (F & B) are enjoying the industrys dynamic growth. The market is growing very stable, which is uncommon in markets today (cf. bottom right chart). The main reason for this is the risen demand in the BRIC states and in many emerging countries in Asia that is caused by a higher level of income. The remarkable successes in this area form a contrast to the equally significant challenges. Especially manufacturers with global presence have to produce the larger part of their products with locally available raw materials. It is a matter of course that those materials have to be affordable and therefore suitable for competitive use, as well as being in accordance with high international standards of quality and security. A special focus lies on the use of water and energy. Because on the one hand, the costs for both of them are rising and due to the fierce competi-
Optimized packaging for beverages

Close to Piedras Negras, a Mexican city near the Texan border (USA), the Mexican beverages producer Grupo Modelo is building the worlds largest brewery. The company has some 40,000 employees and its most popular brand is the beer Corona. The new mega-plant is to produce some 30 million hectoliters of beer per year in its final stage of development. Siemens supplies the standardization concept OPL (Optimized Packaging Line) to the manufacturers of the bottling and packaging lines. It comprises most notably the standardizing of interfaces and hardware components. This saves costs, because the spare parts demand and the training efforts for employees, for instance, are decreasing. In addition to that, the solution simplifies fault diagnostics and maintenance. And due to the standardization, the concept can be effortlessly migrated to other parts of the plant. Grupo Modelo plans to use the OPL concept in other stages of the development as well. The soft drinks manufacturer PepsiCo has made comparably good experiences with it for some time.
Food & Beverage
Optimized Package Line (OPL) from Siemens ensures a comprehensive automation of packaging lines.
tion, additional costs cannot be passed on to the customer in form of higher prices. On the other hand, most leading companies feel duty-bound to their own ambitious targets for minimizing the consumption of water and energy. The interest in Siemens solutions that reduce the energy consumed by up to 30 percent and in systems for water reclamation that enable the reuse of up to 100 percent of the wastewater is accordingly high. Some other challenges are the quickly changing demands of consumers, trends, and local characteristics. A lot of food and beverage companies manage the balancing act between diversification and higher returns increasingly well. Thanks to innovative production processes, they have saved up to one-third of their costs lately and unleashed additional potentials for revenue with it. Increased flexibility and fast variations in production are enabled by the use of modern industrial software, in particular. There are high-performance engineering applications, such as the Totally Integrated Automation Portal (TIA Portal). With this software, new production processes can be engineered 30 percent faster.
The use of Manufacturing Execution Systems (MES) has increased in businesses since roughly a decade. They support the identification of optimization potentials. Finally, product lifecycle software solutions, such as Tecnomatix, Comos, and Teamcenter, enable a 20 percent shorter time to market. The megatrends urbanization and demographic change also demand a change of traditional views. On the one hand, the demand for foodstuffs produced on an industrial scale has to be satisfied and their security ensured. On the other hand, eating habits are changing due to an increase in the average age of the world population and an inclination toward a healthy diet. Demands as complex as that can be satisfied best by food and beverage manufacturers with an international presence. High flexibility and availability of goods, trendsetting logistics, as well as sustainable and efficient actions are a prerequisite for rising turnovers and yields. Convenience food and wellness products are said to be the product ranges with the highest growth potential.
Solid Growth
Country/Region Market development 20092013*
North America
+3
Latin America
+7
Europe, Middle East
+4
Asia
+6
*calculated annual growth rate (in percent) Basis: Euro Source: ARC advisory group, F&B Study 2009
Mechanical Engineering: the action is in the East

The industry is increasingly headed toward growth. Booming markets and new business models come into existence because of geo-economic and geo-political shifts toward Asia driven mostly by the development in China.
Western mechanical engineering companies will have to pass an enormous test in years to come. China is taking the offensive with considerable verve. The speed of growth in the Peoples Republic is breathtaking: the turnover of Chinese mechanical engineers grew by 64 percent to 343 billion Euros between 2007 and 2009. In 2010, the Chinese added another 40 percent to this. The change in their share of the world market was similarly impressive with its rise from nine percent in 2007 to 25 percent in 2009. Currently, the 15 largest mechanical engineering firms in China have an average turnover of three billion Euros. Five years ago, the same companies made an average 700 million Euros. If their growth continues, they will reach an average annual turnover of some ten billion Euros in the next five years. This would place them among the worlds largest mechanical engineers. Some 90 percent of Chinas production is still made up of large batches of comparatively simple machines for the domestic market. But this is going to change, especially because the Chinese government fosters the strengthening of the businesses innovative work. The international consulting company Oliver Wyman expects the Chinese mechanical engineering industry to expand into other emerging countries first. But after this, the triad markets USA, Japan, and Europe are on the list. The expansion is not expected before another three to five years have passed, but the way is already prepared. Experts on the sector expect the Chinese to start strengthening their international activities first of all in the construction, mining, textile machinery, and shipbuilding industries. Not only Chinas mechanical engineering companies, but also their competitors from other countries, profit from an upward trend in the industry. Market researchers expect a global production increase of approximately eight percent for 2011. This development will be sustained to a large part by the economic upturn of the emerging countries. The demand in these regions is mainly for technically less advanced, low-maintenance and affordable machines with a low degree of automation. International mechanical engineering companies are becoming increasingly present in these countries in order to meet this demand, as well as to react quickly and with individual solutions to regional characteristics. They massively develop their local presence and business activities, including research and development. The industry is confronted with completely different challenges faced in the established Western markets. Here, business models and strategies are of less concern than technology. Higher speed of innovation and ever-shortening development cycles in high-tech markets demand new, better, cheaper and faster development, as well as production methods. Therefore, production systems will merge increasingly in the virtual and the real world. A consistent, software-based design of automation, development and production is turning into a key task. In addition, the importance of a holistic view of the entire product lifecycle including the assessment of total cost of ownership increasingly shift into the focus of considerations.
Mechanical engineering
Higher flexibility and efficiency

Scalable products, innovative systems, holistic solutions and comprehensive global services make Siemens the leading partner of mechanical engineers around the world. The automation and drive solutions fit every sector of industry. This holds true for the printing machine industry, as well as for businesses from the conveyor technology or the glass and wood processing industries. It is applicable for crane, plastics, textile, packaging and tool machine builders. One example from the comprehensive range of products: with Mechatronics Concept Designer, customer-specific requirements and simultaneous multi-disciplinary development can be integrated in an innovative simulation technology. Through this, weak points can be found during the development stage and removed without costly expenses in terms of time and money before production commences. This helps to shorten development times, for example, and optimizes the quality of mechanical and plant engineering.
High double-digit growth in many countries

Country
Turnover 2010 (in bn, estimated)
Growth compared to 2009 (in %) 40 51 11 8 9 77 3 39 26 46
China Japan USA Germany Italy South Korea France Great Britain India Brazil
481 237 230 191 80 70 46 43 40 38
Mechatronics Concept Designer is based upon computer-game technology and helps to shorten development times by up to 20 percent.
Source: Eurostat, UN, VDMA, national statistics.
Chemicals: Stable growth

Chemicals worth 3.1 trillion Euros were produced globally in 2010 a gargantuan market. The generally optimistic industry is occupied with annual growth rates of six percent, a regional shift of the world markets, rising costs of energy, and increasing scarcity of resources.
Every crisis is a chance businesses from the chemical sector have impressively demonstrated the truth of this saying from the Far East in recent years: The Lehman crash with its consequences had led to a new orientation of the field of business towards higher cost-efficiency and flexibility. The auditing company PricewaterhouseCoopers (PwC) conducted a global survey among managing directors and chairpersons of managing boards in early 2011. According to it, nearly all businesses in chemical industries had initiated extensive savings measures during the crisis and strongly aligned their strategy toward yield growth. The time to reap what they have sown has now come: After a slump in turnover of more than six percent in 2009, it rose by a remarkable
Rubber in Singapore
The global Siemens network makes it possible to support customers around the world with decades of experience gathered in various companies of the business and with holistic, individual solutions. An example: The starting signal for building LANXESS new rubber plant in Singapore came in May 2010. The worlds most advanced butyl rubber production plant has a nominal capacity of 100,000 tons per year. Siemens was asked to design, deliver, and commission the process automation as well as the power distribution for the production site on the basis of Simatic PCS 7. The distributed control system enables the extremely flexible reaction to changing demands of the market. Integrated security concepts ensure the fault-free operation of the plants and protect employees, machines, and environment. The result: the plant availability increases and the total cost of ownership decreases.
LANXESS employees during an inspection round on a production plant for technical rubber.
Chemicals
23 percent in 2010. According to the PwC survey, some two-thirds of the company bosses said that they were very confident to continually increase their turnover until 2014 experts predict an annual plus of some six percent. The trend of a global market shift is obvious as well: Even if 70 percent of the global turnovers in chemicals are still made by the ten largest chemicals-producing countries, the production gradually shifts towards the emerging countries. This is hardly a surprise: In China alone, the consumption of chemicals rose by 23 percent from 2005 to 2010, in Brazil by 14, and in India by 12 percent. Not only does the industry note the strongest growth in the lower-cost countries strong new competitors and as many plants as nowhere else in the world spring up here. But plant engineers still have a lot of work in the USA and Europe, todays leading chemicals regions. Especially the stringent conditions regarding environment, security, and energy
demand the modernizing and retrofitting of existing production sites in those regions. The field of business is facing great challenges in spite of the generally good opportunities for growth. The basic chemicals area (inorganics, petrochemicals, and polymers), which generates 45 percent of the entire turnover of the chemical sector, has had to fight price jumps and exchange rate effects for years. Higher energy costs across all fields of business as well as scarce natural resources make the business difficult as well. They compel businesses to invest in measures for higher energy and resource efficiency. The profitability of production plants has to be increased throughout their entire life cycle. This becomes increasingly possible with innovative lifecycle management solutions. Such concepts consider the time from commissioning to operation and all the way to the dismantling of the plant as early as in the planning stage, and contribute to the shortening of innovation cycles and the increase of production flexibility.
Regional distribution of chemicals consumption (in %)

46 38 25 19 2008 2020
21
18 6 6 10 11
Asia/ Pacific
Western Europe
North America
South America
Other regions
Source: BASF
Global sales trend in the segments of the chemical industry (in % compared to previous year)
Inorganics PetroPolymers chemicals Fine and Detergents/ Pharmaspecialty Body care ceuticals chemicals
29
33
29 23 17 8 1.5 2 2009 13
20
15
17
2010
Source: Chemdata International, VCI
Pulp & Paper: Good times in the east Bad times in the west
The traditional markets rely on consolidation, the emerging countries on expansion. Manufacturers of paper and pulp around the world are occupied with energy efficiency, rising raw material costs, and sustainable production methods.
The world of the pulp & paper industry is divided: The manufacturers in Europe and North America suffer from excess capacities and declining demand in many regions. A lot of smaller and, through this, comparatively inefficient plants have already had to shut down. At the moment, a lot of companies in these regions rely on consolidation, not on expansion. The situation could not be more different in South America and Asia. A whole lot of modern high-performance plants are built here at the moment to meet the rising local demand. The industry produced more than 370 million tons of paper and pulp in 2009. Market observers estimate that the production will amount to 453 million tons in 2014. It consists mostly of cardboard and packaging paper (171 million tons), graphic papers (152 million tons), other paper and cardboard varieties (96 million), as well as tissue and sanitary products (34 million). The demand is projected to increase by an average 2.4 percent every year until 2020. However, production and consumption have always developed differently depending on the region. Whereas an Indonesian consumes only an average 20 kilograms of paper annually, it is more than twelve times this amount in Germany at a per capita consumption of 250 kilograms. Only Finland and the leader USA use more than that. The segments do not develop in parallel, too: Cardboard and packaging papers have been important drivers of turnover lately, as was the
tissue and sanitary segment. This trend will probably continue. The reason is the economic growth of the BRIC states, on the one hand. On the other hand, the positive global economic outlook speaks for an increase in demand on both sectors. It looks entirely different for graphic papers: Internet, digital cameras, and e-books contribute to noticeable declines in photo, catalogue, and newspaper papers. The industry is facing a geographical change as well: About the third part of its production capacities are still in Europe. In the ranking of nations, China is leader as an individual country in front of the USA, Japan, and Germany. But South American and Asian states such as Brazil and Indonesia increasingly discover expansionoriented business opportunities in Pulp & Paper, so that the markets will probably note a new regional distribution in the medium term. This promises interesting orders for the manufacturers of corresponding production plants. In the classical markets, it will be less about new plants and the extension of capacities, but rather about modernization and services. Either way, the sector is fighting one common problem around the world: The constantly and further rising energy and raw material prices weigh heavily on the margins. Apart from that, increasingly stringent environmental regulations demand innovative and efficient solutions. It is more and more about intelligent processes for water and wastewater treatment, for instance, or about refuse recycling or disposal.
Pulp & Paper

Lower water and energy consumption
Albert Khler GmbH & Co. KG from Gengenbach in the German state Baden-Wrttemberg produces 40,000 tons of highquality cardboards every year. The wastewater treatment takes place in the worlds first membrane bioreactor plant with subsequent reverse osmosis. The solution for energy efficiency, emission control, and water management was developed and implemented by Siemens and has led to noticeable savings and optimizations. The overall concept is considered a benchmark by the international paper industry. The cardboard manufacturer can not only reuse the largest part of its process water and reduce its wastewater volume by 90 percent. The energy costs decreased by some 140,000 Euros a year and with them the CO2 emissions by some 800 tons annually. The noticeably lower demand for process steam contributes to this, for instance. The machine and plant technology is placed in containers and can therefore be commissioned without great assembly efforts.
Albert Khlers wastewater treatment plant can recycle nearly the entire process water of the business.
The largest producers and consumers of the world (data in %, 2009)

42 44
24
22
23
21 7
3 Asia Confederation of European Paper Industries
3 North America
Rest of Europe
Latin America
Other regions Source: CPI, RISI
ExperTalk
Quo vadis, automation services?

The industrial landscape is changing, and the pressure on manufacturers to increase both productivity and flexibility grows. This also changes the role of external service providers. Dirk Hoke, CEO Customer Services Division, Siemens Industry Sector, and Valentijn de Leeuw, Director of Consulting at ARC Advisory Group, recently discussed the future of automation service providers.
Dirk Hoke, CEO Customer Services Division, Siemens Industry Sector

Dirk Hoke (42) is CEO of Siemens Industrys new Division Customer Services, which was established on October 1, 2011. Before that, the mechanical engineer was head of the Siemens Division Industry Solutions. Hoke came from the car manufacturer Renault in Paris to Siemens in Erlangen 15 years ago. He has worked for the company in many regions and business fields. Among them, the former Transportation Systems Group in the United States, Argentina, Germany, and Austria, as well as the leadership of Siemens Transportation Systems Group in China. Hoke was appointed CEO of the Siemens Cluster Western & Central Africa in 2008. From 2009 onwards, he was head of the Siemens Cluster Africa, which encompasses more than 50 countries.
Valentijn de Leeuw, Director ARC Advisory Group

Valentijn de Leeuw (53) is director at ARC Advisory Group Europe and holds a doctorate in Engineering and Chemistry. The international company for consulting and analysis of industry and infrastructure businesses is headquartered in Boston, Massachusetts in the U.S. De Leeuw was born in the Netherlands and is now based in Brussels and Paris. He analyzes a number of global businesses and is a consultant of the EU commission, amongst others. At ARC, he is responsible for research and consulting in process industries, with focus on clients in Europe, Middle East and Africa (EMEA). His focus is on organizational effectiveness, operations management, asset management, manufacturing operations management, performance management, and knowledge management.
! As the automation market
emerges from the recession, external automation services will lead the way in growth.
Valentijn de Leeuw: We expect that the growth in supplier-provided automation services will be significantly higher than the average sales of automation product solutions and services. ARC predicts that services will grow by around eight percent over the next five years compared to six percent in other products and solutions within the automation-related business. These figures include value-added services, for which we see significant potential. In January, Siemens started a project called Growth in Vertical Markets and Services. What have you done so far? Dirk Hoke: The project led to setting up our Customer Services Division which went into operation on October 1 (see page 27). That included the challenging part of involving and gaining buying-in from our people, some of whom are joining us from other service units, such as from our Divisions Industry Automation (IA) and Drive Technologies (DT). Within the project, we have put a strong focus on communication and telling people about the advantages and benefits this has for them as well. de Leeuw: Its vital to consider the people aspects. Doing this the right way can lead to a successful quickstart. I strongly encourage you to continue this approach.
If these assets are becoming increasingly im portant why shouldnt multinationals be able or willing to build up their own resources? Hoke: You cant innovate and be a leader in all domains. We all do best if we stick to our core competencies. Our customers core competencies are in production, ours are in industrial automation. This means that Siemens has the resources to invest in Research and Development and be ahead of the crowd. We also have the skills and resources our customers need. de Leeuw: There are multinationals, however, that consider automation services to be a core competence and capability. But a huge and increasing majority see their core competence in manufacturing. They have a global understanding of automation, but will go shopping for providers that can deliver what they need. How about other advantages apart from reduc ing projectrelated costs? de Leeuw: The key finding of our survey is that companies want to outsource to extend their internal resources; they want to be fast and agile, as well as to reduce their costs. Hoke: During the financial crisis, manufacturers with an effective outsourcing strategy had a huge competitive advantage because they only paid for what they really needed which often was less than before. And as nobody knew when the recession would end, it was important to delay Capex, which is easier to do with outsourced services. de Leeuw: And the providers benefit from collaboration and specialization as well. They can afford specialists that focus on one specific item only and can deploy resources just when needed. Plus, they can maintain skills that are used every day which can reduce costs for their customers as well. What about training? End users seem to have a high demand for this. Hoke: We have been offering both online and classroom training for years and we will strengthen this service regarding automation. There will
! Automation suppliers can provide
users with the resources needed for new projects, to optimize assets, and for operations management.
Industry Journal | 02 | 2011 | Markets 27 03 25
be new training centers for customers and for our own people as well. We will have a certified service education so that at a certain level we can ensure our people have the same competencies.
the best way to run a competitive system? The answer to this always requires a thorough analysis, which we can offer. So at the end of the day, we are talking about trust. Will we see a major change in the relationship be tween customers and suppliers in the near future? de Leeuw: Definitely trust will be a key aspect. Why should a manufacturer believe that paid services would be profitable for him? Suppliers have to answer this question quickly perhaps, even before it is asked. In the next phase, supplier and manufacturer will have to become interdependent. The objective must be to go beyond the traditional client-provider relationship. You can compare that to a bakery where you used to buy bread every day and that was that. Now you grow the wheat yourself and deliver it to the bakery before you buy the bread made out of your own wheat. So suddenly, you both depend on each other to do business. That changes everything in your relationship. Production secrets and key information equal the wheat; services are the bread. In fine chemistry or pharmaceuticals, in particular, sharing this type of proprietary information requires an extremely large amount of trust. Hoke: Therefore, we have to address new business models as well. These are mainly performancebased contracts. If we look at energy efficiency topics, for instance, the fastest way to convince a customer is for the supplier to assume all risks by getting paid only out of the savings. de Leeuw: But still there must be measures that protect the users intellectual property and knowledge. Probably, we have to work out ways to get access to the system information without having access to the production information. And, Mr. Hoke, dont you find your customers to be reluctant since they are afraid their costs will rise over time? Hoke: That would only happen if we couldnt guarantee cost transparency between investments and returns. That is a matter of standardization as well. We will offer service as a product that has repeatable solutions that can be priced and measured easily.
! Operations management and
maintenance have the largest impact on lifecycle costs.

de Leeuw: The system-to-lifecycle cost ratio depends on the type and useful lifespan of the products. But in general, the lifecycle cost and value is a multiple of the system and installation cost. So during a products lifecycle there is a multiple of the potential of the pure system purchase, like maintenance, modernization, remote monitoring, and so on. Hoke: That is why we pay so much attention to covering the whole lifecycle, including the upgrades, spare part services, software updates, and many other possibilities, for expanding the lifetime of a product and to offer replacement when the end of the lifetime approaches. de Leeuw: People do not differentiate between the cost and the value aspect quite often. If the customers make sure that the equipment is well maintained, they can reduce wear and breakdowns, and thus total costs. The other aspect, though, is to optimize the value that the system delivers. We know that the manufacturing equipment changes over time. Pumps, compressors, and other processing equipment are being replaced. If the associated automation strategy and structure are not constantly adapted, the system loses value since it no longer delivers what it was initially designed to deliver. Control strategies must be updated and control loops retuned to readapt the automation solution to the new plant situation. If users dont do these things properly and frequently, the system will lose its total value within five years or so. Hoke: Obviously, each case is different. In the end, it is all about capital efficiency. What is
de Leeuw: But meanwhile they have to think more and more about profitability as wages go up, leveling out their previous advantage in this area.
Suppliers can add value to out- ! sourced maintenance functions by providing metrics for overall equipment effectiveness.
If the dependency increases, how do you value the importance of the suppliers size? Hoke: That is a big opportunity for us, as we can deliver what multinationals need on a global basis with uniform quality. Our customers can rely on service stability which they might not feel safe about with smaller suppliers. Hoke: True. Take energy efficiency topics, for example. These are not only about automation but about the factory as a whole which includes air conditioning, waste and water management, and so on. In this area, the benefits of services are easily measurable if you compare energy consumption. Other key performance indicators that could be discussed with customers might be reducing downtime and guaranteeing uptime, as well as improving meantime between failures, for example. de Leeuw: Or the percentage of scheduled and unscheduled maintenance-related downtime, which directly impacts production and thus profitability. There are many possibilities. So this is about performancebased payment as well. But the purchasing departments of manufac turers are used to pay suppliers by the hour, by the piece by anything but performancebased results. Hoke: That is a difficult issue. Quite often, the corporate employees in the purchasing or supply chain departments are not trained to evaluate such benefits. So with our approach we can hardly go into direct comparison with most of the other suppliers. de Leeuw: What happens if purchasing blocks you? Hoke: We cant go directly through procurement but have to address the topic directly on other levels like executive, factory, and production-line management. Only they understand the benefits that we provide and can give the proper input to supply chain management. That means that we have to train our personnel accordingly. In the future, every service person should also be a salesperson. And the frequency of executive-level customer visits should be increased to improve the feedback process. How do you standardize feedbacks? Hoke: This is a global trend. Even in China, big customers are opening up to outsourced services. About five years ago, this was unthinkable. Hoke: Interviews obviously often follow a given pattern. Or take our net promoter score, based
! There is a lack of automation
skills and expertise within the manufacturing companies.

Hoke: More experts are needed globally than ever before. Even in emerging countries like China there are not enough skilled graduates to supply the needs of the industries. And in mature countries, many experts have simply retired. So the problem will even increase. de Leeuw: In response, the industry in the UK started sponsoring a curriculum for a Masters degree in process automation, provided by a few universities. Employees can study while still being paid by their companies. Hoke: And we have established cooperations with many of the best universities worldwide. Additionally, we are building up a service academy in conjunction with a German university that will offer a complete curriculum on services and, ultimately, a Masters degree. If a manufacturer asked ARC for advice whether to build up its own automation expertise or leave it to the suppliers what would you recommend? de Leeuw: Collaborate with and use the resources of service providers. For many manufacturers, outsourcing non-core activities seems to be the far smarter way than doing it themselves.
Industry Journal | 02 | 2011 | Markets 27 03
on some 18,000 customer interviews every year. This score tells us how many customers would recommend us, how many are neutral, and how many would refuse to recommend us. These comments are always extremely helpful.
Hoke: Certainly. But at present, we have to focus on what to do first according to our resources. Since were organized regionally, our top priority is to ensure that the people in the regions understand our service approach thoroughly. de Leeuw: Is the business planning and execution iterative in your case, like in planning by discovery? Hoke: No, we are much further than that. For example, we have done a lot of service benchmarking to identify blocking points and key success factors. First, we have done that with our own business units, then with the Siemens Healthcare and Energy Sectors. Afterwards, we extended that to companies that are complementary to our service offerings such as MAN Turbodiesel Services USA or Schindler elevators. They shared their experiences with us very openly. de Leeuw: What turned out to be the key success factors in this evaluation? Hoke: Service culture and an appropriate mindset definitely play a major role. This means that it is most important to overcome internal hurdles before rolling out a service strategy externally.
! An ecosystem of provider and
integrator services can provide full lifecycle services. The provider, as main automation contractor, can coordinate this system.
Hoke: We dont see ourselves in such a role. Siemens is present in almost every country of the world. In some cases, we cooperate with partners. Obviously, we will not be able to have the same competencies on the same level worldwide. But we will always find solutions that are best for our customers. de Leeuw: I would imagine that there should be plenty of opportunities for suppliers like Siemens to partner with value added resellers and thirdparty service providers, if needed.
The new Siemens Division Customer Services

The new Siemens Industry Division Customer Services (CS) was established on October 1, 2011, and is responsible for all services within the industry sector. Its task is to develop and expand the service business. The Division employs around 17,000 people around the world and advances the service strategy for products as well as for industries, such as automotive, pharmaceuticals, paper, and metal, in cooperation with the Divisions Industry Automation (IA) and Drive Technologies (DT). CS delivers product-oriented services as well as value-added services. Among the product-oriented services are online support, technical support, and field services for industrial plants. The value-added services comprise consulting (regarding energy and environmental management, for instance), plant monitoring, remote maintenance, and holistic plant management.
The automation market study

The theses of this ExperTalk are taken from a survey by ARC Advisory Group: in the report Supplier Provided Automation Services Worldwide Outlook, ARC examines the automation sector up to the year 2015. The 203-page study costs 6,300 Euros. Information and order: rkilies@arcweb.com
Goldmine junkyard
Raw materials are becoming scarce and the recycling of electrical devices, cars, and houses a profitable business. Urban Mining the reclamation of copper, gold, and aluminum from waste is a sophisticated technological process that benefits the environment as well. One ton of electrical waste contains many times more precious metals than the same amount of ore from a goldmine. Accordingly, the reclamation of gold from recycled materials requires less energy. Car manufacturers increasingly develop their own utilization concepts as well.
It sounds like a hoax: The global scarcity of raw materials leads to an increase in crime at junkyards. But it is true indeed that rising prices on international raw material exchanges lead to rocketing burglary rates at many a countrys scrapyards. The theft of entire power lines, railroad tracks, copper pipes, and shopping trolleys is becoming more frequent, too. There are no stolen goods better than scrap metal, because it fetches cash immediately, says Markus Mehl, CEO of the largest recycling plant in Bonn, Germany. But even without resulting to criminal activities, one can make money in scrap recycling. Lots of money. In the walls of buildings awaiting demolition, on recycling depots, landfills, and scrapyards around the globe lie huge amounts of valuable raw materials that were built into cars, electrical devices, and houses over decades. Savings of four billion Euros There are an estimated 100 billion megatons of metal in German buildings alone. According to the Bavarian Ministry of the Environment, waste disposal and recycling companies save an annual four billion Euros for the German economy. Studies by the Hessian Ministry of Environment claim that today an average landfill contains metals worth 30 million Euros. The Institut der Deutschen Wirtschaft (Institute of the German economy) estimates that raw materials worth 18 billion Euros will be reclaimed from waste in the
Federal Republic in 2015 more than twice as much as in 2009. On an international scale, the potential is even more impressive: Europeans dispose of 1.5 billion tons of reusable materials every year. And in China, four tons of gold, 28 tons of silver, and 6,000 tons of copper are thrown away every year. The gold alone has a value of 100 million Euros that is equal to the monthly production of some gold-mining countries. Scarcity of resources and rising prices of raw materials push the so-called Urban Mines in the focus of economy, politics, and research. All sorts of metal are of greatest interest. They are not only extremely valuable, but can be reused infinitely without quality losses, unlike materials like plastics or paper. Recycling is a profitable core business for the international Umicore Group, which is headquartered in Brussels and specializes in precious metals. More than 60 percent of Umicores turnover of nearly ten billion Euros a year come from recycling with a recent annual increase rate of about 42 percent. The EBIT adjusted to special influences even rose by 68 percent. Umicores sector Precious Metals Refining is among the worlds leading businesses for the recycling of precious metals from composites spanning from electrical waste to car and chemical catalysts, and all the way to slags and flue dusts containing precious metals.
Zinc, nickel, and lithium batteries are a valuable source of raw materials when recycled (left). The company Umicore alone recycles 7,000 tons every year. One ton of old printed circuit boards contain 200 grams of gold (right).
European recycling rates

Electrical junk is utilized in a lot of different ways across Europe. In most cases, there is still a lot of potential. In regard to recyclable materials, the average recycling rate in the EU-27 lies at only 30 percent.
Rate of utilization and recycling in %

80 79 82 83
Germany
Spain
60 65 82
Sweden
76 86 75
Great Britain
78 76 85
France
Consumer electronics Monitors and controls 63
72 80
Poland
IT and telecommunication
23 39
Source: Eurostat 2011
A future-proof business As the demand for precious and special metals is constantly on the rise, the business is futureproof. Other materials cannot replace them, because the specific characteristics of so-called technological metals are irreplaceable in the production of many appliances from consumer electronics to production facilities. Three percent of the annual global production of silver and gold are used for the production of computers and cell phones. The same is true for 13 percent of the palladium and 15 percent of the cobalt mined. The problem of many Western countries is that there are, for instance, next to no primary storage facilities for technological metals in Europe, explains Christian Hagelken, divisional director Business Development of Umicore Precious Metals Refining. This means that raw materials have to be mined abroad and imported. In recent years the costs for this have risen by 80 percent in Europe. And end-of-life products are a huge storage facility that has to be used. The Umweltbundesamt (Federal Bureau for the Environment) estimates that disused cell phones containing materials worth 65 million Euros lie in the cupboards of German households. And the precious metals they contain make up 80 percent of this value. These metals weigh only a couple of milligrams per cell phone and are not even worth one single Euro. But multiplied by 1.3 billion cell phones sold worldwide, or by more than 300 million PCs and laptops a year,
this is an enormous amount of money tendency rising. The global recycling potential for cell phones only is more than 80,000 tons. The de facto reuse is less than 2,000 tons; not even three percent. Recycling reduces dependency on raw materials To ensure a secure supply with technological metals at affordable prices is of the utmost economical importance, especially for regions lacking raw materials. The considerable dependency on import, together with a regional concentration of indispensable metals such as rare earths in China, platinum metals in South Africa, and cobalt in Central Africa increase the risk of supply bottlenecks as well as price leaps. All those are good reasons for the targeted use of end-of-life products. And thanks to modern recycling facilities, most metals can be used again. One of the challenges of Urban Mining is the extraction of reusable materials without causing further damage to the environment. Electronic scrap, for instance, is a complex mixture of precious, basic, and special metals as well as pollutants, halogens, plastics, glass, and others. The importance of this source of raw materials is as big as the environmental risk it constitutes on landfills and in technically inadequate recycling, says Hagelken. With pollutant-free monosubstances such as glass or steel scrap, the focus is on throughput and cost. But with polysubstance materials
Explosion of raw material prices

(Price index 20012011, in US dollars)
1,300 1,200 1,100 1,000 900 800 700
Rising prices for raw materials as well as rising demand lead to increased profitability of recycling electrical junk due to the technological metals it contains.
600 500 400 300 200
Gold Silver Palladium
100 0 13.07.2001 02.01.2006 03.01.2011
found in complex components, it should be on eco-friendly extraction of trace elements and on improving the reclamation of value. And the process is becoming increasingly complex: IThardware of the 1980s contained about eleven different valuable elements, today, there are 60 that is half the periodic table. Metal recovery of 95 percent At Umicores metal works near Antwerp the utilization of these end-of-life-materials can be seen. The worlds largest integrated metal works for the recovery of (precious) metals uses elaborate technical processes to achieve metal yields of over 95 percent from complex materials such as printed circuit boards, catalysts, and lithium-ion batteries. Calculated for the entire recycled material this means an annual yield of 70,000 tons of metal from 300,000 tons of mainly secondary materials. This is as much as the weight of 45,000 mid-range cars. This kind of recycling does not only bring valuable raw materials back into the cycle. It is also a significant contribution to climate protection, says Umicores expert Hagelken. The energy demand for the recovery of precious metals through modern recycling is just a fraction of the amount required for mining. 14 tons of electrical scrap yield approximately one ton of copper. To mine that much, up to 1,000 tons of rock have to be moved. And the extraction of one ton of gold from a conventional mine causes 1,700 tons of CO2 emissions, mostly in mining and processing. And no wonder one ton of rock
contains only five grams of gold. Printed circuit boards are 40 times as profitable, yielding an average 200 grams of gold per ton. Compared to the ore content of the primary deposits, computer circuit boards are a veritable bonanza, Hagelken says. High-tech is in demand Hagelken sees one of the main problems of European recycling in the channeling of collected products through dubious channels to backyard recycling plants in emerging countries. Less than a quarter of the potential yield of precious metals is recovered in those plants. It is high time for a fundamental change: This is about responsible management of resources, which integrates the complete registration of old devices, the stopping of sinister exports, and a global cycle economy, says Hagelken. The goal has to be the focus on quality and economic relevance of raw materials. The path leads away from conventional scrap business towards hightech recycling. Recycling is a business with high economical, ecological, and social relevance. This has been recognized by politics as well: last March, the Ministers of the Environment of the 27 EU states agreed on more stringent conditions for the disposal of electrical scrap. Accordingly, the collection rate is meant to rise from todays 30 to 65 percent within eight years. The German Federal Secretary for the Environment, Katherina Reiche, considers this to be a significant contribution to securing raw materials for Europe: We want to
make sure that materials are reused once they have entered the cycle. EU Commissioner of the Environment, Janez Potocnik, adds: It is important that we view electrical scrap as a valuable resource. And indeed: Losses through non-recycled metals amounts to nearly four billion Euros a year in Europe. BMW has the worlds leading concept Next to electrical appliances, cars are one of the most important sources for secondary raw materials. Since the beginning of the 90s, the BMW Group has been researching in their in-house Recycling and Demonstration Center (RDZ) how to integrate materials used in vehicles into the cycle of material and to spare natural resources. The certified specialist business for disposal is regarded as one of the worlds leading companies in this sector. We develop important approaches for dismantling and draining technologies as well as recycling concepts for the vehicles of the future, Steffen Aumann, director of the BMW Groups RDZ, explains. Originally, the focus was on environmentally friendly disposal when treating old vehicles. The return of materials into the cycle is a new aspect.
From 2015 onwards, the legal requirements for the recycling of vehicles include a utilization rate of 95 percent. With that in mind, the RDZs experts initiated a large-scale test with about 500 vehicles three years ago. They wanted to prove what modern recycling concepts are capable of. Firstly, the vehicles were pre-treated in the RDZ. The law stipulates the neutralization of pyrotechnical components such as airbags and pretensioners, the pure draining of working materials such as oils and fuels, as well as the reduction of concentration of harmful substances, Aumann explains. In the test we dismantled all components for which there is a demand on the market such as alloy wheel rims, bumpers, and headlights. In the next step, the rest of the vehicle body was pressed and shredded. Afterwards, the metal parts of the body were separated completely by using techniques such as magnetic separation and air sifting. From the non-metallic shredder residue, other materials that can be used as secondary raw materials were extracted with post-shredder technologies. In the test we were able to demonstrate that we can conform to the 95 percent recycling quota stipulated by law, says the delighted RDZ boss.
Next to no scrap is as valuable as old cell phones: One ton contains about 300 grams of gold 60 times more than one ton of rock from a goldmine.
The demand in the USA and China is on the rise

UNTHA Recyclingtechnik GmbH (UNTHA recycling technologies Ltd.) is headquartered in Karlstadt, Bavaria, and an international supplier of recycling plants specializing in shredding technology. From single machines to turnkey plants, UNTHA manufactures solutions comprising hoisting devices, separation technology, dedusting sound insulation, and many other features. Specialties are recycling plants for electrical household devices and electrical junk as well as plants for disposing and recycling old refrigerator and freezer appliances. In those plants like in most automated recycling plants Siemens components such as the vibration resistant and maintenance-free controller Simatic S7 are employed. Industry Journal talked with Peter Heler, managing director of UNTHA. What is the difference between the recycling of refrigerator and freezer appliances and other forms of recycling? Primarily the cost as well as the compliance to EU stipulations for plants treating refrigerants and disposing of the CFC contained in refrigerators in an eco-friendly way. A profitable plant that meets these requirements is virtually the top class of recycling technology. So this is about protecting the environment as well? The blowing agents contained in insulation foams destroy the ozone layer and are accountable for a large part of the greenhouse effect. In our plant they are recorded for external environment-friendly disposal or destroyed immediately. What is the part of CFC, which was a hot topic 20 years ago but is next to not discussed today? CFC is a forgotten enemy of the climate. The Montreal protocol of 1987 was initiated because of the CFC problem. Today, this topic ranks significantly behind CO2 in public discussions. But this does not mean that the matter is not relevant any more. Even though products containing CFC have been banned from European markets since 1995, gigantic amounts of them are still out there. 70 percent of all refrigerator and freezer appliances arriving at the disposers still contain CFC.
What is the situation in other countries? In North and South America those appliances are still produced. The importance of professional disposal becomes apparent through an example: When a car drives 10,000 kilometers, it emits about 2,000 kilograms of CO2. The recycling of only one conventional refrigerator can compensate for this amount. For the large refrigerators popular in the USA, 6,000 kilograms are emitted per appliance, which correspond to 30,000 kilometers by car. But there is still only one plant for sustainably recycling refrigerator or freezer appliances which was developed by us. So it is a growth market? In countries like the USA or China the demand for these plants will surely grow. How profitable is recycling? As opposed to other fields of business, like electrical scrap, the recycling of refrigerators and freezers will never be profitable. Our customers are public and private waste disposal companies with an annual throughput of at least 100,000 cooling appliances. A technologically advanced and efficiently designed plant ensures that the recycling is at least a zero-sum game. The aluminum, steel, and copper contained in refrigerators can be reused, the degased polyurethane foam is taken away for free by cement plants to be used as substitute fuel. Plastics can be sold to companies specializing in their recycling. But the disposal and destruction of CFC means expenses for the disposing business in any case.
An UNTHA recycling plant from Terra Nova
Brazil booming, attractive, and laid back
The euphoric mood of the emerging nations as well as the BRIC states and their vast growth are the talk of the whole world which mostly thinks of China and India only. The partly undiscovered jewel is the B in BRIC Brazil. Vast natural resources, a reformed economy and society, an upcoming middle class, high domestic demand, a central position in Latin America, and ambitious employees make South Americas largest country an interesting market. Experts expect Brazil to be among the top five of the worlds largest economies in less than two decades.
Rafael Haddad has just struggled through So Paulos traffic jam again. He still is a little out of breath when he arrives a quarter of an hour late for the meeting. Haddad laughs as he makes his apologies: Thats nothing. We normally calculate an hour, sometimes more. The Brazilians are more easy-going in that matter. So is everybody doing business with them after a short time. Planning is different round here. Haddad sinks onto his chair and takes a sip of strong coffee. He arrived in Brazil only this morning. The CEO of the Brazil Board of the Association of German Industry (BDI) has been visiting German companies in the country without a break ever since. He still has a lot to do: visit more companies, talk to government representatives, go to trade fairs, and establish contact to Brazilian entrepreneurs. At the moment, a lot of contracts are nearing completion. It is a crucial stage. Euphoric mood in Latin Americas booming country: Brazil. Sugarloaf Mountain and Amazon, coffee, samba, soccer, Copacabana? Brazil is more a lot more than the stereotype says. At the moment, the economy of South Americas largest country is among the most dynamic of the world. It listed an increase of 7.5 percent in 2010. The global economic crisis seems to have left Brazil without a mark. With breathtaking speed, the gap is closing between it and the worlds richest countries. Extremely rich in natural resources Basis for the advance are a bunch of treasures: It is the worlds fifth-largest country and almost its entire territory can be used for agriculture. This is a gigantic economic factor, considering the explosion of the global population that is leading to an increased demand for food. The country will soon be the most important food producer of the world. It has a lot of natural reserves such as natural gas, oil and gems, as well as already being the worlds largest exporter of iron. The company Petrobras has discovered huge deposits of crude oil off the Brazilian coast. Experts estimate that this could catapult the country into the top five of the worlds crude-oil exporters. The Asian boom speeds up the growth of the Latin American territorial state. The demand explodes, as does the domestic one: 200 million people, a lot of them young and consumptionoriented, represent a potentially gigantic market. In the last 30 years, large parts of the population have climbed into the middle class. Its percentage has risen from 35 to 51 since 2006. The income rises in all income groups. Thanks to the welfare programs of ex-President Luiz Incio Lula da Silva
The statue of Christ the landmark of Rio de Janeiro. Christo Redentor spreads his arms protectively over the city on the Corcovado mountain.
this holds true for low-wage families as well. A growing class of consumers has emerged that has a lot of catching up to do: refrigerators, TVs, computers, cars, furnishings, better food and prettier flats. This means unprecedented growth for the internal market. Energy demand is rising as well. Next to natural gas and oil, which are mostly exported, Brazil counts on wind- and waterpower, ethanol and nuclear power. A gigantic playground for investors. The worlds seventh-largest economy
because the entire world will be looking at it very soon. The soccer world championship 2014 and the 2016 Olympics Brazil has to be prepared by then. And so the country is being turned into a gigantic construction site. Roads, subways, airports, ports, dykes, flats and sports facilities are being built everywhere. Refineries, offshore oil-production plants and wind farms are on the project developers and construction companies lists as well. President Dilma Rousseff wants to speed up the approval processes for dykes and roads as well as for ports for ships and planes with a decree.
It is a crucial stage.
Rafael Haddad, CEO of the Brazil Board of the Association of German Industry.
It is no surprise that Brazil holds the seventh position in the global ranking of economies. Directly behind the USA, China, India, Germany, Japan and Russia. According to a prognosis by Goldman Sachs, the country will be number three or four in 2035 at the latest. The growth dynamics go hand in hand with an investment boom. Together with the private sector, the government wants to spend a thousand billion US dollars by 2014, mostly for infrastructural developments. The Brazilians cannot afford potholes and power failures any more. Especially
Next to no sector is exempt from the boom. Whether it is energy, infrastructure, engineering, automotive, chemicals, electronics or security the business opportunities for German companies are extraordinary, says BDI expert Haddad, because we are very strong and innovative in those key industries. The German economy has observed the development for some time as opposed to countries such as the USA, China, Spain and France, which made a
decided push in the last three years. But where are the Germans? President Lula asked during a state visit to Berlin at the end of 2009. The Germans reacted and established the BDIs Brazil Board in order to strengthen the economic relations between Germany and Brazil. Bridgehead to the free-trade area Mercosur 1,200 German companies are already in the country, some of them since many years. According to the BDI, the German share in the creation of value in industrial production has already reached ten percent. Great names are represented from Siemens to Daimler and Volkswagen and all the way to Bosch. For many of them, Brazil is the bridgehead to the Latin American free-trade area Mercosur, consisting of Argentina, Paraguay, Uruguay, Venezuela and Chile. This year, the German-Brazilian chamber of commerce expects some 60 economic delegations in So Paulo. Recently, the port of Duisburg signed a bulk order for the design of a logistics concept for the development of Santos, Latin Americas largest port, and the adjoining hinterland. We want to be a pioneer for the national industry when it comes to the placing of orders later on, Erich Starke, Head of the Duisburger Hafen AG (Port of Duisburg plc.) says. Chemical giant BASF plans a production site for acrylic acid, the basic material for nappies, and wants to invest hundreds of millions of Euros in northeastern Brazil. Siemens, which has been one of the most important companies in Brazil for many a day, has most recently made a turnover of some 1.8 billion Euros in fiscal year 2010 (This is an increase of over 32 % compared to 2009). The company invests heavily in infrastructure, automation and energy as well as developing their medical sector. Car manufacturer BMW doubled their sales in 2010 and sold 18,000 cars. Attractive market for niche suppliers The economic miracle attracts medium-sized companies from Germany as well. They make up 90 percent of the local businesses. Often they are niche suppliers like GERB Schwingungsisolierungen (vibration insulations) from Berlin. GERB specializes in everything that has to be insulated and elastically embedded, such as heavy machinery, turbines, houses, track systems and bridges. The company cushioned the terraces of So Paulos gigantic Morumbi stadium, for instance. The Berliners ventured to South America 20 years ago and have a production site in So Paulo. As a niche supplier, we have to be close to our customers and markets, Christoph von Waldow, Managing Director of GERB in Berlin, says.
Business and private people can feel at home in this county. Western lifestyle meets Latin American ease and a remarkable economic growth in many sectors.
Siemens in Brazil
Siemens was one of the first European companies to venture towards Brazil. As early as 1867, Siemens built the countrys first telegraph line between Rio de Janeiro and Rio Grande do Sul. Today, the Brazilian subsidiary of the Group is among the most important companies of this South American country and has contributed substantially to development and modernization of the infrastructure. Siemens employs more than 10,800 people in Brazil and is the countrys largest electric company. In 2010, a turnover of 1.8 billion Euros was implemented with Brazilian customers and orders were secured for 2.1 billion Euros.
Removal of a slab in the Brazilian steelworks ThyssenKrupp CSA. The shown casting machine was supplied by Siemens VAI.
Nevertheless: A lot of established businesses watch the current euphoria skeptically. Too long they have suffered from the exchange rates rollercoaster rides, from periods of hyperinflation, political instability and their economical consequences. They know that a lot has changed fundamentally. That the country has become more stable and reliable. That the economical development has largely been severed from changes in the political mood. And that strong domestic economic activity has significantly reduced the dependence on the global economy. But the scars of the past still smart. Highly qualified specialists from Brazil The formulas for success of foreign companies in Brazil resemble each other in many aspects. Most companies prefer to employ native employees, which they recruit from the countrys universities. Training on the job has proven to be a success, especially at specialist companies such as GERB. It is complemented by one or two years of experience at different stations in the parent company. The search for specialists is not made easier by the current boom. But the great quality of training at the Brazilian universities is a huge advantage, says von Waldow.
When Peter Rsler, Brazil expert of the trade association Lateinamerikaverein (Latin America Association) in Hamburg, travels the country, he is always impressed by the South Americans dynamics and will to advance. The Brazilians themselves were skeptical not so long ago, Rsler remembers. With President Lulas assumption of office in 2003, his program of reform and the opening to the world came a strong change of mood. The Brazilians are full of vigor. Education, for example: Even after a long working day, many Brazilians get additional training. The desire for self-improvement is enormous. Especially among the career-oriented younger people, companies from the Western countries with a systematic in-house training system are favored. Unlike many other countries, Brazil does not have its own vocational training system. Rsler: This is an incentive for Brazilian specialists, as well as the social security and good wages that German companies in Brazil can offer. The salaries on management level have almost reached the European level and factory workers are well paid. Somebody trying to find cheap labor in a Brazilian metropolis will hardly succeed.
All business sectors of the company are represented in the country: from industrial plants to building and lighting technologies, from public infrastructure to power supply, and all the way to healthcare technology. Siemens systems provide half of Brazils power. By 2016, Siemens will have built two new plants for the countrys oil and gas industry and one for medical appliances. The orders have a value of 600 million US dollars. On an island off Rio de Janeiro, Siemens is building its own research and development center in the Parque Technologico close to Petrobras research center. The company is one of Siemens most important customers in Brazil. With a most recent annual turnover of some 96 billion Euros and a daily production volume of more than two million barrels of crude oil, Petrobras is the worlds fifth-largest oil company. One of the most impressive success stories of Siemens is the implementation of automation systems
on 13 oil platforms in 2010. According to their own estimates, Petrobras will have tripled its daily production volume by 2020. For this, we need partners that can cope with such gigantic volumes partners like Siemens, says Carlos Tadeu da Costa Fraga, head of the Petrobras research center. Siemens is successful in the steel industry as well. An annual output of some five million tons of steel was installed in the steelworks of ThyssenKrupp CSA in the federal district of Rio de Janeiro by Siemens VAI. A project with a volume of some 20 million Euros is currently being implemented in the steel plant of ArcelorMittal in Jao Monlevade in the federal district Minas Gerais. In addition to this, Siemens counts among the best employers of the country: the Brazilian magazine Gesto RH voted Siemens among the Top 100 businesses for exemplary personnel development and among the best ten businesses in personnel management for the fourth time running.
160 kilometers off the Brazilian coast lie the Barracuda and Caratinga oil fields. Together, they contain an estimated 1.2 billion barrels. Petrobras produces some 300,000 barrels a day from them, sometimes from a depth of more than 1,100 meters. Siemens technologies for process-gas use, alarm and emergency shutdown, as well as communication support the production.
High crime rates remain a specific regional problem, especially in the urban centers. Businesspeople quickly learn the unwritten rules, one way or the other: Do not take a stroll on the beaches of Rio in a business outfit, for instance. Take a taxi to business dinners. Or follow the natives example and throw on jeans and T-shirt in the evening, as well as taking off your watch. And always have some 50 Euros in cash with you to be able to buy your way out of robberies. High bureaucratic effort A further specific obstacle of the country is the inefficient bureaucracy: complicated approval procedures, tax and customs regulations. All this is very complex, Brazil expert Rsler says. He advises finding a Brazilian partner who is familiar with the authorities, the market with its ever-new requirements, new terms of tender and new projects. Newcomers do well to establish a network very quickly. German companies, for example, profit from the strong German community. More than 500,000 Germans or people with German ancestry live in So Paulo alone. They make up five percent of the population. Partnerships are very important, too, because Brazil works differently than Europe, for example. Cultural differences are easy to underestimate. You feel at home quickly, people are very warm-hearted, BDI expert Haddad says. But nevertheless: at the end of the day this is tough business and one should know the rules of it. They include a less direct style of negotiation than in Western countries. You made a mistake here: The figures are not correct this way. Sentences like that unthinkable in Brazil, where facts and arguments are presented in a more friendly manner in most cases. Small talk about family, soccer, and the country, preferably over a good meal, can take almost two hours. First talk about the plot, then about the building and machines and finally about sales? A Brazilian may start with sales and turn to production afterwards, Rsler knows. Brazilians are used to directing their attention at many aspects simultaneously. Nevertheless: Brazil is a good portal into the emerging countries for Western companies. The cultures and languages are closer than the ones of India and China, for example. Not even a different attitude towards punctuality and commitment can change this.
Brazilian figures
Population 196 million Gross domestic product 2010 Inflation rate 2011 (estimate) Unemployment rate 2011 (estimate) Economic growth 2011 (estimate) Budget deficit 2010 Most important natural reserves: 1,700 billion US dollars 5.5%
6.5%
4.5%
2.6%
iron ore, natural gas, oil, diamonds, tin
Raw materials
The global economy is running at full steam and demands fuel. On the one hand in form of energy, on the other in form of increasingly scarce raw materials. A lot of them have highly specific characteristics, which make them indispensable for the manufacture of high-tech goods. Around the world, the competition for these valuable raw materials has started and it is bound to increase.
Investigation of the deposits of 14 particularly rare and important raw materials for the manufacture of industrial goods
Rich blessings
Many rare raw materials are found in countries that do not normally appear on large companies radars. They could be the ones profiting most from the global economic boom. This could change the structure of our worlds economy.
Canada: Cobalt
Russia: Platinum metals
USA: Beryllium
Japan: Indium China: Antimony, Beryllium, Fluorite, Gallium, Graphite, Germanium, Indium, Magnesium, Rare Earths, Wolfram
Mexico: Fluorite
India: Graphite
Congo: Cobalt, Tantalum
Rwanda: Tantalum
Brazil: Niobium, Tantalum Australia: Manganese, Neodymium, Nickel, Silver, Wolfram, Zinc Source: EU Raw Materials Supply Group 2010. Own research.
South Africa: Platinum metals
Rare earths under deep water

According to the magazine Nature Geoscience, scientists estimate that one square kilometer on the bottom of the Pacific Ocean could contain enough rare earths to cover 20% of the annual global demand. Next to neodymium, lanthanum, gadolinium, and europium, 13 other raw materials are counted among the rare earths. They are indispensable for the manufacture of several modern technologies. There could be more deposits of rare earths under the sea as on dry land. But suitable mining measures are lacking.
Keys to technologies
17 important technology metals are subsumed under the term rare earths. The term was coined at a time in which those metals were found primarily in rare minerals and were isolated from them in the form of oxides (earths). There are next to no large deposits of rare earths around the world. They are distributed on countless mineral deposits (predominantly in China) and mostly salvaged as a by-product of the extraction of other metals.
297
It could be a tight fit here

Be it the manufacture of LEDs, touch screens, mobiles, strong magnets, catalysts, or capacitors nothing works without rare metals such as gallium, indium, neodymium, or tantalum. The demand increases and so 120 does the scarcity of raw materials.
66 35
India 2.1
229
Global extraction of rare earths 2009 (in %)
Brazil 0.5 China 97 Malaysia 0.3
Source: US Geological Survey.
Increase in demand 20062030 (in %)

2
Investigated global reserves of rare earths 2010 (in %)

China 37
CIS 19
USA 13
Source: EU Commission Source: US Geological Survey.
Australia 5 India 3
FACTS & FIGURES
42 Industry Journal | 02 | 2011 | People To watch
Industry Journal | 02 | 2011 | People To watch 43
People to watch: Jigar Shah
More than half of all CO2 emissions could be cut

Jigar Shah is CEO of the U.S. foundation Carbon War Room. The British billionaire Sir Richard Branson founded the organization that fights for the drastic reduction of CO2 emissions all over the world. Shah, who was born in India, talks with Industry Journal about financing models for green technologies, the failure of the market economy, and Brazilian cows.
Jigar Shah (36), former solar entrepreneur and CEO of Carbon War Room in his office in Washington DC.
Mr. Shah, let us talk about climate protection even if your organizations name implicates less peaceful topics. Winston Churchill coined the term War Room. It was here he assembled military strategists as well as scientists, entrepreneurs, and bankers during World War II. All of them worked together to develop a strong military strategy. We bring together various experts as well to deal with global warming, though. Why this analogy? What has global warming in common with a world war? It is as dangerous as World War I and II put together. The devastating earthquake in Japan is only one piece of a huge pattern. People notice that things like that are becoming increasingly frequent and threatening. Today, more people die in natural disasters than in wars. But contrary to a military conflict, we of Carbon War Room focus on positive and constructive ways of solving this problem. Why do you think that you as a private organization can move something in a case where even massive efforts of politics failed? We calculated that 50 percent of todays global CO2 emissions could already be saved cost-efficiently and with existing technologies.
Why is it not happening? At the moment, we try and answer this question in order to remove the reasons afterwards. We are currently analyzing 25 sectors from the field of energy to industry and all the way to forestry and seek to find ways to reduce CO2 emissions. We are thinking big in this endeavor and only take up projects that have the potential to avoid at least one gigaton of CO2 emissions. You say that the use of energy-efficient technologies is already feasible today. Does the market economy fail where CO2 emissions are concerned? In several cases, I really am of this opinion. One would think that the market will always choose the most cost-efficient option. But unfortunately, this is not always true. All of us love low initial costs. But for many green projects one has to put down a lot of cash up front. Savings become apparent noticeably later this process goes against intuition. Is it not quite often just a simple lack of money? Thats right. And the economic crisis has made financing very difficult. But suppliers want payment for their technologies. They do not know, however, if potential customers can afford them.
This is the reason why some deals, which are really interesting for both partners, do not come to fruition. Therefore we analyze, for instance, what can be done in those cases. The Carbon War Room does not want to be a Think Tank but rather a Do Tank. The crux of our work is the creative financing of projects, which cannot be shown in balance sheets in a standardized way. Why should you succeed where even Fortune-500 businesses with large financial departments seem to fail, namely in profitably employing green technologies? Take UPS, for example. The logistics company knows that it could fly more efficiently with autopilots in the cockpit. To fit this technology into all planes, a huge investment would be necessary. For a conventional loan financing following the usual calculation to be feasible, the investment would have to lead to immediate savings of at least 15 percent of the amount invested. But in reality, the savings did not amount to this. To fit in the autopilots in spite of that, an off-balance-sheet transaction would be required. In that case, the borrowing costs and amortization rates are paid back over many years through kerosene savings. Unfortunately, UPS is not an expert for this kind of project financing. In these cases we can give support with our expertise. In addition to that, we integrated large consulting companies such as McKinsey, Cap Gemini, and Accenture into the process. What has the Carbon War Room de facto achieved until now? Our first great successes are in the area of shipping. It is responsible for three percent of the global CO2 emissions. Many technologies that can lower the CO2 emissions of ships by 30 percent have already been developed in the 1970s and 1980s. But ship owners did not introduce these technologies, because they were able to pass on 70 percent of fuel costs to their customers, who could not distinguish between efficient and less efficient ships until then. With 60,000 ships worldwide, savings of 30 percent are significant. Therefore, we introduced an efficiency ranking for ships that made their consumption transparent for customers. It is similar to the efficiency categorization of fridges. This transparency will lead to the assertion of efficient ships.
In this case, the market economy had failed a non-profit organization such as the Carbon War Room was required to make a difference. Are there other examples of success? We are only two years old. In that time span, one successfully implemented initiative is really good. At the moment we are concerning ourselves with the energy efficiency of office buildings, for example. Great technologies are already available for this sector as well. The owners of buildings are just not prepared to pay for refurbishments. The value of many buildings has decreased since the financial crisis, which increases the difficulty of financing, even though the modernization of buildings would make financial sense in the long run. For cases like that, modern financing models are already in existence. We adapt them for the construction industry at the moment. We are talking about a gigantic amount of investment 1,000 billion US dollars.
The person
Jigar Shah (36) is CEO of the Carbon War Room. He was born in India and lives in the USA, where he founded the solar company Sun Edison in 2004. It became the largest of its kind in the USA. He developed the business model of Sun Edison for a concept competition of Harvard Business School and won the first prize. Two years ago, the engineer sold his business for 200 million US dollars. He has invested all his occupational energies in the Carbon War Room ever since.
What do these models look like? It is pay-as-you-save financing that can be entered off-balance-sheet. These credits are repaid from energy savings. Models like this already exist and they achieve competitive returns for the financing banks. This is the core idea of our philosophy: every approach to saving carbon
dioxide has to be economically feasible. The tremendous changes we want to initiate cannot be asserted in any other way. The Carbon War Room has a program for CO2 neutral cities, too. What does it entail? We developed the Green Capital-Global Challenge from our conversations with the mayor of Vancouver, Gregor Robertson. Vancouver hosted the Olympic Winter Games in February 2010 and they were the first to host CO2-neutral Olympics, thanks to waterpower and green building standards. Now we want to give an incentive for cities to participate in a kind of competition to be the first to be truly green. Is this mainly about renewable energies? No, the main focus is on the energy efficiency of commercial buildings. We bring together local banks, the Kreditanstalt fr Wiederaufbau (KfW development bank), and pension funds. Until now, Vancouver, Toronto, Copenhagen, London, Birmingham, New York City, Washington DC, and Chicago are participating. We are still trying to find interested cities in Germany. You are interested in venture capital as well. Dont such investment companies know best, which future technologies will yield the highest returns? You would think so, wouldnt you? In reality, the money of venture capitalists piles up in a few mainstream sectors such as wind and solar power. On the other hand, many lucrative innovations in aviation, shipping, rail traffic, forestry, and industrial applications cannot be financed with them. One could say that venture capital follows the hype; attention goes where the best marketing is. Does nuclear power feature in your calculations for the possible CO2 reduction? No. As opposed to other forms of a new energy infrastructure, even brand-new nuclear power stations are not cost-efficient in most countries. What is the Carbon War Rooms general position as regards nuclear power? We do not select winners or losers as a general rule. We assess data to find possible CO2 reductions in the dimension of a gigaton. Because according to scientific insights we need those volumes to remain below the global warming target of a maximum of two degrees Celsius. If countries such as China manage to build a safe nuclear power station in a cost-efficient way,
An overview of the Carbon War Room

The Carbon War Room was founded in Washington DC in 2009. The non-profit organization aims to reduce global CO2 emissions drastically. It has 20 employees and brings people like scientists, entrepreneurs, mayors, and investors together to quickly implement green technologies. The Carbon War Room identified 25 so-called battles, in each of which one gigaton of CO2 could be saved annually more than two percent of the global emissions in the same time span. The work of the Carbon War Room consists of three military-sounding sectors: Intelligence and Reconnaissance collects information and backgrounds. Communications and Logistics deals with new media to better spread the knowledge gained. In the course of Battle Operations the organization considers itself an operative driver of innovation. Initiator of the Carbon War Room is the British billionaire Sir Richard Branson, founder of the Virgin group. Capital investors alongside Branson are, for example, Michael Haas, founder of the Orion Renewable Energy Group, Lithuanian entrepreneur Vladas Lasas (Skubios Sluntos Ltd.), Strive Maslylwa, founder of the South African telecommunication company Econet Wireless, investment consultant Shelly Meyers of Palisades Management, Boudewljn Poelman, founder of the Dutch Postcode Lottery, and Mark Shuttleworth, who founded the Ubuntu Project, a free operating system based on Linux. Chairman of the supervisory board is the former president of Puerto Rico, Jos Mara Figueres, who is renowned for his sustainability policies around the world.
Inventive not dogmatic the Carbon War Room (www.carbonwarroom.com) creates attention with its external presentation as well.
we are glad that a gigaton of CO2 has not been produced by other means of power generation. For most OECD countries, though, nuclear power is not a cost-efficient way to reduce their CO2 emissions. Richard Branson, founder of the Carbon War Room, wants to take a tourist into space soon, and founded a Formula 1 racing team 2009. How does this match your goals of CO2 reduction? Richard is one of our founding members, supporting the Carbon War Room financially. Each of them have their personal carbon footprint nobody is perfect. Branson is founder and CEO of the airline Virgin Atlantic. How committed is the Carbon War Room in the aviation sector? Thats a difficult field. The sector as such is flying relatively efficiently already. The next big step would have systemic consequences, because it would be about a new generation of aviation control. If planes could land in continuous descent, which means without waiting loops as well, about 15 percent of kerosene could be saved on each flight, because every interruption of an approach costs a lot of fuel. Airlines have tested this principle successfully. But to implement it on all airports worldwide is a huge challenge. Another topic is renewable fuel for planes. It already is cost-efficient today. An admixture of 50 percent of fuel from renewable sources is
held to be risk-free. But the manufacturers of those fuels cannot yet scale this. At the moment, we are trying to find out how we can help. How big is the potential of agriculture? One of our approaches concerns Brazilian cattle farming. Brazil is the largest beef supplier to China. But cattle farming leads to a large amount of legal deforestation. One cow needs one hectare of grazing area. Doubling the amount of cattle normally means doubling the required space as well. But there are new varieties of grass and cattle, which are more efficient. We try and find ways to pay for the seed at the moment. We should easily convince Brazilian farmers: They will make more profit if their cows grow faster and need less grazing area. And we protect the rain forest. Mr. Shah, you come from the solar energy sector and sold your start-up Sun Edison for 200 million US dollars in 2009. How do you employ your entrepreneurial experiences for the Carbon War Room? Sun Edison was an innovative business model, not a new technology. I made a business out of solar energy as a service. Sun Edison finds investors and locations; customers buy solar power for a fixed price for a couple of years. Sun Edison makes buying solar power easier. And this is my inspiration for the Carbon War Room, too. We want to make green technologies easier to use and to employ this principle in various sectors.
48 Industry Journal | 02 | 2011 | Management
Save, dont squander

Thousands of small and medium-sized enterprises in Germany literally pour their money down the drain for avoidable energy costs. A broad awareness for the fact that energy-saving measures do pay off and are easy to implement is slow in building up. And this despite the fact that there are competent consultants giving free advice, offers of financial support, and service providers whose offers pay off in next to no time.
Industry Journal | 02 | 2011 | Management 49
When Gerd Marx visits businesses, he always makes the same experience: The importance of energy efficiency depends mostly on the management, the energy adviser of the Energy Agency of North Rhine-Westphalia (Energieagentur Nordrhein-Westfalen) says. And Marx has visited a lot of companies. He has worked for 17 years for the publicly financed organization, which advises some 1,000 companies and deals with nearly 20,000 individual requests from companies, municipalities, and administrative bodies annually. For some managers this is a high-priority topic, others care less about it independent of the size of the company or its line of business. Objectively, this is hard to understand. Because there are high savings potentials everywhere in the smallest businesses as well as in companies with thousands of employees. In particular, the cross-sectional technologies prove to be energy drains time and again: a lot could be saved through modern technologies, an up-to-date energy management system, and employees that are aware of these issues in lighting, pressurized air, cooling, and heating. Up to 70 percent of energy is wasted The potential is particularly high in lighting: up to 70 percent of the energy is wasted here. The companies do not want to spend money on cleaning, so the plants are often dirty, Marx
says. And due to missing reflectors, the light is not efficiently focused and directed to where it is needed. Outdated fluorescent tubes in combination with inefficient ballast add their part to wasting power. Even though saving energy would be comparatively easy here. Next to modern illuminants, sensors can contribute significantly to saving power, Marx explains. A simple motion detector, for example, prevents lights constantly burning in a storage facility that is rarely frequented. Another big savings potential lies in the area of pressurized air. In many cases, one central compressor is used, which feeds a network of pipes that grows over the years. Sometimes another one is added next to it but the problem remains: the machines have to push the pressurized air through long pipes, and there are always leakages. This means that the compressors pressure is turned up until enough arrives at the end, Marx says. As a result it can happen that of the ten or twelve bar at the entry of the pressurized air network only six or seven bar reach the consumer. Nearly half the energy is lost in this way. A decentralized distribution of the compressors would be better. A system for heat recovery can help saving, too. Compressed air becomes hot and the excess heat can be used for heating, for example. A lot of energy is wasted in other areas, such as pump systems and heat supply, as well as cooling and cooling water systems. Energy experts esti-
Economical injection-molding machines

At Dr. Schneider Plastics Works Ltd. in the Bavarian Kronach, more than 100 injection-molding machines produce plastics components for the automotive industry. The family business has an annual turnover of nearly 300 million Euros and more than 2,500 employees. It is among the leading plastics processors for the automotive industry. The management wanted to meet the DIN EN 16001 standard for energy efficiency, effective from 2013, as early as possible, and asked inTec Industry Automation Ltd from Erlangen, Germany, to implement systems for the recording of energy data and for the creation of energy management structures. inTec advised the medium-sized business to use Simatic powerrate for WinCC, an option for the process visualization system Simatic WinCC for the analysis and interpretation of energy consumption values, to track energy flows. The power meters that were already installed were connected to the Programmable Logic Control (PLC) Simatic S7-300 to process the measuring values. By now, Simatic powerrate shows the measuring values and documents their progress. But it does not stop here: with the help of the energy measurement system consumption peaks will be recognized, and avoided through the equalization of the start-up processes.
Energy management systems create transparency and reduce energy costs (above). With the Sentron Powermanager software energy consumption and measurands can be analyzed (r.).
mate the savings potential in this area to be an average 30 percent, in ventilation another 25 percent. Medium-sized companies lag behind Therefore, businesses would be well advised to rethink their energy management. But are they really doing this? Especially in small and medium-sized companies (SMEs) there are still a lot of obstacles, reports Friedrich Seefeldt of Prognos AG, a leading scientific consulting company for economy and governments. Last year, Seefeldt researched the role and importance of energy efficiency in SMEs within a study. It verifies the experiences of energy advisor Marx: In SMEs, a lot of functions are customized for the CEO, Seefeldt says. Due to their multitude of tasks, energy efficiency is unfortunately only a side issue for them in many cases as opposed to big businesses, which have staff positions for it. Financing is an obstacle But even if there is the will to investment in energy efficiency measures, the schemes often fail in practice due to financing issues. SMEs do not like to use their own capital for processes which are not connected to their core business, Seefeldt knows. Approaching a bank is unpopular, too, because entrepreneurs would rather use reserve funds for investments than to borrow.
The government wants to lend a hand in this matter: the special fund for energy efficiency in SMEs is raised by the Federal Ministry of Economy and the Reconstruction Loan Company (KfW) and subsidizes energy efficiency consulting with up to 80 percent of its cost. Additionally, SMEs are supported with loans at reduced rates of interest for investments leading to savings of at least 20 percent in the case of replacement investments or 15 percent in the case of new investments. German businesses that do not systematically address energy efficiency issues will suffer from tax disadvantages in future: companies in the production sector get a discount of 40 percent on taxes on power and heating costs at the moment. Only a simple application is required. From 2013 onwards, this privilege will probably be connected to the condition that an energy management system according to the DIN 16001 standard is implemented. This means that learning about the legislative framework and savings possibilities as well as acting accordingly will become indispensable for most businesses for economical reasons. Award for energy efficiency measures Since 2005, they have been supported by the German energy agency (dena) in this matter. Its initiative for energy efficiency (www.initiativeenergieeffizienz.de) addresses private consumers and businesses committed to the efficient use
Efficient cooling systems

Since some 80 years, Brger GmbH & Co. KG produces Maultaschen in the Swabian Crailsheim. Today, the company has 700 employees and produces some 1.5 million pieces a day. In the production of the stuffed pasta, optimized cooling technology is of central importance. On the one hand it is necessary for ensuring a high product quality. On the other it is a large and costly energy consumer. Brgers most important goal was to lower the energy costs of the plant without impairing the process quality. Siemens solution partner Heitec AG recommended the use of Simatic powerrate for WinCC in order to achieve transparency. For power measurement, 12 consumption measuring devices of the Sentron PAC3200 type were installed. They could be integrated into the existing communication structure of the company. With the help of the sensors, the experts realized that at the beginning of a shift a couple of cooling compressors started at the same time, causing a high peak in consumption. Accordingly, the settings were changed and the overall consumption reduced by over ten percent. Apart from that, the consumption profile that has now become constant will help the food producer to get more favorable purchase prices in future negotiations with their energy provider. Another bonus: Simatic powerrate for WinCC provides information regarding necessary maintenance of the machines. Because a significant increase in the power consumption of individual machines can be an indicator for mechanical wear or leakages.
of power. We do not only provide information and support, but bestow the Energy Efficiency Award every year as well, Steffen Joest, divisional director of dena, reports. The winners receive a cash prize of 30,000 Euros altogether. Even more interesting for businesses is the PR aspect, as winners are lauded publicly. One of the biggest challenges remaining for energy advisers is to do away with old prejudices. Because according to prevailing stereotypes, investments in energy efficiency cost more than they help save in a reasonable time. But in many cases the opposite can be proven easily: A lot of measures already pay off after two to four years, the expert Seefeldt says. Only if entire energy supply systems, such as a heating system, have to be replaced, it can take up to ten years until the investment pays off. But SMEs do not even have to make these capitalintensive investments themselves anymore and thereby strain their balance. Because there is an increasing number of energy service providers on the market that finance and even operate the entire energy system, or parts of it, on behalf of their customers even the procurement of energy is included. Another advantage: The companies do not have to concern themselves with the complex topic of energy any more, Seefeldt argues. This means that they can focus on what they do best and what is most important to them: their core business.
Higher efficiency through integration

Identify, evaluate, implement this is how Siemens holistic approach can be summarized. It is used by the company to support its customers in energy optimization from initial consulting to analysis of details and feasibility studies and all the way to implementation. First of all, we have to create awareness for this topic, explains Engelbert Lang, head of professional services energy management at Siemens. This is about the current state, the savings targets, and first thoughts on how they can be met. To achieve this, Siemens experts conduct a computer-assisted interview with their customers. It deals with 22 topics in ten categories. The result is a value that shows the position of the company in comparison to other locations, countries, or sectors. First indications for energy-saving potentials result from it, too. In the next step, Siemens experts expand the analysis. Transparency regarding the individual consumers as well as the flows of energy has to be obtained, information that is missing in most companies. Most of them have only one electricity meter at the central point of infeed, Lang says. How much power is used by the individual parts of the plant is unknown. The detailed analysis that includes all energy media such as power, heat, and gas quite often leads to sudden insights: Customers suddenly realize that the power consumption on production-free weekends is disproportionally high when compared to times of production, Lang reports. The consultants now have enough information to initiate the third stage of the energy optimization program: As soon as we know where and when most of the energy is used, we can start a targeted search for energy-saving measures, says Lang. We assess every measure according to savings potential and investment needed, and show the return on investment that can be expected. How elaborate the energy optimization really becomes depends on the individual case: in discrete production plants, for example in the automotive industry, a lot can be gained from switching off machines on weekends as well as during breaks and disturbances. The new energy efficiency profile PROFIenergy, which is based on the communication protocol PROFINET, supports the selective shutdown of the plants. In continuous processes, for instance in the chemical industry, the optimization is way more complicated. For cases like this, Siemens has set up a special team focusing on energy optimization in the process industry. In addition to consultancy, Siemens offers project management and implementation. The company provides a comprehensive product range for enhanced energy efficiency, too. It spans from components on the automation level, such as frequency converters and soft starters that already provide energy data, to separate measuring devices (Sentron PAC), the energy management option powerrate, and all the way to the visualization (Simatic WinCC) and process control system Simatic PCS 7 as well as to the management level (B.Data). Even Lang cannot make a general statement on how long the entire process, from the first analysis to the end of the measures, takes: The first stage can be concluded in one day in most cases, whereas the analysis by two experts can take five to ten days onsite plus additional work afterwards. And the feasibility study can take a couple of months. The result is a detailed implementation concept. It spans from measures that can be implemented quickly and cost-effectively to the installation of a heat-recovery system, which is efficient in the midand long-term. In most cases the experts recommend the introduction of a technical energy management system, because the sustainability of the energy efficiency measures can be controlled in the best way with it. Energy-saving potentials in small and medium-sized businesses
lighting pressurized air pump systems cooling and cooling water systems heat supply ventilation systems up to 70% up to 50% up to 30% up to 30% up to 30% up to 25% Source: dena
The system consultants

Electric power is bound to become considerably more expensive and may not always be available in unlimited quantities. This emphasizes the importance of switching machines and equipment to sleep mode when they are not in use and of optimizing a factorys energy consumption through production control without affecting the production. Intelligent software, microgrids as part of energy management, and innovative storage technologies can make this work.
Potential energy savings with PROFIenergy

Load profile (kWh values, 15 min)
12 10 8 6 4 2 0
Weekend
Weekend
Energy consumption during non-production periods to date: approx. 60 percent of energy consumption during production.
Energy savings of up to 80 percent with PROFIenergy.
Unbelievable but true: Even in modern industrial plants and factories, it is hardly known what parts of the plant consume how much energy. It is only obvious how many kilowatt-hours are delivered by the electric utility but details about how this total amount is distributed among individual production lines, machines, and the associated electrical loads is largely unknown. This is more than an embarrassing knowledge gap: only they who know the energy consumption of pumps, presses, and compressors over time can increase the efficiency of plants, saving costs and reducing the CO2 footprint. Therefore, better information about the usage of valuable energy is indispensable from an economic and ecological point of view. This is why Professor Frithjof Klasen from the Institute for Automation & Industrial IT (AIT) of the University of Applied Sciences of Cologne, Germany, wants to make the industrial power consumption more transparent: On behalf of the PROFIBUS users organization (PNO), he examined the power consumption of machines in the automotive industry in October of last year, AIT staff, equipped with measuring equipment for power consumption and for the analysis of production control data, showed up in plants of Daimler in Sindelfingen and Volkswagen Nutzfahrzeuge (Volkswagen utility vehicles), in Hanover, Germany.
During our long-term investigations, we took measurements at different levels from the main feed to the plants to individual consumers, reports Klasen. Each measuring cycle took seven days, and we captured all values once per second. This combination of a long measuring period and short measuring intervals provided the experts from Cologne with detailed insights of the energy flows. They were able to measure the typical power consumption of individual parts of the plant as well as the power consumption during downtimes and in the different operational phases of a plant. High energy consumption during idle periods And this consumption is significant: One of the plants that we examined consumed an average of 34 kilowatts of power during production, and no less than 17 kilowatts during idle periods this means 50 percent for doing nothing, says Klasen. This load during standstill is equivalent to the average consumption of about 50 households. Such interruptions can have a variety of causes: some are scheduled (for example on a weekend), while others occur in an unpredictable manner, such as short waiting times on equipment or technical problems. According to Klasen their duration may also vary considerably short breaks of a few tens of seconds up to five minutes account for about one-third,
while longer standstills of at least 30 minutes accounted for about 25 percent. And why are idle plants not simply switched off in order to conserve expensive electric power during the breaks? After all, every notebook PC today has a standby mode that helps increase battery life. In a factory, this can be very complex because the interaction of numerous components must be taken into consideration, says Klasen about the issue. Many plants must be emptied first before they can be switched off otherwise you get problems during the next start-up due to products that were left in the machines after switch-off. Another reason is that many of todays industrial plants are not even designed for this kind of standby operation. Switching off via the main circuit-breaker is still state of the art, according to Klasen. There are often problems during restart, so that the operators prefer to keep the machines running even during idle periods. While some companies have already implemented isolated solutions to be able to switch their machines to standby during standstills, this requires tailored software that is expensive and requires a high level of maintenance. PROFIenergy helps energy savings For this reason, AIDA (the automation initiative of German automotive manufacturers) and the PROFIBUS users organization began to develop a standard for improved power management in mid-2008. The result is PROFIenergy an energy efficiency profile that builds on the popular Profinet communication protocol and in which plant control, communication network, and electrical consumers interact. Shortly before the lunch break, for example, the plant controller will send an instruction to all connected devices via the Profinet network (30-minute lunch break!). A software program in the PROFIenergy components will then decide which components can be switched off or switched to an energy-saving mode. This is based on the idea that the controller does not need to know anything about the inner workings of the machines the manufacturer knows much more about them. And it is the manufacturer that programs the standby software, so that the equipment can be switched off and on without a problem. It does not even matter if the idle time is just a few minutes or several days long the machine knows which state it should assume in each case. This eliminates the need for expensive isolated solutions, and equipment from different manu-
facturers can be interconnected easily and without major extra costs thanks to the common standard. The first machines with PROFIenergy have been available since 2010, and expert Klasen estimates that they will have a significant market share in about five years: The automotive manufacturers already specify PROFIenergy in their tenders for new machines and plants. And for good reason: According to the measurements of the efficiency experts from Cologne, the new standard saves about 70 percent of the energy during standstills and can thus reduce the overall power consumption by about onethird. In a typical production line, annual savings of about 7,000 Euros can be achieved, calculates Klasen. Since a great number of machines are involved in the manufacture of a vehicle, the energy costs can be reduced by a mid-range six-figure amount per year. From Smart Grid to microgrid The individual switch-off of machines and components is a major prerequisite to turn production plants into microgrids. These are smaller versions of the intelligent power grids of the future (Smart Grids), in which energy producers and consumers as well as energy storage devices and networks are interconnected to achieve an intelligent balance of supply and demand.
Today, some plants of the automotive industry still require half the energy used for normal operation at standstill.
Storage chambers for electric power

They are an indispensable element of our future energy supply from the Smart Grid: power storage systems. After all, the yield from sources like wind and solar power varies widely, while supply and demand must always be precisely balanced on the power grid. This means that when, for example, the wind is blowing particularly strongly and the wind farms deliver too much electricity, the excess power is temporarily stored and fed back into the grid as required, in other words when the wind is not blowing. There is only one type of storage today that is available for large amounts: pumped-storage plants. Here, excess power is used to pump water
from a lower into a higher basin. When the demand increases again, the water is allowed to flow downwards, driving a generator. The technology has been proven for many decades and has an efficiency of about 80 percent. However, only a few suitable sites exist, and the cost of building their own pumped-storage plant is simply prohibitive for companies. Other methods are still in the development state such as pressurized air or hydrogen storage systems. The latter is actively researched in Erlangen, where the company develops electrolyzers that produce hydrogen from electricity. The gas can be stored in underground caverns and used to drive turbines as required (hydrogen generation and back-conversion into electricity with an overall efficiency of about 40 percent). Alternatively, it is possible to generate methane instead and feed it into the gas network, or use the hydrogen as a fuel or basic material for the chemical energy. By 2012, Siemens will build a demonstra-
Smart meters, a component of the Smart Grid, are intelligent power meters in private households that do not only provide the customers with detailed information on their power consumption but can also selectively switch individual electric loads on and off. For example, they can run the washing machine at night when the power demand is low. Vice versa, electric loads can be removed from the grid when there is a high demand for electrical power a refrigerator can easily be switched off for a few hours without spoiling its contents. Basically, this idea can also be adopted for production plants and rising energy costs will make sure that this will be done. In the future, companies will have to implement intelligent power management, predicts Engelbert Lang, Director of Professional Services Energy Management in the Industry Sector of Siemens. After all, with the expansion of renewable energy, supply and prices will fluctuate considerably more than today which makes an economically reasonable energy mix indispensable. This will also include that parts of a plant are switched off when power gets too expensive. This is already done today in some cases in order to avoid load peaks.
This presents a complex optimization challenge to the automation experts: on the one hand, energy costs need to be minimized, and on the other hand there must be absolutely no negative effect on production. Today, the plants are optimized for maximum productivity, but in the future the companies will need to adjust their production to the availability of energy as well, says Lang. Some savings measures are relatively simple whenever the power is expensive, the system can, for example, temporarily switch off the ventilation and air-conditioning. Even parts of the production can go on a break if intermediate products from a warehouse are not available. However, a prerequisite for such scenarios is that automation technology and power supply will converge in the future. Intelligent software saves energy PROFIenergy is a first step in this direction because it allows for the first time parts of a plant to be switched off and on again over the network. But who decides when which machine can go on a break without having the production process suffer? This would be the responsibility of the superordinate level (Manufacturing Ex-
tion unit that fits in a container and is able to convert a maximum of 300 kilowatts of excess electric power into hydrogen. However, more suitable for companies as intermediate storage are batteries (efficiency: greater than 90 percent), such as lithium ion or redox flow batteries, in which two liquid electrolytes in tanks are used to store the energy. This kind of small intermediate storage unit can make perfect sense at the factory level since the price of electricity may vary widely in the future. A factor of ten and more is possible, at least in the case of difficult grid conditions, says Dr. Christian Urbanke, head of Electronics, Energy, and Environment of Siemens Corporate Technology. However, the cost of this storage capacity should not exceed 100 Euros per kilowatt-hour. Currently, the costs are between 200 and 1,000 Euros per kilowatt-hour of storage capacity, depending on the battery type and load profile.
Static grid operation has to become a flexible infrastructure enabling fast communication between producer and consumer.
ecution System, MES) that knows the shift plans and break times and takes the interdependencies within the entire production line. It sends its commands to the individual plant controllers in the factory buildings, that will in turn send the sleep or wake up commands to machines and components. Intelligent factory control will also include permanent communications with the power utility. The control system compares the current electricity offering with the production planning, explains Dr. Martin Tackenberg from Siemens Corporate Technology. When the energy is available at a low price, can, for example, initiate independent up- and downstream pretreatment processes like etching or cutting, and fill certain warehouses with a stock of intermediate products. Siemens is working intensively on the development of such software solutions, and a first version of such an Operations Manager is already running in the lab. The challenge for the developers consists of developing algorithms that consider energy price and demand profiles (for example for cold) as well as the necessary energy usage and the possibility for intermediate storage.
In addition, according to Tackenberg, electricity will not flow just in one direction in the future: Many companies have emergency power generators that can be regionally combined to form virtual power plants of some tens of megawatts of power, says the expert. These can be powered up in case of high demand, so that the companies will temporarily change from power consumers to power producers. With this model, special intermediaries would remotely control these virtual power plants and supply the electricity to the power utilities. Is all this only a dream of the future? Not quite: in addition to the PROFIenergy energy saving standard, products are already available that make energy flows transparent and enable effective power management. Powerrate is an add-on for the Simatic automation system from Siemens, which determines the energy consumption of machines or entire parts of plants and permits load management by switch-off. The B.DATA power management system from Siemens provides a companywide overview of energy costs and permits direct integration with the enterprise software, such as SAP R/3. This can already be used to optimize the contracts with the energy suppliers the future of energy-efficient production has already begun.
What to do in case of fire

It is a vision that frightens every entrepreneur: a fire paralyzes the entire business. For a Chinese steel manufacturer the nightmare became reality. The procurement of spare parts would have taken months. Therefore, the management made a hard decision and went for a highly complicated, faster repair instead with uncertain outcome. Taking the risk paid off.
Fire. On May 8, 2010, a fire breaks out in the control center of furnace No. 2 of a Chinese steel manufacturer only one month after commissioning. Nearly 120 frequency converters are ablaze. It is a catastrophe for the company. Because nothing goes without the converters and the furnace has to be taken out of operation. Each day of production loss costs the steelworker millions. This is dramatic in itself. But the fact that procuring replacements for the damaged and destroyed frequency converters will take four months is even worse. All of a sudden, the company has a really big problem. What to do? An emergency plan does not exist too extraordinary and unlikely the case that now occurred. A crisis-management team is formed. Its task: Find out if and how the damaged parts can be repaired in short time instead of waiting for months for replacements. A hazardous decision The responsible people long for blueprints, benchmarks, examples, and experiences to help them make the right decision. But there has never been a comparable incident in the whole world. Never before has a repair like this been carried out on so complex a scale. The risk of failure is high from the technical as well as the financial point of view. Because in the worst case, not only considerable costs would be contracted in case of unsuccessful repair. The risk of having to order the spare parts after all and to lose several valuable weeks is even higher. One would be back at the start. A fast decision has to be made. Nobody would be envied for this task. The management decides to risk a few days of uncertainty and to ask their long-standing service partner Siemens Factory Automation Engineering (SFAE) for advice and support. A small task force arrives on the spot in a matter of hours. The experts analyze the damages between mountains of charred cables and cabinets. After a few days it is definite: The repair could be feasible, but a risk remains. The management decides to take the risk the financial losses of many months of production standstill would be too high. SFAE receives an order to repair the plant within a single month. This is more than ambitious, because in those four weeks not only the repairs have to be carried out, but trial runs and approvals for frictionless normal operation as well.
Success through service

Siemens Factory Automation Engineering Ltd. (SFAE) is headquartered in Beijing. It was the first operating company that Siemens had invested in China's automation field and ranks among the 50 best businesses of Chinas electrical industry (2010). SFAE has always held to the principle of Customer first, best service and set up 23 regional offices, providing professional products and services to over 4,000 customers. SFAE is the professional Siemens automation and drives service center, low-voltage cabinet manufacturer and automation engineering solution provider. The services of SFAE include, for example, in-house and field services, spare parts business, maintenance, and repairs.
Lack of materials and spare parts The matter is made even more difficult by the fact that not only the fire has caused heaviest damages: well-meaning employees have cut masses of cables to remove charred parts of the plant. This increases the complexity of repairs. Moreover, there are not enough materials and spare parts available on-site for repair. Specialists from the steel manufacturer and drive experts of SFAE develop a plan for the repair in close cooperation. It is vital to anticipate as many contingencies as possible and to include them in the concept. What tools and test devices could be necessary? Could technical units and maintenance devices such as ultrasonic cleaning devices and network analysis units be needed? Everything that could possibly be required has to be available immediately otherwise there is no way to keep to the schedule.
Between charred cables and cabinets a small task force from Siemens Service Factory Automation Engineering analyzes the damages. The fire in the control center of furnace No. 2 has heavily damaged some 120 frequency converters. In order to dispose of charred plant parts, employees cut several cables.
This is not only about technology, but about money as well. As it is nearly impossible to estimate the repair effort from the beginning, costs and contract details have to be negotiated in a fair process between equals. This requires a lot of mutual trust, especially in an emergency situation like this is. Good cooperation is vital Everybody involved realizes quickly that the form of cooperation determines the success of the venture. The multitude of employees, teams, and competencies has to be coordinated quickly and efficiently. Responsibilities have to be assigned and a powerful as well as efficiently cooperating unit has to be formed. This is only possible with a project team that works independently. First of all, the team shuts off the damaged areas and mounts guards. There is no room for solo runs. Everything has to be planned and coordinated carefully. Only authorized persons may enter the damage area from now on. Following a structured and clear plan, they take care of tasks such as the disposal of destroyed parts and materials, the division of working areas, the storage of materials and tools, as well as the registration and procurement of spare parts.
Difficult conditions Work is extremely hard: the plant is full of dust and pollutants, demanding the permanent wearing of protective masks six, eight, ten hours at a time. Everybody works from morning until ten at night with only one short break for lunch. Subsequent meetings in the apartments last until the small hours: difficulties have to be discussed, solutions developed, the status of the project recorded, and the next days work prepared. To repair the 120 damaged or destroyed frequency converters, not only electronics experts are required. The fire has left only the frame of some converters. In the damage area, nearly every piece has to be taken to parts with meticulous care. Bit by bit, cable by cable, it is cleaned, either reassembled or exchanged, and connected anew. In normal circumstances, plans are drawn weeks in advance for processes like this, but there is no time now. Undamaged units have to serve as models. And finally there is success where many did not believe in it any more. On July 4, 2010, one week ahead of schedule, the plant is working smoothly again. In only three weeks, 1,600 parts were exchanged, 120 frequency converters repaired and losses of millions avoided.
Energy efficiency
Energy efficiency accounts for 54 percent of the global climate protection measures. According to estimates of the Deutsche Energieagentur (German Energy Agency), this is the largest part. At the same time, its economical importance grows due to increasing power prices especially for sectors with high power demand.
Success factor energy efficiency

Companies for which energy and energy efficiency are of strategic importance generated a global 36 trillion Euros in 2008. This is about 40 percent of the entire turnover. Transport and traffic, building technologies, industries with high power demand, engineering and plant construction, information technology and IT services, and the energy industry are among the sectors obtaining highest Source: McKinsey & Co. turnovers.
Global power consumption 2030
Prices for fossil sources of energy explode

Price trend 20042030 (nominal, in US dollars) 120
75 50 35 58 44
77 Asia: 46% America: 25% 4 5 2010 7 2020 11 2030 Western Europe: 13% Eastern Europe/CIS states: 8% Africa/Near and Middle East 8%
Source: Energy efficiency and environment protection, Siemens AG.
38
2004
2010
2020
2030
2004
2010
2020
2030
Oil (barrel)
Coal (ton)
Gas (BTU)
Source: Hamburgisches WeltWirtschaftsinstitut.
Demand increases by 28% by 2030 Consumption (in trillion BTU)

The global industry alone will use 246,000 trillion BTUs (British Thermal Unit) of fuel in 2030.
Sources: Siemens AG: EIA, International Energy Annual 2006; World Energy Projections plus 2009.
Liquid fuels
70,000
Natural gas
63,000
2004
Coal
Power
Renewable Energies
Total
246,000
60,000
42,000
43,000
60,000 26,000
48,000 3,000
175,000 4,000
2006
2030
2006
2030
2006
2030
2006
2030
2006
2030
2006
2030
Spain and Russia are CO2-savings champions

Deviation from the CO2 reduction target (2009, in %) 0
Spain +2.6 Russia +1.2 Turkey 3.0 Brazil 3.1 India 3.3 Japan 3.4 Argentina 4.5 France 4.7 Indonesia 5.9 EU 5.9 Great Britain 6.0 USA 6.7 Germany 7.1
Source: Low Carbon Economy Index 2010, PricewaterhouseCoopers
CO2 emissions have to be reduced to meet the global warming target of a maximum 2 C by 2050. PricewaterhouseCoopers calculated how much the G20 states would have to cut compared to their economic performance. From 2000 to 2009, only Spain and Russia exceeded their targets. The world will now have to reduce its CO2 emissions by 3.8 percent each year to be able to meet the climate protection targets, the study says.
Australia 8.8
Italy 9.2
South Africa 10.1
Canada 10.3
Saudi Arabia 37.4
South Korea 13.3
Mexico 17.7
China 17.9
FACTS & FIGURES
62 Industry Journal | 02 | 2011 | People to watch
People to watch: Raymond Kurzweil
A mans dream
If he did not hold 19 honorary doctorates, had not been honored as an inventor by President Clinton, did not bring spectacular inventions to market for decades, and was not frequently right with his apparently insane predictions we would not take him seriously. Ray Kurzweils current vision is about artificial intelligence. About a world in which man and machine become one. For a long time, even ardent believers in progress took this for science fiction. But the latest innovations support his theses that span from autopilot cars to learning computers and all the way to voice-operated industrial robots. And Kurzweils fame is on the rise.
Industry Journal | 02 | 2011 | People to watch 63
Raymond Kurzweil has made it. Definitely. He is surrounded by admirers at a reception in the Time & Life Building, just around the corner from Rockefeller Center, New York. There could hardly be more diversity: a colored man in a kaftan, two neat Wall Street bankers with briefcases, and a nanotechnologist from California with his wife. Ray, do you remember me? the latter asks shyly. The small man in front of him smiles and nods: is everything all right at home? Then he hurries to the stage. Maybe he really does remember. For more than 20 years, the information scientist has explained how our lives will be changed by artificial intelligence. Only recently, people have started listening in earnest to his seemingly surreal theses. Man will merge with computers and become immortal, so his prediction. This will be the threshold of a new era Singularity. Todays super-fast progress in bio- and nanotechnology seems to confirm a lot of his assumptions. A veritable triumph for the New York-born man: I have never been really wrong, I just missed by a few years sometimes, he confidently states. As an inventor, the 63-year-old had already achieved considerable reputation in the 1960s. He holds 19 honorary doctorates and has friends with considerable resources in the financial and investment sector. His marketing has constantly improved over the years. So it is hardly a miracle that the following of Kurzweil is constantly increasing. A survey conducted by the renowned TIME magazine ranked him 31 among the worlds 100 most influential people. Brains on hard drives Standing on the stage of the Time & Life Building, Kurzweils soft voice preaches radical thoughts. Tiniest robots will travel through our bodies in a couple of years. They will locate the signs of wear and repair them. Life expectancy will increase rapidly, until humanity has reached immortality through merging with hyper-intelligent robots and people do not have to rely on their bodies anymore. They can upload their brains on a hard drive, or get one implanted to raise their intellectual capabilities. According to Kurzweil, man will turn into cyborg about the year 2030. More than 50 percent of our body will be constituted from non-biological particles by then. 15 years afterwards, we will reach Singularity: Human existence as we take it for granted today will not exist anymore. If somebody other than Kurzweil predicted something of the like, hardly anybody would take the theses seriously. They would be dis-
missed as the science fiction fantasies of a seriously disturbed mind. Kurzweil is anything but a nutcase, though. The scientific community regards him as a global instance. At the moment, he is pulling together and advancing the developments of sectors such as the decoding of genomes, nanotechnology, microstructure technology, and artificial intelligence. He takes it for granted that progress is exponential and not linear. It took 400 years for the book to become a mass product, 50 years for the telephone, seven for the cell phone, and three for social networks. He is referring to Moores law, which is named after Gordon Moore, the founder of Intel. It implies that the number of transistors on a chip will double once every two years. Daring theses, successful inventions Even if his vision of immortality sounds quite daring the man undeniably is a genius of technology. In 1965, when he was only 17 years old, he wrote a computer program for classical music. Later on he invented amongst others the flatbed scanner, a reading device for blind people (first customer: Stevie Wonder), and the electronic keyboard Kurzweil 250. In 1999, former President Bill Clinton awarded the National Medal of Technology, the highest US award for inventors, to him. Three years later he was admitted to the National Inventors Hall of Fame. Even in those days, he made prognoses, such as in the 1980s the global linking of computers. In predicting when a chess computer would defeat a human champion, he was wrong by only one single year (1997 instead of 1998).
Disposable, salt-grain-small endoscopic cameras were inconceivable just a few years ago. Today, they are real. Kurzweil is not surprised at all.
64 Industry Journal | 02 | 2011 | People to watch
The future has begun

The rapid advancement of information technology makes developments possible that appeared to be unthinkable or unreachable only a short while ago. Only a couple of years from now, the first of them could revolutionize our everyday life. Google, for instance, is working on software that will automatically steer a car. The first Toyota Prius prototypes are already cruising the highways around Silicon Valley on their test drives. The system is not perfect yet but it is already obvious that the robots will be better drivers than their human counterparts. They react faster, have 360-degree panorama vision, and do not get tired. If the technology is used comprehensively, accidents will happen less frequently and street capacity will double, as the cars need less safety distance. Last year, IBMs supercomputer Watson made it into the headlines around the world when it showed itself to be vastly superior to human champions on the quiz show Jeopardy. The company Hanson Robotics, on the other hand, produces robots that look like humans. They converse and can even show emotions. The reactions are programmed, but the robots are constantly widening their scope through learning algorithms. Researchers of the renowned Carnegie Mellon University invented the NeverEnding Language Learning system. This software is learning all the time and through this constantly improves its communication skills. The era in which humans have had to learn the language of computers to operate them is nearing its end. This will drastically change and speed up many production processes as well. Robots could soon reach a new level in interhuman affairs, too as teachers. At the University of Southern California in Los Angeles, researchers use a machine called Simon for practicing simple movements of the body with autistic children. Their colleagues in San Diego use a robot that looks like a small Martian for teaching simple vocabulary. The artificial teachers have one decisive advantage: they never get impatient.
One thing is certain: Even in the USA, a nation famous for its belief in technology, the merging of man and machine is considered tough stuff. When Kurzweil published his 650page work The Singularity Is Near in 2005, it became a bestseller. Media reactions were cautions, though, and most scientists did not acknowledge the theses. But reality seems to confirm Kurzweils predictions. Cars steered by machines; humanoid robots teaching children; voice-operated industrial computers (see box). Progress in medical technology is baffling as well. Scientists in North Carolina grow artificial bladders, kidneys, and muscles that could revolutionize transplantation medicine in a couple of years. Researchers in Israel are testing a chip that is meant to compensate the loss of brain functions of Parkinsons patients. And just recently, the Fraunhofer Institut fr Zuverlssigkeit und Mikrointegration (Fraunhofer institute for reliability and microintegration) in Berlin presented an endoscopic camera. It is as small as a grain of salt and so inexpensive that it can be disposed of after a single use.
In 2008, Kurzweil founded Singularity University. It is situated in the Research Center of NASA in Moffett Field, California. By now, its courses are 40 times overbooked. The course program spans from life-prolonging diets to genetic testing, and all the way to encountering robots. It throws together young enthusiasts and wellestablished masterminds such as Michael Gillam, Director of the Microsoft Medical Media Lab. A university as an utopists Davos Another multiplier of Kurzweils ideas is the Singularity Institute for Artificial Intelligence in San Francisco. It hosts an annual Singularity Summit, which is said to be the Davos of utopists. According to Wired, the US magazine for intellectuals, Kurzweil transformed Singularity from a speculation to a social movement. It is not only a movement it is a business as well. Kurzweil is certainly not what one could call modest. A one-hour talk by the guru costs 50,000 US dollars. In partnership with the phy-
Industry Journal | 02 | 2011 | People to watch 65
Just like the private life of many intellectual eccentrics, Kurzweils is a model of stability. He has been married for 35 years to the psychologist Sonya Kurzweil; his children Ethan and Amy studied at conservative Stanford University. He lives in one of Bostons tranquil suburbs. The headquarters of his company is a solid concrete building. On the wall behind his desk is an oil painting of his father, a concert pianist who died aged 58. Kurzweil would like to revive him, or so he says using DNA from the grave and his own stored memories. Is that his way of coping with trauma? One thing is sure: Death is something the 63-year-old man finds hard to accept.
In 2001, the avatar was unknown to most people. Kurzweil, however, had an avatar called Ramona as his alter ego. Voice and movement came from the inventor himself in real time. At that time, this was unbelievable.
sician Terry Grossman he founded a company selling a broad range of expensive wellness products on a Website. There is, for example, the Anti-Aging MultiPack containing capsules of the allegedly life-prolonging substances resveratrol, phosphatidylcholine, and ubiquinol. Kurzweil himself takes a vast amount of vitamins and minerals every day. His goal is to become old enough to achieve endless life through technology. My biological age is 20 years below my real one, he says although he does not really look as if he were 43. Virtuality changes identities Ten years ago, he created a three-dimensional virtual alter ego for himself. An avatar called Ramona. To him, this is a taste of what will be possible in the Singular world: adopting various identities and the practically limitless living of fantasies. In virtual reality, everybody can be whatever they want and even take on the role of their own partner, says Kurzweil.
One does not have to be a visionary to prophesy that the popularity of Kurzweils utopias will continue to increase. They carry the promise of immortality a dream as old as humankind. At the same time this takes away the fear of superior and hostile machines. Artificial Intelligence is nice, is Kurzweils message. He says: Progress is a part of our civilization. It does complement and not replace us. Criticism of the scientific approach Somebody as radical, rich, and famous always has critics that have to be taken seriously. The philosopher John Searle of University of California, Berkeley, accuses Kurzweil of methodical weakness: he did not sufficiently substantiate his famous predictions. Others, such as the physicist Jonathan Huebner, are convinced that the speed of innovation will not increase, as Kurzweil believes, but slow down considerably: Progress in this century will certainly not match the one of the hundred past, Huebner says. Considering this, it is quite well that Kurzweil can always fall back on the claim that most of his prognoses refer to dates in the far future. In 2045, when according to his prediction Singularity begins, the visionary will be 97 in reality. On his biological age at this point he does not comment.
66 Industry Journal | 02 | 2011 | Innovation
The optimum is just about good enough

Glass is one of the oldest and one of the most innovative materials of the world at the same time. Its production for the construction, automotive, and solar industries is technologically challenging. And it consumes a vast amount of energy. So it is an advantage for a company to produce more economically than the competition. By 20 percent, for example just like f | glass from the eastern part of Germany. The medium-size company has built one of the most innovative and energy-efficient flat glass works of the world from scratch in next to no time.
Industry Journal | 02 | 2011 | Innovation 67
They call him Maartje. Maartje has been in action since about three years, 24 hours a day, 365 days a year. Inside of Maartje, it is boiling red-hot. Maartje is the name of the daughter of one of f | glass partners. The company produces flat glass in Osterweddingen, a small town in the eastern part of Germany. But Maartje is the name patron for the melting furnace of one of the worlds most innovative, energy-efficient, and sustainable glass manufacturers, too. f | glass has officially named it after the daughter. Furnaces, machines, industrial robots such things do not normally get named. But this furnace is something special. It is the heart and soul of f | glass production plant, and a small technological miracle. It uses some 20 percent less energy than conventional glass furnaces, for instance. At a daily energy consumption of more than 100,000 cubic meters of natural gas
the equivalent of one million kilowatt hours or the consumption of a one-family house in 50 years , this amounts to savings of several million Euros annually. Order for a new, competitive plant To really get to know and appreciate Maartje, one has to go back in time a little bit. It began in 2007. In that year, Herbert Khler and Wolfgang Rbiger, two experts with decades of experience in the glass industry, received an order from a joint venture of the Dutch Scheuten Group and the German Interpane Industrie AG: They were to set up a float glass production in Germany that could compete on an international level. Thomas Belgardt, who is responsible for processing, joined them a short time after that. The construction of a production plant for flat glass suitable for a multitude of industrial uses and for the solar industry in particular was planned.
How float glass is made

Float glass is a variety of flat glass, which is produced with the so-called float method. Its basic materials are white glass sand, dolomite, quartz sand, and shards. Those materials are mixed in the batch house according to individual recipes depending on the desired glass quality. A conveyor belt transports the mixture to the furnace where it melts at a temperature of 2,000 degrees Celsius. The now viscous glass material is brought onto a layer of liquid tin in a continuous process. Because the glass is lighter than the metal, it floats over the tin and spreads out evenly. The surface tension of both materials makes sure that extremely smooth glass surfaces are forming. The thickness varies between three and 12 millimeters, depending on the customers order. In the next step, the glass is carefully cooled down in the lehr, which is nearly 160 meters long. Afterwards, blowing devices remove the remaining foreign particles. The last steps of the process are the cutting and, finally, the customer-specific refining, such as a coating, curing, or both. Storage, commissioning, and transport take place in the logistics center.
A challenging task in itself. But the three visionaries were not satisfied: We wanted to build the most advanced and energy-efficient plant in the world that delivers the best product quality, too, says Belgardt, who shares the position of managing director of f | glass with Rbiger today. An ambitious goal through and through. Humankind has the recipe for manufacturing glass since approximately 5,000 years primarily molten quartz sand, mixed with ingredients such as lime and metal oxides. But modern production methods for flat glass used for industrial purposes made with the float glass method are a technologically complex, automated, and energy consuming process (see box). The product characteristics of high-quality flat glass make it indispensable in many fields of business, from the construction to the automotive industry and all the way to the manufacturers of solar and photovoltaic plants. Goods of inferior quality are unknown here. Short construction time, maximum efficiency To meet their own demands, the two industry managers started to build a glass plant designed for maximum energy efficiency and process security with only a small team and handpicked external partners in only 15 months time. One of the worlds largest and most efficient float glass plants came into being in Osterweddingen near Magdeburg literally on the green field. f | glass employs some 280 people and occupies premises of some 400,000 square meters. The storage alone is as large as ten football pitches. The daily production of float glass amounts to
700 tons, which are carted away with 50 trucks day after day to be delivered to customers around the world. But the plant sets benchmarks with its short construction time, its size, and its output to a lesser extent. It is more of an international object lesson for sustainable and energy-efficient glass production due to many innovative details. The melting furnace plays an important part in this. Its energy efficiency, which is the highest that can be reached by technology, was the center of the planning teams attention from the word go. The primary reasons for its low energy consumption compared to other melting furnaces are its superior isolation and a range of constructive measures meant to further energy savings: A unique system for heat retention ensures that the furnace only becomes lukewarm on its outside, whereas tremendous 2,000 degrees Celsius prevail inside of it. Failsafe performance was decisive in the design of the furnace, too. Because the entire production process breaks down if it fails only once. This would result in enormous financial losses. Energy efficiency and permanent operation Permanent operation and energy efficiency, everything at f | glass revolves around those factors. Not only the melting furnace, but the entire energy system of the production plant is designed for the utmost efficiency and sustainability. There are the slats for air intake in the outer wall next to the lehr. They are a part of the
Thomas Belgardt, managing director of f | glass (l.). His company generates more than half of the power it requires in the innovative energy recovery plant (r.).
buildings ventilation and open or close according to the outside temperature. In this way, they contribute to tempering the air of the room without additional energy consumption. A purification system for exhaust fumes is integrated into in the process of using the exhaust heat in order to conform to environment protection stipulations. It works with electrostatic deposition in the electrostatic precipitator. Energy recovery by steam turbine The greatest influence on the plants sustainable operation has a steam turbine. It uses the plants exhaust air to generate power, is made by Siemens and the heart of a complex energy recovery system. One of the first ones in the glass industry around the world. The furnace is the heart of our plant, the utilities are its blood circuit. And they need power, Wolfgang Rbiger says. The steam turbine does not only save energy, it increases the procedural safety, too. We generate 60 percent of our power with it. This means that we could cope with an outage of the external power supply. At a last resort, there are three emergency power generators to supply the plant with power. It goes without saying that the operation of the melting furnace is ensured in case of emergencies: f | glass has access to a reserve of nearly 900 million cubic meters of natural gas, which are stored under the ground. This is the equivalent of nearly nine billion kilowatt hours sufficient to supply power to a European city with over a million inhabitants for a couple of weeks.
No matter if it is the delivery and mixing of raw materials, the melting process, the processing and refining of the glass surfaces, or the commissioning the entire production and distribution process is automated at f | glass. This demands highest precision. In the so-called batch house, for instance, the raw materials are precisely measured and brought together. The recipe has to be exact up to the per mille range. The employees in the control center direct batch, production, energy values, quality control, and exhaust fumes. Their most important tool is the process control system Simatic PCS 7 from Siemens, which centrally controls and monitors all production processes. f | glass had made the compatibility with Simatic PCS 7 a prerequisite as early as in the tender stage for the mechanical and plant engineering. To ensure a stable operation in every situation, the process control system is of an uncompromisingly redundant design similar to nearly every important part of the plant. A replacement module immediately takes over in case of a failure in the control system. The knowledge that all processes are secured so well lets me sleep soundly, says Rbiger. Thanks to the precise and secure processes, f | glass can perform so-called campaign-changes within very short time. This means that the production can be shifted during uptime for example toward thicker or thinner glasses or ones with a different recipe or specification. This means that the company can easily meet the varying demands of its international customers comprehensively and without long waiting times.
Simatic PCS 7 in the glass industry

Simatic PCS 7 is the distributed process control system (Distributed Control System, DCS) from Siemens. It is completely integrated into Totally Integrated Automation (TIA) and uses standardized hardware and software components that can be connected to the MES level (Manufacturing Execution System). Simatic PCS 7 offers decisive advantages to glass manufacturers: Time savings trough the use of a common engineering tool for the entire process. Consistent visualization of all process data at all workstations. Control of configuration from all workstations. Functional modules and libraries that are customized to sector-specific demands facilitate the configuration. Controls over Ethernet with up to 10/100 Mbit/s and Profibus DP and PA for the communication on process level. Redundant control and Profibus communication for highly available processes ensure interruption-free operation. Expandability and modifiability even online. Through this, users can flexibly react to new demands in production facilities. Scalability from the small single system, for instance for a supply or intermittent plant, to the distributed multi-user system with Client/Server-architecture, for instance for the automation of very large production plants or integrated plants.
Simatic PCS 7 is the director in the 160 meter long production plant and thus ensures process safety.
Outsiders do not notice much during a campaign change, apart from a short and controlled output of waste glass. The waste glass is automatically transferred into a large shard storage and fed back into the production circuit later on. With its cutting-edge and efficient production, its innovative finishing technologies, and a logistics concept that is designed for a fast flow of goods, Thomas Belgardt and Wolfgang Rbiger feel optimally prepared for the future. Business is good. Attractive new customers, mainly from abroad, ensure that the entire production of a day is always sold out. Improvements are already in progress But the two visionaries are by no means satisfied. With their partners and especially intensive with Siemens , they are working on new, even more energy efficient end environmentfriendly solutions. Because for Rbiger, one thing is certain: The material glass is just at the beginning of its evolution. And another thing is sure, too: Maartje will continue to play a part in all those considerations. We are proud of the furnace. And we will be able to go on using it for a long time. Conventional furnaces have an average service life of twelve to 15 years. Maartje will surely work for 20 years, according to Rbiger.
Europe gets a green shock

Restrictive guidelines for the protection of the environment issued by governments are rather unpopular with the economy, because they lead to rising costs and lower international competitiveness. This is at least an assumption of traditional economic models. A new study by leading European scientists comes to a revolutionarily different conclusion. When considering factors and side effects such as technological progress, learning effects, and changing investor expectations as well, the EUs ambitious climate protection policy will speed up economic growth and create six million new jobs by 2020.
It sounds too good to be true: Better protection of the environment leads to growth, enhanced competitive ability, and higher innovative strength. Or so EU politicians and internationally renowned scientists say. Last March, the European Commission introduced their Agenda for a low-carbon economy by 2050. According to it, CO2 emissions in the European Union are meant to fall by 25 percent by 2050. When considering projects for climate protection from outside Europe as well, even the 30 percent mark could be reached. Previously, the climate targets of the European Union aimed at a considerably lower emissions reduction of 20 percent related to the figures of the base year 1990.
If the EUs ambitious climate agenda is good or bad news is a matter of debate among experts. The German Minister of the Environment, Norbert Rttgen, welcomes the model: Finally, Europe is giving the long-expected signal. It will make the international process of climate protection more dynamic. Moreover, it is a decisive step for the growth opportunities and competitive position of Europe. Spokespeople of the Federal Association of German Industries (BDI) take a different position and oppose a one-sided increase of climate targets in the EU. They fear that the climate targets will only lead to a displacement of production and emissions to regions with lower climate
protection stipulations. The so-called Carbon Leakage would not only be detrimental to the fight against global warming, but an obstacle to the development of the European economy, too. Growth and lower CO2 emissions But will more ambitious climate protection targets really lead the European economies into a dead end? Not at all economic growth and a reduction of greenhouse gas emissions are not mutually exclusive. The opposite is true. At least this is what the latest study A New Growth Path for Europe commissioned by the Federal Ministry of the Environment shows. Where studies like this are concerned, there are immediate suspicions that the result does not accidentally coincide with the interests of the commissioning party. But neutrality and seriousness of this study are undisputable: It was conducted by a group of internationally renowned scientists from Oxford University, National Technical University of Athens, Universit Paris 1 Panthen-Sorbonne, and the
European Climate Forum, with Carlo Jaeger of the Potsdam-Institute of climate research (PIK) responsible. Six million new jobs The study shows that targeting a reduction of CO2 emissions by 30 percent rather than 20 percent by 2020 could provide a sustainable stimulus for the European economy: The share of investments in the gross national income could rise from 18 to 22 percent. There could be six million new jobs. The economic output would rise by 620 billion Euros. With a corresponding increase of the climate target, the total economic growth in the EU would rise by 0.6 percent by 2020 (green growth scenario) compared to the maintenance of the 20 percent mark (business as usual scenario). What sounds like the formula for the squaring of the circle is based on conclusive arguments: In conventional economic models a reduction of greenhouse gas emissions leads to additional
Economic growth by 2020* at a Country Germany France Great Britain Italy Netherlands Sweden Spain
... CO2 reduction by ... CO2 reduction by
20% 1.8 2.0 2.3 1.8 1.7 2.3 3.0
30% 2.4 2.7 3.1 2.3 2.1 2.6 3.6
*Gross national income in % p.a., related to base year 1990
Unemployment rate 2020 (in %)* at a Country Germany France Great Britain Italy Netherlands Sweden Spain
... CO2 reduction by ... CO2 reduction by
20% 8.5 8.1 4.4 7.6 3.9 5.8 10.6
30% 5.6 5.4 3.5 5 3.3 4.1 7
* Related to base year 1990. Source: European Climate Forum.
costs in the short run, which are justified by the avoidance of long-term damages, leading author Carlo Jaeger explains. But we show that a credible commitment to low-emissions economies, together with an ambitious goal and supportive political measures, could mean a winwin scenario for Europe. In other words: The hitherto applied models showing the connection between climate protection measures and economic growth focused on two main aspects the replacement of fossil fuels with regenerative sources of energy and the reduction of energy consumption. According to common assumption, both cause additional costs. Those have to be accepted in order to avoid the even higher costs unchecked climate change causes in the long run. This results in the following equation: the higher the emissions reductions, the higher the growth losses. New evaluation of economical effects A New Growth Path for Europe breaks with this logic, because it is the view of the authors that conventional simulations ignore important
economic effects, which partly arise in the form of inevitable positive side effects. Among them are learning effects (learning by doing), which result from investments in the environmental sector, as well as results of the overall and specific technological progress. In addition to that, investors expect an acceptable return and thus create further economical pressure and will to innovate. The authors of the study include those aspects in their model and assume a self-enhancing, positive loop that will lead the European economy on a sustainable green growth path. Investments through new climate targets The forces meant to leverage this economical perpetuum mobile unfold through the following mechanism: If the European Union commits to a new growth strategy that does not only require an ambitious increase of the economic performance but equally ambitions targets for CO2 emissions as well, new investments are needed. Those will lead to learning processes in the economy as well as the development and distribu-
The modernization of buildings such as the Siemens headquarters (architects sketch) in Munich, Germany, will contribute considerably to meeting the climate targets and therefore to an increase of the gross national income from 18 to 22 percent and to the creation of 6 million new jobs by 2020.
tion of new technologies in turn. Productivity and competitiveness will increase, growth is stimulated, and this has a positive influence on investors expectations. According to the authors, some prerequisites still have to be fulfilled for this mechanism to work. Credibility is a decisive factor. The EU has to fix on consistent climate policy programs and measures. The proceeds of European emissions trading have to be invested in measures for the reduction of emissions in Eastern Europe, for instance. Tax relief programs will further the readiness for climate-friendly investment. Higher energy efficiency is much needed For scientists and the EU Commission alike, higher energy efficiency and the development of renewable sources of energy play a central role. Both require substantial investment, for example for the refurbishment of buildings, the modernizing of the energy infrastructure, and environmentally friendly mobility. Independent of the results of the study, the EU Commission estimates that the reduction of emissions by at least 80 percent that they hope to realize by 2050 (related to the 1990 figures) would require investments of 270 billion Euros annually. The high price would be partially offset, and could even lead to profit. Because on the one hand, the costs caused by damage to the environment would fall. On the other hand, the savings potential of oil and gas consumption amounts to 320 billion Euros annually. All sectors profit Simulations within the study show that all sectors of the European economy would profit from this investment boost, from agriculture to industry and all the way to services. The construction industry in particular would profit, because meeting the climate goals vitally depends on optimizing the energy efficiency of buildings. The argument that a pioneering role of Europe in climate protection does not make any sense from a global point of view is not valid for the authors of the study. The economic advantages of a 30 percent target in emissions reduction are completely independent of the question if a new international climate agreement will be agreed on after the end of the first stage of the Kyoto Protocol in 2012.
New thinking
The past economic and financial crisis has been a litmus test for current economic models. It revealed their deficits and signaled the need for improvement. This holds true for simulations showing the economical consequences of climate protection measures as well. Until now, most models have not considered the impact of climate protection investments on learning processes, technological progress, and the role of investors expectations. The result: The economical opportunities of climate protection have been insufficiently assessed. The study A New Growth Path for Europe, though, considers learning processes and technological development triggered by investment in its simulations. Investors expectations are no longer projected from past figures, but calculated according to future conditions. In consequence, the behavioral patterns of the entire economy change. Ideally, the expectation of higher growth becomes a self-fulfilling prophecy. But this model is only a first step. The development of complex models able to show effects like that is a huge task. A start has been made: In February 2011 AMPERE (Assessment of Climate Change Mitigation Pathways and Evaluation of the Robustness of Mitigation Cost Estimates) got under way. The project under the leadership of the Potsdam-Institute for Climate Impact Research (PIK) aims to evaluate the cost of climate change more reliably in order to deliver a dependable basis for decisions concerning emissions reduction and technology promotion to governments. To achieve this, teams of researchers from 12 countries gather with their computer models. The cost estimates that have been delivered until now have to be placed on a broader basis, PIK project leader Elmar Kriegler says.
Given that, even a solo effort by Europe would be economically worthwhile. In their simulations, the scientists only considered measures that have been agreed on in the minimum consensus of the Convention of Copenhagen. If the benchmark for emissions targets is raised by future conventions of the world climate conference, the growth curve of the European economy could become even steeper.
Download the study at www.european-climate-forum.net
Innovations: a driving force for growth

1. Siemens: 2,135 2. Philips: 1,765 3. BASF: 1,707 4. Samsung: 1,691 5. Qualcomm: 1,682 6. Panasonic/Robert Bosch: 1,400 each 8. Sony: 1,286 9. LG: 1,263 10. Bayer: 1,123 11. Mitsubishi: 1,096 12. Ericsson: 1,095 13. General Electric: 1,084 14. Research in Motion: 907 15. Roche: 811 16. Alcatel: 773 17. Hitachi: 741 18. Huawei: 730 19. 3M: 710 20. Johnson & Johnson: 709
Experts estimate that the world economy will grow by 4 percent in 2011. Innovations play an essential part in this.
Patents
The European patent office registered 235,000 patent applications in 2010. Three European companies are at the top of the applicants list.
World champion in innovation

The Global Innovation Index 2011 ranks the innovative strength of 125 countries. Among the 80 decisive factors are: technology transfer, R&D expenditure, patent applications, intensity of competition, science, ecology, education, bureaucracy, financing, and political framework conditions. Rank Country 1 Switzerland 2 Sweden 3 Singapore 4 Hong Kong 5 Finland
7.2
How progress pays off

Stock yield of particularly innovative companies 20072009 (in % p.a.)
16.5 12.4 12.0
Score 63.82 62.12 59.64 58.80 57.50 56.96 56.57 56.33 56.31 55.96 55.10 54.89 54.10 54.03 53.79 53.68 52.65 52.60 50.75 50.32 ... 46.43 ... 37.75 ... 35.85 ... 34.52
6 Denmark 7 USA 8 Canada 9 The Netherlands 10 Great Britain 11 Iceland 12 Germany 13 Ireland 14 Israel 15 New Zealand 16 South Korea 17 Luxembourg 18 Norway 19 Austria 20 Japan ... ... 29 China ... ... 47 Brazil ... ... 56 Russia Computing/ Electronics 137
Source: Booz & Company 2010
Global
North and South America
Europe
Asia
Source: BCG Senior Executive Innovation Survey 2010
What prevents innovation

Survey of 600 top managers from North America and Europe (information in %) Focus on further development not on new business models Short-term profit considerations instead of long-term approaches Lack of business owners in the company Little learning from mistakes and lacking willingness to take risks 45 43 37 26
Source: Accenture/Economist Intelligence Unit 2008
R&D expenditure in industries

2009 in bn. USD, global
Software/Internet 34 Chemicals/Energy 37 Industrials 51
Aerospace/Defense 22 Consumer 20 Telecom 10 Other 8
Automotive 73 Healthcare 113
... ... 62 India

Source: INSEAD eLab 2011
FACTS & FIGURES
76 Industry Journal | 02 | 2011
Publication information
Industry Journal
Creating sustainable value through technological leadership
Editorial staff
das AMT Gesellschaft fr individuelle Kommunikation mbH & Co. KG Andreas Jung (CEO) Tiessenkai 10 24159 Kiel, Germany www.das-amt.net
Photo credits
Getty images: Cover, p. 2, p. 28, pp. 34/35, p. 37, p. 48 Thinkstock: p. 29 left, p. 29 right, p. 32, p. 53, p. 58 Jens Brosemann: pp. 6/7 LANXESS 20072011: p. 14 left UNTHA Recyclingtechnik GmbH: p. 33 Brger GmbH: p. 51 right William George Wadman: p. 62 Fraunhofer-Gesellschaft: p. 63 Courtesy of Kurzweil Technologies, Inc.: p. 65 All other images: Copyright Siemens AG
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Contributors to this issue

Christian Buck, Anja Dilk, Stefanie Heinrich, Nele Husmann, Andreas Jung, Christine Mattauch, Mirjam Mller, Jochen v. Plskow, Andrea Wiedemann, Martin Wiedemann
Editor
Gerald Odoj Siemens AG Industry Sector Communications Erlangen, Germany
Copyright
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Concept
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Creating sustainable value through technological leadership

02 Industry Journal | 02 | 2011 | Editors note

Industry Journal | 02 | 2011 | Editors note 03

Prof. Dr. Siegfried Russwurm, CEO Industry Sector

04 Industry Journal | 02 | 2011 | Contents

Cover story: Vertical market report

0809: Spotlight 2227: ExperTalk

4247: People to watch: Jigar Shah 2833: Goldmine junkyard

6265: People to watch: Ray Kurzweil 3440: Country report Brazil

41: Facts & Figures

76: Publication information

Industry Journal | 02 | 2011 | Contents 05

5357: The system consultants

7174: Europe gets a green shock

5860: Case study

75: Facts & Figures

61: Facts & Figures

06 Industry Journal | 02 | 2011 | Big Picture

Industry Journal | 02 | 2011 | Big Picture 07

The Big Picture

08 Industry Journal | 02 | 2011 | Spotlight

Remote maintenance of memorials

Energy-efficient paper production

The worlds first hybrid plane with an electric motor

Industry Journal | 02 | 2011 | Spotlight 09

Greenest foreign company in China

Software from production plants prevents flooding

A better understanding and evaluation of data

10 Industry Journal | 02 | 2011 | Markets

Industry Journal | 02 | 2011 | Markets 11

12 Industry Journal | 02 | 2011 | Markets

Automotive: Industry in motion

Industry Journal | 02 | 2011 | Markets 13

Growth of car production* 2010 to 2017**

+7.5 % +9.3 % +2.7 % +12.5 % + 0.0 % +14.3 % +0.4 %

14 Industry Journal | 02 | 2011 | Markets

Food & Beverage: Turnover and variety are increasing

Optimized packaging for beverages

Food & Beverage

Industry Journal | 02 | 2011 | Markets 15

Europe, Middle East

16 Industry Journal | 02 | 2011 | Markets

Mechanical Engineering: the action is in the East

Industry Journal | 02 | 2011 | Markets 17

Higher flexibility and efficiency

High double-digit growth in many countries

Growth compared to 2009 (in %) 40 51 11 8 9 77 3 39 26 46

481 237 230 191 80 70 46 43 40 38

Source: Eurostat, UN, VDMA, national statistics.

18 Industry Journal | 02 | 2011 | Markets

Chemicals: Stable growth

Industry Journal | 02 | 2011 | Markets 19

Regional distribution of chemicals consumption (in %)

Source: Chemdata International, VCI

20 Industry Journal | 02 | 2011 | Markets

Industry Journal | 02 | 2011 | Markets 21

Pulp & Paper

The largest producers and consumers of the world (data in %, 2009)

3 Asia Confederation of European Paper Industries

Other regions Source: CPI, RISI

22 Industry Journal | 02 | 2011 | Markets

Quo vadis, automation services?

Dirk Hoke, CEO Customer Services Division, Siemens Industry Sector