Creating sustainable value through technological leadership

02 | 2011

Cover story:
Vertical market report What’s 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 | Editor’s note

Industry Journal | 02 | 2011 | Editor’s note 03

Editor’s 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 haven’t changed everything; we’ve 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

biggest squanderers. and Brazilian cows. old cars. market economy. The AIDA shipping company’s new cruise ship offers luxury and technological sophistication. success factors. about green technologies. 41: Facts & Figures Raw materials: richest countries. pulp & paper. 76: Publication information . 62–65: People to watch: Ray Kurzweil 34–40: Country report Brazil Brazil counts among the world’s largest economies. But apart from those basics. and growth perspectives differ greatly. food & beverage. The U. chemicals. 42–47: People to watch: Jigar Shah 28–33: Goldmine junkyard Governments and businesses discover electrical waste. booming emerging countries – these are factors occupying the global industry. His prognoses have proven correct quite often. This brings in billions and spares the environment. A global report about five leading vertical markets: automotive.S. News and trends – from remote maintenance of fountains to e-planes. CEO of the Siemens Division Customer Services. mechanical engineering. and all the way to cost-efficient paper production. rarest metals. Markets 06–07: The Big Picture 10–21: Dissimilar siblings The challenges facing the global industries and the factors that connect them. fiercer competition. Interview with Jigar Shah.04 Industry Journal | 02 | 2011 | Contents Cover story: Vertical market report 10: Dissimilar siblings Higher flexibility and productivity. and buildings as valuable sources of raw materials. A vertical market report. 08–09: Spotlight 22–27: ExperTalk ARC analyst Valentijn de Leeuw in conversation with Dirk Hoke. challenges. CEO of the “Carbon War Room”. visionary believes in the future of artificial intelligence. Tendency: rapid growth.

Management 48–52: Save. And that clever energy management is easier than imagined. . highest returns. as well. 66: The optimum is just about good enough The production of float glass for the industry is extremely energy-intensive.Industry Journal | 02 | 2011 | Contents 05 Contents 48: Save. biggest hurdles. most innovative countries. price trend in fossil power sources. 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. 53–57: The system consultants A lot of production plants have up to 50 percent of their normal power consumption during downtime. don’t squander Thousands of small and medium-sized business literally put their money down the drain for unnecessary energy expenditure. 71–74: Europe gets a green shock More ambitious climate protection targets can speed up economic growth and create millions of new jobs. don’t squander Small and medium-sized businesses could reduce their energy costs dramatically. Innovation 66–70: 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. Slowly it dawns on them that energy savings measures pay off. They often only lack the required knowledge. It does not have to be like this. world champions of CO2 reduction. 61: Facts & Figures Energy efficiency: Energy demand and power consumption 2030. 58–60: 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.

06 Industry Journal | 02 | 2011 | Big Picture .

The smoothly running luxury at sea is a matter of course for the passengers. Much of this innovation comes from Siemens. Two 12. Germany. high-tech. and self-sufficient emergency shutdown system are integrated in it as well. Because they do not know how much effort. alarm.000 cabins. Among them is the AIDA diva. Germany. Also the ship automation system Siship Imac that is based on the Simatic PCS 7 control system and manages all monitoring. Altogether. and innovation are needed for it. and can accommodate more than 2. The ship belongs to the third generation of AIDA cruise ships. all this is not overly exciting: the new cruise ship is already the seventh AIDA ship equipped with Siemens technology. where the ship is being constructed. She will be launched in the spring of 2013 and has many innovations and even more innovative technology in store for her future passengers.5 MW electric motors from the Siship Drive MV production range for the diesel-electric drive system.000 passengers – the as yet unnamed new club ship of the Aida Cruises shipping company in Rostock.Industry Journal | 02 | 2011 | Big Picture 07 The Big Picture She is 252 meters long. has 1. The safety management system. a subsidiary of the U.S.000 measuring points are collected. which was named in 2007 (photo). air conditioning plan control. . data from some 13. group Carnival Corporation. For Siemens and the Meyer Werft (Meyer shipyard) from Papenburg. for instance. and control functions on board.

The monument features two huge fountains with a capacity of 2. The battery is recharged in cruising flight. Siemens has developed the world’s first plane with a serial hybrid electric motor. 120. Energy-efficient paper production Producing steam in order to dry paper consumes a large amount of the energy required for paper production. It is projected to save 25 percent of fuel and emissions compared to today’s most efficient technologies. Sipaper APC Drysec calculates process variables that are not monitored. A small Wankel engine with connected generator provides power. The plane uses a serial hybrid electric motor as integrated power train. 2011. The system calculates the optimal values for the drying process based on these parameters and adapts them to the process. Germany.500 km away. A Siemens electric motor drives the propeller. The technology is . This feature alone leads to savings in maintenance costs of up to 200.3 million liters of water each. was able to lower their steam consumption for drying by more than three percent and to reduce energy costs and CO2 emissions accordingly. significant amounts of energy are saved. such as humidity and temperature of the paper webs.000 filtered. In cooperation with partners.000 liters have to be pumped and 23. fuel consumption is very low. The world’s first hybrid plane with an electric motor meant to be used in large aircraft in the future. This is made possible by the controller-solution Simatic S7-300 with added features. The motor glider “DA36 E-Star” is still in the testing stage. This enables the localization of errors in the process at an early stage. Additionally. As the combustion motor always runs evenly and on low power. During start and climbing stage a battery system from EADS provides additional power.000 US dollars a year. An inverter from Siemens provides the electric motor with energy from battery and generator. 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. Rhein Papier GmbH in Hürth near Cologne. Additionally. In a pilot project. located in Florida some 1. 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. With sensors. Every minute.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.

the software learns under realistic circumstances to interpret the measurement data correctly. 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. They use research dykes. Siemens commissioned the world’s highest-performing High Voltage Direct Current (HVDC) line. visual presentation of product data from various sources can be presented in a customized format. In 2010. Intuitive. for instance.Industry Journal | 02 | 2011 | Spotlight 09 “Greenest” foreign company in China China Central Television (CCTV). and Roland Berger Strategy Consultants have awarded the “Best Company Award in Green Competitiveness 2011” to Siemens China. an experiment simulated water causing a tunnel in the dyke. It connects the provinces of Yunnan and Guangdong over a distance of 1. HD-PLM has been developed to transfer large. At the moment a two-year trial period is under way in Eemshaven. Netherlands. Software is able to predict dangerous situations based on these measurements in order to implement actions. For this research project. 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. Siemens experts are employing software originally meant for the monitoring of production plants. . Here. distributed. which are destroyed in different ways. for instance. the stability of these protecting walls is meant to be closely monitored with sensors. They enable users to understand information better and to classify the meaning of data faster.400 kilometers. The HVDC connection enables a highly energy-efficient transmission of power. 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 product’s lifecycle. Siemens was honored with this distinction in recognition of its contribution to a sustainable Chinese economy and society for the second time running. Financial Times. USA. saving 30 megatons of CO2 emissions a year. which is now adapted to the characteristics of dykes. In future. in 2005. and heterogeneous collections of data into knowledge. Based on the flooding catastrophe in New Orleans.

cars. The Industry Journal takes a look at five leading vertical markets: automotive. more sustainability. chemicals. . challenges. or Europe and whether it is the production of plastics. food. or beer – similar trends are emerging in every field of industry: higher flexibility and productivity. and success factors differ greatly. the outlooks. the U. fiercer competition especially from and in the emerging countries.S.10 Industry Journal | 02 | 2011 | Markets Dissimilar siblings Whether it is in Asia. But apart from these basic similarities. mechanical engineering. as well as pulp and paper..

and sustainable production methods. the reduction of interfaces through personal responsibility for industries on the supplier side. and Russia. For mediumsized and highly diversified suppliers. asking themselves how they could actively contribute to a higher product variety and flexibility of their customers. an increasingly fierce competition. in which international businesses. such as Siemens. but also excellent specialists. holistic solutions. Latin America. Massive geoeconomic and geo-political shifts are the result. An era of vertical markets begins. For this.Industry Journal | 02 | 2011 | Markets 11 The global economy is undergoing radical change: Many industries note a solid growth. The formula for success for the manufacturers of both capital and consumer goods is maximum flexibility. . they need cutting-edge production plants as well as excellent engineering and automation software. and higher efficiency in all areas. This approach demands an uncompromising customer focus. instead of simply reacting to their requests. Further challenges for businesses are the globally soaring prices for energy and raw materials. an industry expertise that is far above average. and rising demand for new and customized products. seem to be at their end in the industrial business. but mainly in Asia. Corporate companies with international presence. focus on individual areas – just as highly specialized niche suppliers have always done. will probably have the greatest success in times of vertical markets. times will probably get tough. corporate companies can meet the individual demand of their customers at all stages and apply best practice examples from other industries. It is the only way to achieve customized. Because the software enables the parallel flow of product and production planning – for higher efficiency and shorter development cycles. It just does not take place on the traditional Western markets in many cases. More and more often. as well as a marked service mentality. increased productivity. process know-how in great detail. in which standardized products were sold to businesses in various industries. The days of horizontal markets. Unlike these specialists. suppliers try to put themselves in their customers’ shoes.

These are images of production plants to be built. for example. systems. India. Important drivers of this growth will mainly be China. too. 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. The number of car owners is rising by more than 35 percent each year in China alone. 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 production of cars rose by 24 percent. but also Southeast Asian states. and so does the demand for customization. where production capacities are on the increase. Indonesia. Korea. With them. a global trend towards comparatively small and affordable models is on the rise. The trend towards globalization has reached all manufacturers by now.12 Industry Journal | 02 | 2011 | Markets Automotive: Industry in motion The automotive industry is booming and will radically realign itself in the next few years. 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. 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. and the auditing company PricewaterhouseCoopers prognosticates 83 million sold units for 2012. and services for infrastructure as well as automation and drive technology. Car manufacturers have to rethink their technological positions. solutions. The growth rates are predicted to be an average 5. Alongside them. Experts predict sales of 75 million cars for this year. too. and Malaysia. especially in China. flexibility in production. With a continuous PLM platform. But in Western countries. the one of utility vehicles even by 32 percent. production processes can be simulated and procedures optimized – to meet the increasingly stringent regulations for energy efficiency. New markets are emerging in Asia. Siemens is leader here as well (compare box: “Flexible production plants”). Such variety demands increasingly complex IT and production concepts for virtual engineering and digital plants. Siemens as a global partner provides products. and not least e-mobility will decide about success. energy as well as cost efficiency. The digital plant plays an important role in this as a key technology. Since then. The automotive industry is doing well again after its dramatic slump in 2009. 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 2025.5 percent per year until 2017. there are billions of options of ordering due to the many equipment variations for one car. As the average purchasing power in those countries is considerably below the one in Western industrial nations. the demand for affordable vehicles will rise. engineering. . The speed of innovation increases as well. Time-to-market. expanding markets are developing in Thailand. Mathematically. and India. and Russia.

a.4 % * in million units ** average growth p.1 4. China 14.7 India 3. 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.3 4. This shortens the time to market. and more profitable than before.2 +7. with a higher degree of customization.5 27.7 % +12.1 5.3 3.5 % +9. the gap between product development and production of a car is closed.9 Japan 9. This means that production processes can be simulated cost-efficiently and flexibly.6 10. The result: New models can be brought to market in shorter time. With it. USA 7. or that production plants can be virtually commissioned.2 South Korea Flexible production facilities are virtually planned and analyzed with the help of PLM solutions in the framework of the digital plant. for instance.0 European Union 16.1 9.1 % Source: PricewaterhouseCoopers .0 % +14.3 % +0.5 % + 0.3 19. Growth of car production* 2010 to 2017** Brazil 3.3 % +2.0 6.8 +5.1 Russia 1.Industry Journal | 02 | 2011 | Markets 13 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.

. are decreasing. as well as being in accordance with high international standards of quality and security. The new mega-plant is to produce some 30 million hectoliters of beer per year in its final stage of development. for instance. which is uncommon in markets today (cf. In addition to that. It is a matter of course that those materials have to be affordable and therefore suitable for competitive use. Siemens supplies the standardization concept OPL (Optimized Packaging Line) to the manufacturers of the bottling and packaging lines. the Mexican beverages producer Grupo Modelo is building the world’s largest brewery. This saves costs. A special focus lies on the use of water and energy. Because on the one hand.14 Industry Journal | 02 | 2011 | Markets 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. because the spare parts demand and the training efforts for employees. bottom right chart). The representatives of the food & beverage industry (F & B) are enjoying the industry’s dynamic growth. The soft drinks manufacturer PepsiCo has made comparably good experiences with it for some time. And due to the standardization. the solution simplifies fault diagnostics and maintenance. 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 costs for both of them are rising and due to the fierce competi- Optimized packaging for beverages Close to Piedras Negras. The remarkable successes in this area form a contrast to the equally significant challenges. a Mexican city near the Texan border (USA). Especially manufacturers with global presence have to produce the larger part of their products with locally available raw materials.000 employees and its most popular brand is the beer Corona. The market is growing very stable. 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. It comprises most notably the standardizing of interfaces and hardware components. Food & Beverage Optimized Package Line (OPL) from Siemens ensures a comprehensive automation of packaging lines. The company has some 40.

enable a 20 percent shorter time to market. With this software. as well as sustainable and efficient actions are a prerequisite for rising turnovers and yields. and Teamcenter. such as the Totally Integrated Automation Portal (TIA Portal). Middle East +4 Asia +6 *calculated annual growth rate (in percent) Basis: Euro Source: ARC advisory group. They support the identification of optimization potentials. 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. Solid Growth Country/Region Market development 2009–2013* North America +3 Latin America +7 Europe. Demands as complex as that can be satisfied best by food and beverage manufacturers with an international presence. most leading companies feel duty-bound to their own ambitious targets for minimizing the consumption of water and energy. such as Tecnomatix. Comos. trends. trendsetting logistics.Industry Journal | 02 | 2011 | Markets 15 tion. F&B Study 2009 . High flexibility and availability of goods. The megatrends urbanization and demographic change also demand a change of traditional views. and local characteristics. eating habits are changing due to an increase in the average age of the world population and an inclination toward a healthy diet. the demand for foodstuffs produced on an industrial scale has to be satisfied and their security ensured. The use of Manufacturing Execution Systems (MES) has increased in businesses since roughly a decade. product lifecycle software solutions. On the one hand. There are high-performance engineering applications. in particular. Thanks to innovative production processes. additional costs cannot be passed on to the customer in form of higher prices. Convenience food and wellness products are said to be the product ranges with the highest growth potential. new production processes can be engineered 30 percent faster. Increased flexibility and fast variations in production are enabled by the use of modern industrial software. Some other challenges are the quickly changing demands of consumers. A lot of food and beverage companies manage the balancing act between diversification and higher returns increasingly well. they have saved up to one-third of their costs lately and unleashed additional potentials for revenue with it. On the other hand. On the other hand. Finally.

International mechanical engineering companies are becoming increasingly present in these countries in order to meet this demand. software-based design of automation. the 15 largest mechanical engineering firms in China have an average turnover of three billion Euros. development and production is turning into a key task. mining. The international consulting company Oliver Wyman expects the Chinese mechanical engineering industry to expand into other emerging countries first. Five years ago. profit from an upward trend in the industry. Experts on the sector expect the Chinese to start strengthening their international activities first of all in the construction. Not only China’s mechanical engineering companies. Therefore. But after this. In 2010. . as well as production methods. but also their competitors from other countries. Japan. This development will be sustained to a large part by the economic upturn of the emerging countries. Western mechanical engineering companies will have to pass an enormous test in years to come. In addition. They massively develop their local presence and business activities. This would place them among the world’s largest mechanical engineers. and Europe are on the list. especially because the Chinese government fosters the strengthening of the businesses’ innovative work. Currently. But this is going to change.16 Industry Journal | 02 | 2011 | Markets Mechanical Engineering: the action is in the East The industry is increasingly headed toward growth. cheaper and faster development. China is taking the offensive with considerable verve. Market researchers expect a global production increase of approximately eight percent for 2011. A consistent. the triad markets USA. textile machinery. and shipbuilding industries. the Chinese added another 40 percent to this. Higher speed of innovation and ever-shortening development cycles in high-tech markets demand new. 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. 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. as well as to react quickly and with individual solutions to regional characteristics. 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. The expansion is not expected before another three to five years have passed. The industry is confronted with completely different challenges faced in the established Western markets. the same companies made an average 700 million Euros. The speed of growth in the People’s Republic is breathtaking: the turnover of Chinese mechanical engineers grew by 64 percent to 343 billion Euros between 2007 and 2009. low-maintenance and affordable machines with a low degree of automation. Some 90 percent of China’s production is still made up of large batches of comparatively simple machines for the domestic market. better. business models and strategies are of less concern than technology. they will reach an average annual turnover of some ten billion Euros in the next five years. production systems will merge increasingly in the virtual and the real world. If their growth continues. including research and development. but the way is already prepared. The demand in these regions is mainly for technically less advanced. Here.

weak points can be found during the development stage and removed without costly expenses in terms of time and money before production commences. Through this. packaging and tool machine builders. holistic solutions and comprehensive global services make Siemens the leading partner of mechanical engineers around the world. innovative systems. The automation and drive solutions fit every sector of industry. national statistics. plastics. textile. VDMA. for example. Source: Eurostat. . UN. This holds true for the printing machine industry. 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. 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. This helps to shorten development times. High double-digit growth in many countries Country Turnover 2010 (in € bn. and optimizes the quality of mechanical and plant engineering. as well as for businesses from the conveyor technology or the glass and wood processing industries.Industry Journal | 02 | 2011 | Markets 17 Mechanical engineering Higher flexibility and efficiency Scalable products. It is applicable for crane.

a regional shift of the world markets. and increasing scarcity of resources. Chemicals . The result: the plant availability increases and the total cost of ownership decreases. deliver. nearly all businesses in chemical industries had initiated extensive savings measures during the crisis and strongly aligned their strategy toward yield growth. Siemens was asked to design. The world’s most advanced butyl rubber production plant has a nominal capacity of 100. According to it. machines. LANXESS employees during an inspection round on a production plant for technical rubber. The auditing company PricewaterhouseCoopers (PwC) conducted a global survey among managing directors and chairpersons of managing boards in early 2011. The generally optimistic industry is occupied with annual growth rates of six percent. An example: The starting signal for building LANXESS’ new rubber plant in Singapore came in May 2010. The distributed control system enables the extremely flexible reaction to changing demands of the market.000 tons per year. The time to reap what they have sown has now come: After a slump in turnover of more than six percent in 2009.1 trillion Euros were produced globally in 2010 – a gargantuan market. individual solutions. and environment.18 Industry Journal | 02 | 2011 | Markets Chemicals: Stable growth Chemicals worth 3. 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. Integrated security concepts ensure the fault-free operation of the plants and protect employees. rising costs of energy. 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. and commission the process automation as well as the power distribution for the production site on the basis of Simatic PCS 7.

Industry Journal | 02 | 2011 | Markets 19 23 percent in 2010. which generates 45 percent of the entire turnover of the chemical sector. and in India by 12 percent. and energy demand the modernizing and retrofitting of existing production sites in those regions. Especially the stringent conditions regarding environment. They compel businesses to invest in measures for higher energy and resource efficiency. According to the PwC survey. VCI . the production gradually shifts towards the emerging countries. The profitability of production plants has to be increased throughout their entire life cycle.5 –2 2009 13 –20 –15 –17 2010 Source: Chemdata International. The field of business is facing great challenges in spite of the generally good opportunities for growth. petrochemicals. the consumption of chemicals rose by 23 percent from 2005 to 2010. The basic chemicals area (inorganics. has had to fight price jumps and exchange rate effects for years. today’s leading chemicals regions. But plant engineers still have a lot of work in the USA and Europe. security. 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. 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. in Brazil by 14. This becomes increasingly possible with innovative lifecycle management solutions. 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. 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. and polymers). and contribute to the shortening of innovation cycles and the increase of production flexibility. 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. Higher energy costs across all fields of business as well as scarce natural resources make the business difficult as well. This is hardly a surprise: In China alone.

China is leader as an individual country in front of the USA. Manufacturers of paper and pulp around the world are occupied with energy efficiency. graphic papers (152 million tons). The situation could not be more different in South America and Asia. A lot of smaller and. comparatively inefficient plants have already had to shut down. the emerging countries on expansion. Whereas an Indonesian consumes only an average 20 kilograms of paper annually. as was the tissue and sanitary segment. Market observers estimate that the production will amount to 453 million tons in 2014. 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.4 percent every year until 2020. Japan. Either way. but rather about modernization and services. Only Finland and the leader USA use more than that. not on expansion. The reason is the economic growth of the BRIC states. it is more than twelve times this amount in Germany at a per capita consumption of 250 kilograms. This promises interesting orders for the manufacturers of corresponding production plants. and newspaper papers. and sustainable production methods. . too: Cardboard and packaging papers have been important drivers of turnover lately. through this. production and consumption have always developed differently depending on the region. 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. It is more and more about intelligent processes for water and wastewater treatment. on the one hand. increasingly stringent environmental regulations demand innovative and efficient solutions. and Germany. It looks entirely different for graphic papers: Internet. In the ranking of nations. The industry produced more than 370 million tons of paper and pulp in 2009. On the other hand. a lot of companies in these regions rely on consolidation. digital cameras. The demand is projected to increase by an average 2. and e-books contribute to noticeable declines in photo. as well as tissue and sanitary products (34 million). In the classical markets. for instance. other paper and cardboard varieties (96 million).20 Industry Journal | 02 | 2011 | Markets Pulp & Paper: Good times in the east – Bad times in the west The traditional markets rely on consolidation. catalogue. The segments do not develop in parallel. A whole lot of modern high-performance plants are built here at the moment to meet the rising local demand. so that the markets will probably note a new regional distribution in the medium term. or about refuse recycling or disposal. At the moment. This trend will probably continue. It consists mostly of cardboard and packaging paper (171 million tons). But South American and Asian states such as Brazil and Indonesia increasingly discover expansionoriented business opportunities in Pulp & Paper. the positive global economic outlook speaks for an increase in demand on both sectors. However. it will be less about new plants and the extension of capacities. Apart from that. The industry is facing a geographical change as well: About the third part of its production capacities are still in Europe. rising raw material costs.

The wastewater treatment takes place in the world’s first membrane bioreactor plant with subsequent reverse osmosis. The energy costs decreased by some 140. RISI . The largest producers and consumers of the world (data in %. for instance. The overall concept is considered a benchmark by the international paper industry. emission control. and water management was developed and implemented by Siemens and has led to noticeable savings and optimizations.Industry Journal | 02 | 2011 | Markets 21 Pulp & Paper Lower water and energy consumption Albert Köhler GmbH & Co. The noticeably lower demand for process steam contributes to this. The solution for energy efficiency.000 tons of highquality cardboards every year. The machine and plant technology is placed in containers and can therefore be commissioned without great assembly efforts. 2009) 42 44 24 22 23 21 7 3 Asia Confederation of European Paper Industries 3 North America 5 2 3 Rest of Europe Latin America Other regions Source: CPI.000 Euros a year – and with them the CO2 emissions by some 800 tons annually. Albert Köhler’s wastewater treatment plant can recycle nearly the entire process water of the business. KG from Gengenbach in the German state Baden-Württemberg produces 40. The cardboard manufacturer can not only reuse the largest part of its process water and reduce its wastewater volume by 90 percent.

CEO Customer Services Division. Dirk Hoke. Argentina. Hoke came from the car manufacturer Renault in Paris to Siemens in Erlangen 15 years ago. 2011. he was head of the Siemens Cluster Africa. as well as the leadership of Siemens Transportation Systems Group in China. the mechanical engineer was head of the Siemens Division Industry Solutions. Siemens Industry Sector. and the pressure on manufacturers to increase both productivity and flexibility grows. This also changes the role of external service providers. Among them. Director of Consulting at ARC Advisory Group. and Valentijn de Leeuw. Germany. the former Transportation Systems Group in the United States. . Siemens Industry Sector Dirk Hoke (42) is CEO of Siemens Industry’s new Division Customer Services. recently discussed the future of automation service providers. From 2009 onwards. He has worked for the company in many regions and business fields. which encompasses more than 50 countries.22 Industry Journal | 02 | 2011 | Markets ExperTalk Quo vadis. and Austria. Hoke was appointed CEO of the Siemens Cluster Western & Central Africa in 2008. Before that. which was established on October 1. Dirk Hoke. automation services? The industrial landscape is changing. CEO Customer Services Division.

Middle East and Africa (EMEA).Industry Journal | 02 | 2011 | Markets 23 Valentijn de Leeuw. The international company for consulting and analysis of industry and infrastructure businesses is headquartered in Boston. amongst others. Director ARC Advisory Group Valentijn de Leeuw (53) is director at ARC Advisory Group Europe and holds a doctorate in Engineering and Chemistry. He analyzes a number of global businesses and is a consultant of the EU commission. De Leeuw was born in the Netherlands and is now based in Brussels and Paris. . operations management. performance management. with focus on clients in Europe. and knowledge management. His focus is on organizational effectiveness. At ARC. asset management.S. he is responsible for research and consulting in process industries. manufacturing operations management. Massachusetts in the U.

for which we see significant potential. de Leeuw: It’s vital to consider the people aspects. This means that Siemens has the resources to invest in Research and Development and be ahead of the crowd. de Leeuw: And the providers benefit from collaboration and specialization as well. such as from our Divisions Industry Automation (IA) and Drive Technologies (DT). some of whom are joining us from other service units. In January.24 Industry Journal | 02 | 2011 | Markets ! “As the automation market emerges from the recession. I strongly encourage you to continue this approach. What about training? End users seem to have a high demand for this.” .” 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. They have a global understanding of automation. Siemens started a project called “Growth in Vertical Markets and Services. they want to be fast and agile. that consider automation services to be a core competence and capability. We also have the skills and resources our customers need. Plus. 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. We all do best if we stick to our core competencies. 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. we have put a strong focus on communication and telling people about the advantages and benefits this has for them as well. Our customers’ core competencies are in production. to optimize assets. de Leeuw: There are multinationals. Hoke: During the financial crisis. however. Hoke: We have been offering both online and classroom training for years and we will strengthen this service regarding automation. They can afford specialists that focus on one specific item only and can deploy resources just when needed. But a huge and increasing majority see their core competence in manufacturing. they can maintain skills that are used every day – which can reduce costs for their customers as well. and for operations management. There will ! “Automation suppliers can provide users with the resources needed for new projects. If these assets are becoming increasingly im­ portant – why shouldn’t multinationals be able or willing to build up their own resources? Hoke: You can’t innovate and be a leader in all domains. Within the project. it was important to delay Capex. These figures include value-added services. ours are in industrial automation. That included the challenging part of involving and gaining buying-in from our people. as well as to reduce their costs. 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. And as nobody knew when the recession would end.” 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). Doing this the right way can lead to a successful quickstart. but will go shopping for providers that can deliver what they need. which is easier to do with outsourced services. external automation services will lead the way in growth.

the lifecycle cost and value is a multiple of the system and installation cost. for expanding the lifetime of a product and to offer replacement when the end of the lifetime approaches. Why should a manufacturer believe that paid services would be profitable for him? Suppliers have to answer this question quickly – perhaps. the best way to run a competitive system? The answer to this always requires a thorough analysis. Hoke. So at the end of the day. compressors. We will have a certified service education so that – at a certain level – we can ensure our people have the same competencies. In the end. Now you grow the wheat yourself and deliver it to the bakery before you buy the bread – made out of your own wheat. we have to address new business models as well.Industry Journal | 02 | 2011 | Markets 27 03 25 be new training centers for customers – and for our own people as well. Probably. So during a product’s lifecycle there is a multiple of the potential of the pure system purchase. The other aspect. including the upgrades. Hoke: That is why we pay so much attention to covering the whole lifecycle. and so on. In the next phase. even before it is asked. it is all about capital efficiency. If users don’t do these things properly and frequently. for instance. and many other possibilities. you both depend on each other to do business. The objective must be to go beyond the traditional client-provider relationship. services are the bread. Mr. You can compare that to a bakery where you used to buy bread every day – and that was that. and thus total costs. like maintenance. they can reduce wear and breakdowns. the fastest way to convince a customer is for the supplier to assume all risks by getting paid only out of the savings. 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. the system will lose its total value within five years or so. in particular. Control strategies must be updated and control loops retuned to readapt the automation solution to the new plant situation. What is . which we can offer. the system loses value since it no longer delivers what it was initially designed to deliver. That is a matter of standardization as well. Hoke: Therefore. If we look at energy efficiency topics. remote monitoring. software updates. So suddenly.” de Leeuw: The system-to-lifecycle cost ratio depends on the type and useful lifespan of the products. Pumps. If the customers make sure that the equipment is well maintained. Production secrets and key information equal the wheat. That changes everything in your relationship. de Leeuw: People do not differentiate between the cost and the value aspect quite often. ! “Operations management and maintenance have the largest impact on lifecycle costs. we are talking about trust. These are mainly performancebased contracts. modernization. de Leeuw: But still there must be measures that protect the user’s intellectual property and knowledge. If the associated automation strategy and structure are not constantly adapted. and other processing equipment are being replaced. though. sharing this type of proprietary information requires an extremely large amount of trust. each case is different. don’t you find your customers to be reluctant since they are afraid their costs will rise over time? Hoke: That would only happen if we couldn’t guarantee cost transparency between investments and returns. is to optimize the value that the system delivers. We will offer service as a product that has repeatable solutions that can be priced and measured easily. But in general. We know that the manufacturing equipment changes over time. In fine chemistry or pharmaceuticals. spare part services. we have to work out ways to get access to the system information without having access to the production information. Hoke: Obviously. supplier and manufacturer will have to become interdependent. And.

Take energy efficiency topics. Additionally. big customers are opening up to outsourced services. for example. every service person should also be a salesperson. And in mature countries. Quite often.” Hoke: More experts are needed globally than ever before. There are many possibilities.26 Industry Journal | 02 | 2011 | Markets de Leeuw: But meanwhile they have to think more and more about profitability as wages go up. de Leeuw: What happens if purchasing blocks you? Hoke: We can’t go directly through procurement but have to address the topic directly on other levels like executive. Or take our net promoter score. So the problem will even increase. the benefits of services are easily measurable if you compare energy consumption. Hoke: True. In the future. How do you standardize feedbacks? Hoke: This is a global trend. So with our approach we can hardly go into direct comparison with most of the other suppliers. Our customers can rely on service stability – which they might not feel safe about with smaller suppliers. many experts have simply retired. this was unthinkable. the corporate employees in the purchasing or supply chain departments are not trained to evaluate such benefits. provided by a few universities. Even in emerging countries like China there are not enough skilled graduates to supply the needs of the industries. Even in China. waste and water management. . That means that we have to train our personnel accordingly. and so on. ultimately. “Suppliers can add value to out. Employees can study while still being paid by their companies. But the purchasing departments of manufac­ turers are used to pay suppliers by the hour. factory. outsourcing non-core activities seems to be the far smarter way than doing it themselves.! sourced maintenance functions by providing metrics for overall equipment effectiveness. which directly impacts production and thus profitability. These are not only about automation but about the factory as a whole – which includes air conditioning. as well as improving meantime between failures. About five years ago. how do you value the importance of the supplier’s size? Hoke: That is a big opportunity for us. for example. de Leeuw: In response. de Leeuw: Or the percentage of scheduled and unscheduled maintenance-related downtime. Only they understand the benefits that we provide and can give the proper input to supply chain management. Hoke: That is a difficult issue. leveling out their previous advantage in this area. In this area. 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. And the frequency of executive-level customer visits should be increased to improve the feedback process. Hoke: And we have established cooperations with many of the best universities worldwide.” If the dependency increases. So this is about performance­based payment as well. by the piece – by anything but performance­based results. For many manufacturers. we are building up a service academy in conjunction with a German university that will offer a complete curriculum on services and. Other key performance indicators that could be discussed with customers might be reducing downtime and guaranteeing uptime. the industry in the UK started sponsoring a curriculum for a Master’s degree in process automation. and production-line management. based ! “There is a lack of automation skills and expertise within the manufacturing companies. as we can deliver what multinationals need on a global basis with uniform quality. Hoke: Interviews obviously often follow a given pattern. a Master’s degree.

Its task is to develop and expand the service business. paper. They shared their experiences with us very openly.000 customer interviews every year. 2011. Afterwards. in cooperation with the Divisions Industry Automation (IA) and Drive Technologies (DT). The provider.Industry Journal | 02 | 2011 | Markets 27 03 on some 18. CS delivers product-oriented services as well as value-added services. This means that it is most important to overcome internal hurdles before rolling out a service strategy externally. for instance). For example. Siemens is present in almost every country of the world.300 Euros. In some cases. as main automation contractor. But at present. and field services for industrial plants. ARC examines the automation sector up to the year 2015. de Leeuw: Is the business planning and execution iterative in your case. technical support. we have done a lot of service benchmarking to identify blocking points and key success factors. we are much further than that. 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”. This score tells us how many customers would recommend us. Hoke: Certainly. plant monitoring. Since we’re organized regionally. pharmaceuticals. we have to focus on what to do first according to our resources. and holistic plant management. The 203-page study costs 6. such as automotive. how many are neutral. we cooperate with partners. our top priority is to ensure that the people in the regions understand our service approach thoroughly.” Hoke: We don’t see ourselves in such a role. The Division employs around 17. and metal.000 people around the world and advances the service strategy for products as well as for industries. we have done that with our own business units. and how many would refuse to recommend us. But we will always find solutions that are best for our customers. ! “An ecosystem of provider and integrator services can provide full lifecycle services. The value-added services comprise consulting (regarding energy and environmental management. Among the product-oriented services are online support. if needed. we will not be able to have the same competencies on the same level worldwide. Information and order: rkilies@arcweb. 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. we extended that to companies that are complementary to our service offerings such as MAN Turbodiesel Services USA or Schindler elevators. then with the Siemens Healthcare and Energy Sectors.com . First. and is responsible for all services within the industry sector. 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. These comments are always extremely helpful. The new Siemens Division Customer Services The new Siemens Industry Division Customer Services (CS) was established on October 1. Obviously. like in “planning by discovery”? Hoke: No. remote maintenance. can coordinate this system.

the reclamation of gold from recycled materials requires less energy. “Urban Mining” – the reclamation of copper. and houses a profitable business. Accordingly. gold. . One ton of electrical waste contains many times more precious metals than the same amount of ore from a goldmine. cars. Car manufacturers increasingly develop their own utilization concepts as well.28 Industry Journal | 02 | 2011 | Markets Goldmine junkyard Raw materials are becoming scarce – and the recycling of electrical devices. and aluminum from waste – is a sophisticated technological process that benefits the environment as well.

In the walls of buildings awaiting demolition. CEO of the largest recycling plant in Bonn. Savings of four billion Euros There are an estimated 100 billion megatons of metal in German buildings alone. four tons of gold. Umicore’s sector Precious Metals Refining is among the world’s leading businesses for the recycling of precious metals from composites – spanning from electrical waste to car and chemical catalysts. and shopping trolleys is becoming more frequent. The company Umicore alone recycles 7. and research. which is headquartered in Brussels and specializes in precious metals. on recycling depots.” says Markus Mehl. All sorts of metal are of greatest interest. copper pipes. and houses over decades.000 tons every year. and scrapyards around the globe lie huge amounts of valuable raw materials that were built into cars. On an international scale. The EBIT adjusted to special influences even rose by 68 percent. The theft of entire power lines. but can be reused infinitely without quality losses. unlike materials like plastics or paper. More than 60 percent of Umicore’s turnover of nearly ten billion Euros a year come from recycling – with a recent annual increase rate of about 42 percent. too. Lots of money. They are not only extremely valuable. nickel. and lithium batteries are a valuable source of raw materials when recycled (left). electrical devices. Scarcity of resources and rising prices of raw materials push the so-called “Urban Mines” in the focus of economy. one can make money in scrap recycling. Studies by the Hessian Ministry of Environment claim that today an average landfill contains metals worth 30 million Euros.Industry Journal | 02 | 2011 | Markets 27 03 29 It sounds like a hoax: “The global scarcity of raw materials leads to an increase in crime at junkyards. According to the Bavarian Ministry of the Environment. .5 billion tons of reusable materials every year. waste disposal and recycling companies save an annual four billion Euros for the German economy. landfills. and all the way to slags and flue dusts containing precious metals. Recycling is a profitable core business for the international Umicore Group. And in China. 28 tons of silver. 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. One ton of old printed circuit boards contain 200 grams of gold (right). The gold alone has a value of 100 million Euros – that is equal to the monthly production of some gold-mining countries. politics. because it fetches cash immediately. Germany. the potential is even more impressive: Europeans dispose of 1. “There are no stolen goods better than scrap metal. railroad tracks. But even without resulting to criminal activities. and 6.000 tons of copper are thrown away every year. Zinc.” But it is true indeed that rising prices on international raw material exchanges lead to rocketing burglary rates at many a country’s scrapyards.

this is an enormous amount of money – tendency rising. With pollutant-free monosubstances such as glass or steel scrap. The same is true for 13 percent of the palladium and 15 percent of the cobalt mined. platinum metals in South Africa. for instance. Recycling reduces dependency on raw materials To ensure a secure supply with technological metals at affordable prices is of the utmost economical importance.000 tons. next to no primary storage facilities for technological metals in Europe. the focus is on throughput and cost.000 tons. and special metals as well as pollutants. This means that raw materials have to be mined abroad and imported. But with polysubstance materials . halogens. Three percent of the annual global production of silver and gold are used for the production of computers and cell phones. the average recycling rate in the EU-27 lies at only 30 percent. And the precious metals they contain make up 80 percent of this value. In recent years the costs for this have risen by 80 percent in Europe. especially for regions lacking raw materials. These metals weigh only a couple of milligrams per cell phone and are not even worth one single Euro. together with a regional concentration of indispensable metals – such as rare earths in China. 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. there is still a lot of potential. not even three percent.” says Hagelüken. The problem of many Western countries is that “there are. “The importance of this source of raw materials is as big as the environmental risk it constitutes on landfills and in technically inadequate recycling. Other materials cannot replace them. glass. Electronic scrap. All those are good reasons for the targeted use of end-of-life products. One of the challenges of Urban Mining is the extraction of reusable materials without causing further damage to the environment. or by more than 300 million PCs and laptops a year. The global recycling potential for cell phones only is more than 80. most metals can be used again. But multiplied by 1. And thanks to modern recycling facilities.30 Industry Journal | 02 | 2011 | Markets European recycling rates Electrical junk is utilized in a lot of different ways across Europe. and others. divisional director Business Development of Umicore Precious Metals Refining. and cobalt in Central Africa – increase the risk of supply bottlenecks as well as price leaps. basic. In regard to recyclable materials.” 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.3 billion cell phones sold worldwide. because the specific characteristics of so-called technological metals are irreplaceable in the production of many appliances – from consumer electronics to production facilities. The de facto reuse is less than 2. is a complex mixture of precious. for instance. the business is futureproof. “And end-of-life products are a huge storage facility that has to be used.” explains Christian Hagelüken. In most cases. The considerable dependency on import. plastics.

“The energy demand for the recovery of precious metals through modern recycling is just a fraction of the amount required for mining. the stopping of sinister exports.07. Metal recovery of 95 percent At Umicore’s metal works near Antwerp the utilization of these end-of-life-materials can be seen. And the extraction of one ton of gold from a conventional mine causes 1.2011 found in complex components. “This kind of recycling does not only bring valuable raw materials back into the cycle.” says Hagelüken. in US dollars) 1. which integrates the complete registration of old devices. The world’s 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. And no wonder – one ton of rock contains only five grams of gold. This is as much as the weight of 45. Katherina Reiche. it should be on eco-friendly extraction of trace elements and on improving the reclamation of value. The German Federal Secretary for the Environment.2001 02. Printed circuit boards are 40 times as profitable. catalysts. up to 1. the collection rate is meant to rise from today’s 30 to 65 percent within eight years. there are 60 – that is half the periodic table. the Ministers of the Environment of the 27 EU states agreed on more stringent conditions for the disposal of electrical scrap.2006 03. The path leads away from conventional scrap business towards hightech recycling.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. considers this to be a significant contribution to securing raw materials for Europe: “We want to . mostly in mining and processing. It is also a significant contribution to climate protection. Calculated for the entire recycled material this means an annual yield of 70. and lithium-ion batteries. Less than a quarter of the potential yield of precious metals is recovered in those plants. computer circuit boards are a veritable bonanza. “The goal has to be the focus on quality and economic relevance of raw materials. “Compared to the ore content of the primary deposits.000 tons of mainly secondary materials.” Hagelüken says.000 mid-range cars.01.200 1.100 1. This has been recognized by politics as well: last March. It is high time for a fundamental change: “This is about responsible management of resources. High-tech is in demand Hagelüken 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.300 1.” 14 tons of electrical scrap yield approximately one ton of copper. And the process is becoming increasingly complex: IThardware of the 1980s contained about eleven different valuable elements.” Recycling is a business with high economical. Accordingly. 600 500 400 300 200 Gold Silver Palladium 100 0 13.000 tons of metal from 300.700 tons of CO2 emissions. ecological.000 tons of rock have to be moved. yielding an average 200 grams of gold per ton. today.” says Umicore’s expert Hagelüken. To mine that much.01.Industry Journal | 02 | 2011 | Markets 27 03 31 Explosion of raw material prices (Price index 2001–2011. and a global cycle economy. and social relevance.

other materials that can be used as secondary raw materials were extracted with post-shredder technologies. “The law stipulates the neutralization of pyrotechnical components such as airbags and pretensioners. . Firstly. BMW has the world’s leading concept Next to electrical appliances. bumpers.” From 2015 onwards. the legal requirements for the recycling of vehicles include a utilization rate of 95 percent. cars are one of the most important sources for secondary raw materials. the pure draining of working materials such as oils and fuels. as well as the reduction of concentration of harmful substances. the vehicles were pre-treated in the RDZ.” EU Commissioner of the Environment. “In the test we were able to demonstrate that we can conform to the 95 percent recycling quota stipulated by law. With that in mind.” says the delighted RDZ boss. director of the BMW Group’s RDZ. the focus was on environmentally friendly disposal when treating old vehicles. 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.32 Industry Journal | 02 | 2011 | Markets make sure that materials are reused once they have entered the cycle. They wanted to prove what modern recycling concepts are capable of. the rest of the vehicle body was pressed and shredded.” In the next step. “We develop important approaches for dismantling and draining technologies as well as recycling concepts for the vehicles of the future. adds: “It is important that we view electrical scrap as a valuable resource. 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. “Originally.” And indeed: Losses through non-recycled metals amounts to nearly four billion Euros a year in Europe. 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. the RDZ’s experts initiated a large-scale test with about 500 vehicles three years ago. Since the beginning of the 90s. Afterwards. “In the test we dismantled all components for which there is a demand on the market – such as alloy wheel rims.” Steffen Aumann. Janez Potocnik. The return of materials into the cycle is a new aspect. explains. and headlights. The certified specialist business for disposal is regarded as one of the world’s leading companies in this sector.” Aumann explains.

steel. like electrical scrap. separation technology. Plastics can be sold to companies specializing in their recycling. Bavaria. From single machines to turnkey plants. Industry Journal talked with Peter Heßler. How profitable is recycling? As opposed to other fields of business. and copper contained in refrigerators can be reused.000 kilometers by car. But this does not mean that the matter is not relevant any more.000 kilograms of CO2. Our customers are public and private waste disposal companies with an annual throughput of at least 100. An UNTHA recycling plant from Terra Nova . Today. dedusting sound insulation.000 kilograms are emitted per appliance. this topic ranks significantly behind CO2 in public discussions. The importance of professional disposal becomes apparent through an example: When a car drives 10. A technologically advanced and efficiently designed plant ensures that the recycling is at least a zero-sum game. 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. the degased polyurethane foam is taken away for free by cement plants to be used as substitute fuel. 6. gigantic amounts of them are still out there. So it is a growth market? In countries like the USA or China the demand for these plants will surely grow. But there is still only one plant for sustainably recycling refrigerator or freezer appliances – which was developed by us. For the large refrigerators popular in the USA.) is headquartered in Karlstadt.Industry Journal | 02 | 2011 | Markets 33 “The demand in the USA and China is on the rise” UNTHA Recyclingtechnik GmbH (UNTHA recycling technologies Ltd. Even though products containing CFC have been banned from European markets since 1995. What is the situation in other countries? In North and South America those appliances are still produced. A profitable plant that meets these requirements is virtually the top class of recycling technology. The recycling of only one conventional refrigerator can compensate for this amount. 70 percent of all refrigerator and freezer appliances arriving at the disposers still contain CFC. managing director of UNTHA. In our plant they are recorded for external environment-friendly disposal or destroyed immediately. But the disposal and destruction of CFC means expenses for the disposing business in any case. and an international supplier of recycling plants specializing in shredding technology. and many other features. In those plants – like in most automated recycling plants – Siemens components such as the vibration resistant and maintenance-free controller Simatic S7 are employed. Specialties are recycling plants for electrical household devices and electrical junk as well as plants for disposing and recycling old refrigerator and freezer appliances.000 kilometers. 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. which was a hot topic 20 years ago but is next to not discussed today? CFC is a forgotten enemy of the climate. The aluminum. UNTHA manufactures solutions comprising hoisting devices.000 cooling appliances. the recycling of refrigerators and freezers will never be profitable. it emits about 2. The Montreal protocol of 1987 was initiated because of the CFC problem. which correspond to 30. What is the part of CFC.

a reformed economy and society. attractive. . Experts expect Brazil to be among the top five of the world’s largest economies in less than two decades. The partly undiscovered jewel is the B in BRIC – Brazil. high domestic demand.34 Industry Journal | 02 | 2011 | Markets Brazil – booming. and ambitious employees make South America’s largest country an interesting market. a central position in Latin America. an upcoming middle class. Vast natural resources. 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.

Its percentage has risen from 35 to 51 since 2006. large parts of the population have climbed into the middle class. At the moment. We normally calculate an hour. He still has a lot to do: visit more companies. the gap is closing between it and the world’s richest countries. samba. This is a gigantic economic factor. talk to government representatives. The Asian boom speeds up the growth of the Latin American territorial state. With breathtaking speed. It is a crucial stage. Sugarloaf Mountain and Amazon. and establish contact to Brazilian entrepreneurs. So is everybody doing business with them after a short time. The company Petrobras has discovered huge deposits of crude oil off the Brazilian coast. Haddad laughs as he makes his apologies: “That’s nothing. Copacabana? Brazil is more – a lot more – than the stereotype says. Thanks to the welfare programs of ex-President Luiz Inácio Lula da Silva . He arrived in Brazil only this morning. Experts estimate that this could catapult the country into the top five of the world’s crude-oil exporters.5 percent in 2010. represent a potentially gigantic market. a lot of contracts are nearing completion. In the last 30 years. “Planning is different round here. the economy of South America’s largest country is among the most dynamic of the world. coffee. as well as already being the world’s largest exporter of iron. considering the explosion of the global population that is leading to an increased demand for food.” The Brazilians are more easy-going in that matter. oil and gems. Extremely rich in natural resources Basis for the advance are a bunch of treasures: It is the world’s fifth-largest country and almost its entire territory can be used for agriculture. He still is a little out of breath when he arrives a quarter of an hour late for the meeting. 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. It has a lot of natural reserves such as natural gas.” Haddad sinks onto his chair and takes a sip of strong coffee. go to trade fairs. sometimes more. a lot of them young and consumptionoriented. It listed an increase of 7. The income rises in all income groups. soccer. The global economic crisis seems to have left Brazil without a mark. The country will soon be the most important food producer of the world. as does the domestic one: 200 million people.Industry Journal | 02 | 2011 | Markets 35 Rafael Haddad has just struggled through São Paulo’s traffic jam again. The demand explodes. “At the moment.” Euphoric mood in Latin America’s booming country: Brazil.

Directly behind the USA. India. CEO of the Brazil Board of the Association of German Industry. infrastructure.36 Industry Journal | 02 | 2011 | Markets The statue of Christ – the landmark of Rio de Janeiro. flats and sports facilities are being built everywhere. Especially Next to no sector is exempt from the boom. The soccer world championship 2014 and the 2016 Olympics – Brazil has to be prepared by then. According to a prognosis by Goldman Sachs. Japan and Russia. “because we are very strong and innovative in those key industries. better food and prettier flats. China. It is a crucial stage. ethanol and nuclear power. The Brazilians cannot afford potholes and power failures any more. chemicals. The world’s seventh-largest economy because the entire world will be looking at it very soon. Together with the private sector. dykes. electronics or security – “the business opportunities for German companies are extraordinary. subways. This means unprecedented growth for the internal market. Rafael Haddad. Refineries. furnishings. Roads. engineering. cars. Spain and France. automotive. which are mostly exported. Energy demand is rising as well. Germany.” says BDI expert Haddad. airports. the country will be number three or four in 2035 at the latest. And so the country is being turned into a gigantic construction site. Whether it is energy.and waterpower. the government wants to spend a thousand billion US dollars by 2014. China. 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. A gigantic playground for investors. It is no surprise that Brazil holds the seventh position in the global ranking of economies. which made a . ports. Brazil counts on wind. “Christo Redentor” spreads his arms protectively over the city on the Corcovado mountain. Next to natural gas and oil. The growth dynamics go hand in hand with an investment boom.” The German economy has observed the development for some time – as opposed to countries such as the USA. TVs. computers. A growing class of consumers has emerged that has a lot of catching up to do: refrigerators. offshore oil-production plants and wind farms are on the project developers’ and construction companies’ lists as well. this holds true for low-wage families as well. mostly for infrastructural developments.

The “Berliners” ventured to South America 20 years ago and have a production site in São Paulo. “As a niche supplier.” Erich Starke. consisting of Argentina. Head of the Duisburger Hafen AG (Port of Duisburg plc. for instance. The company cushioned the terraces of São Paulo’s gigantic Morumbi stadium. Often they are niche suppliers like GERB Schwingungsisolierungen (vibration insulations) from Berlin. “We want to be a pioneer for the national industry when it comes to the placing of orders later on.200 German companies are already in the country. Great names are represented – from Siemens to Daimler and Volkswagen and all the way to Bosch. some of them since many years. the basic material for nappies. Uruguay. turbines. and the adjoining hinterland. Bridgehead to the free-trade area Mercosur 1. According to the BDI. the German-Brazilian chamber of commerce expects some 60 economic delegations in São Paulo.8 billion Euros in fiscal year 2010 (This is an increase of over 32 % compared to 2009). Chemical giant BASF plans a production site for acrylic acid.000 cars. Brazil is the bridgehead to the Latin American free-trade area Mercosur. They make up 90 percent of the local businesses. Paraguay. Attractive market for niche suppliers The economic miracle attracts medium-sized companies from Germany as well. says. Latin America’s largest port. houses. Business and private people can feel at home in this county. and wants to invest hundreds of millions of Euros in northeastern Brazil. Car manufacturer BMW doubled their sales in 2010 and sold 18. we have to be close to our customers and markets. the port of Duisburg signed a bulk order for the design of a logistics concept for the development of Santos.Industry Journal | 02 | 2011 | Markets 37 decided push in the last three years. which has been one of the most important companies in Brazil for many a day. For many of them. Recently. Venezuela and Chile. Western lifestyle meets Latin American ease – and a remarkable economic growth in many sectors. “But where are the Germans?” President Lula asked during a state visit to Berlin at the end of 2009. This year. The company invests heavily in infrastructure. such as heavy machinery.) says. The Germans reacted and established the BDI’s Brazil Board in order to strengthen the economic relations between Germany and Brazil. track systems and bridges. Managing Director of GERB in Berlin.” Christoph von Waldow. . automation and energy as well as developing their medical sector. GERB specializes in everything that has to be insulated and elastically embedded. Siemens. the German share in the creation of value in industrial production has already reached ten percent. has most recently made a turnover of some 1.

“The Brazilians themselves were skeptical not so long ago. Today. “But the great quality of training at the Brazilian universities is a huge advantage. Removal of a slab in the Brazilian steelworks ThyssenKrupp CSA. In 2010. As early as 1867. The Brazilians are full of vigor.1 billion Euros. “With President Lula’s assumption of office in 2003. Rösler: “This is an incentive for Brazilian specialists.800 people in Brazil and is the country’s largest electric company. Siemens employs more than 10. And that strong domestic economic activity has significantly reduced the dependence on the global economy. But the scars of the past still smart. Brazil expert of the trade association Lateinamerikaverein (Latin America Association) in Hamburg. Especially among the career-oriented younger people. That the country has become more stable and reliable.” Education. he is always impressed by the South Americans’ dynamics and will to advance. . It is complemented by one or two years of experience at different stations in the parent company. especially at specialist companies such as GERB. political instability and their economical consequences. as well as the social security and good wages that German companies in Brazil can offer. a turnover of 1.” says von Waldow.” The salaries on management level have almost reached the European level and factory workers are well paid. Too long they have suffered from the exchange rates’ rollercoaster rides. The desire for self-improvement is enormous. many Brazilians get additional training.8 billion Euros was implemented with Brazilian customers and orders were secured for 2. which they recruit from the country’s universities. The shown casting machine was supplied by Siemens VAI. Brazil does not have its own vocational training system. Training on the job has proven to be a success. 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. Highly qualified specialists from Brazil The formulas for success of foreign companies in Brazil resemble each other in many aspects. from periods of hyperinflation. Unlike many other countries.” Rösler remembers.38 Industry Journal | 02 | 2011 | Markets Siemens in Brazil Siemens was one of the first European companies to venture towards Brazil. companies from the Western countries with a systematic in-house training system are favored. Nevertheless: A lot of established businesses watch the current euphoria skeptically. That the economical development has largely been severed from changes in the political mood. They know that a lot has changed fundamentally. The search for specialists is not made easier by the current boom. When Peter Rösler. Siemens built the country’s first telegraph line between Rio de Janeiro and Rio Grande do Sul. travels the country. his program of reform and the opening to the world came a strong change of mood. Most companies prefer to employ native employees. for example: Even after a long working day. Somebody trying to find cheap labor in a Brazilian metropolis will hardly succeed.

A project with a volume of some 20 million Euros is currently being implemented in the steel plant of ArcelorMittal in Jõao Monlevade in the federal district Minas Gerais. Siemens is successful in the steel industry as well. One of the most impressive success stories of Siemens is the implementation of automation systems on 13 oil platforms in 2010. Siemens technologies for process-gas use. Petrobras produces some 300.” says Carlos Tadeu da Costa Fraga. On an island off Rio de Janeiro. Together. By 2016. “For this. Petrobras is the world’s fifth-largest oil company. alarm and emergency shutdown. The orders have a value of 600 million US dollars. and all the way to healthcare technology.Industry Journal | 02 | 2011 | Markets 39 All business sectors of the company are represented in the country: from industrial plants to building and lighting technologies. 160 kilometers off the Brazilian coast lie the Barracuda and Caratinga oil fields. sometimes from a depth of more than 1.100 meters. . 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. from public infrastructure to power supply. Siemens is building its own research and development center in the Parque Technologico – close to Petrobras’ research center. Petrobras will have tripled its daily production volume by 2020.2 billion barrels. we need partners that can cope with such gigantic volumes – partners like Siemens. 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. head of the Petrobras research center. In addition to this. According to their own estimates. Siemens counts among the best employers of the country: the Brazilian magazine “Gestão 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. Siemens systems provide half of Brazil’s power. Siemens will have built two new plants for the country’s oil and gas industry and one for medical appliances. The company is one of Siemens’ most important customers in Brazil. as well as communication support the production. they contain an estimated 1.000 barrels a day from them.

for instance. where facts and arguments are presented in a more friendly manner in most cases.5% 2. because Brazil works differently than Europe. the market with its ever-new requirements. as well as taking off your watch. new terms of tender and new projects. Newcomers do well to establish a network very quickly. And always have some 50 Euros in cash with you to be able to buy your way out of robberies. tin . Not even a different attitude towards punctuality and commitment can change this.5% 4. Or follow the natives’ example and throw on jeans and T-shirt in the evening. He advises finding a Brazilian partner who is familiar with the authorities. High bureaucratic effort A further specific obstacle of the country is the inefficient bureaucracy: complicated approval procedures. for example. Partnerships are very important.700 billion US dollars 5.000 Germans or people with German ancestry live in São Paulo alone. But nevertheless: at the end of the day this is tough business and one should know the rules of it. Take a taxi to business dinners. They include a less direct style of negotiation than in Western countries. preferably over a good meal. too. tax and customs regulations.” Nevertheless: Brazil is a good portal into the emerging countries for Western companies. diamonds. “All this is very complex. More than 500. First talk about the plot. especially in the urban centers. people are very warm-hearted. for example. Small talk about family. oil. Businesspeople quickly learn the unwritten rules. “You made a mistake here: The figures are not correct this way.” Sentences like that – unthinkable in Brazil.5% 6. can take almost two hours.” Rösler knows. You feel at home quickly. “Brazilians are used to directing their attention at many aspects simultaneously. one way or the other: Do not take a stroll on the beaches of Rio in a business outfit. natural gas.” Brazil expert Rösler says.6% iron ore.40 Industry Journal | 02 | 2011 | Markets High crime rates remain a specific regional problem. and the country. German companies. soccer. then about the building and machines and finally about sales? “A Brazilian may start with sales and turn to production afterwards.” BDI expert Haddad says. profit from the strong German community. The cultures and languages are closer than the ones of India and China. They make up five percent of the population. “Cultural differences are easy to underestimate. for example. 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.

or capacitors – nothing works without rare metals such as gallium. There could be more deposits of rare earths under the sea as on dry land. or tantalum. Germanium.1 229 Global extraction of rare earths 2009 (in %) Brazil 0. Silver. catalysts. which make them indispensable for the manufacture of high-tech goods. South Africa: Platinum metals Rare earths under deep water According to the magazine “Nature Geoscience”. strong magnets. 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”). indium. Zinc Source: EU Raw Materials Supply Group 2010. neodymium. On the one hand in form of energy. Own research. Keys to technologies 17 important technology metals are subsumed under the term “rare earths”. Magnesium. Wolfram. Tantalum Rwanda: Tantalum Brazil: Niobium. and europium. on the other in form of increasingly scarce raw materials. touch screens. A lot of them have highly specific characteristics. Nickel. They are indispensable for the manufacture of several modern technologies.3 Source: US Geological Survey. 66 35 India 2. Neodymium. Wolfram Mexico: Fluorite India: Graphite Congo: Cobalt. Tantalum Australia: Manganese. Australia 5 India 3 FACTS & FIGURES . Beryllium. Indium. Around the world. Gallium. Rare Earths. 297 It could be a tight fit here Be it the manufacture of LEDs. Graphite. mobiles. There are next to no large deposits of rare earths around the world. 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. Fluorite.Industry Journal | 02 | 2011 | Markets 41 Raw materials The global economy is running at full steam and demands fuel. Increase in demand 2006–2030 (in %) 2 Investigated global reserves of rare earths 2010 (in %) China 37 CIS 19 USA 13 Source: EU Commission Source: US Geological Survey. 13 other raw materials are counted among the rare earths. They could be the ones profiting most from the global economic boom.5 China 97 Malaysia 0. Next to neodymium. lanthanum. the competition for these valuable raw materials has started and it is bound to increase. They are distributed on countless mineral deposits (predominantly in China) and mostly salvaged as a by-product of the extraction of other metals. 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. But suitable mining measures are lacking. This could change the structure of our world’s economy. The demand increases – and so 120 does the scarcity of raw materials. Canada: Cobalt Russia: Platinum metals USA: Beryllium Japan: Indium China: Antimony. gadolinium.

42 Industry Journal | 02 | 2011 | People To watch .

The British billionaire Sir Richard Branson founded the organization that fights for the drastic reduction of CO2 emissions all over the world. . and Brazilian cows.S. who was born in India. talks with Industry Journal about financing models for green technologies. foundation Carbon War Room. Shah. the failure of the market economy.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.

we try and answer this question in order to remove the reasons afterwards. But contrary to a military conflict. this is not always true. But unfortunately. Savings become apparent noticeably later – this process goes against intuition.44 Industry Journal | 02 | 2011 | People To watch Jigar Shah (36). 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. 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 today’s global CO2 emissions could already be saved cost-efficiently and with existing technologies. We bring together various experts as well – to deal with global warming. All of them worked together to develop a strong military strategy. 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. Is it not quite often just a simple lack of money? That’s right. if potential customers can afford them. But suppliers want payment for their technologies. But for many green projects one has to put down a lot of cash up front. though. however. . let us talk about climate protection – even if your organization’s name implicates less peaceful topics. entrepreneurs. more people die in natural disasters than in wars. And the economic crisis has made financing very difficult. They do not know. Today. we of Carbon War Room focus on positive and constructive ways of solving this problem. Shah. Winston Churchill coined the term “War Room. One would think that the market will always choose the most cost-efficient option. 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. and bankers during World War II. Does the market economy fail where CO2 emissions are concerned? In several cases. You say that the use of energy-efficient technologies is already feasible today. Mr. All of us love low initial costs. The devastating earthquake in Japan is only one piece of a huge pattern. I really am of this opinion. Why is it not happening? At the moment. People notice that things like that are becoming increasingly frequent and threatening. former solar entrepreneur and CEO of Carbon War Room in his office in Washington DC.” It was here he assembled military strategists as well as scientists.

for example. do not come to fruition. In that time span. modern financing models are already in existence. the market economy had failed – a non-profit organization such as the Carbon War Room was required to make a difference. The person Jigar Shah (36) is CEO of the Carbon War Room. In addition to that. for instance. what can be done in those cases. which increases the difficulty of financing. At the moment we are concerning ourselves with the energy efficiency of office buildings.000 ships worldwide. namely in profitably employing green technologies? Take UPS. Therefore. The owners of buildings are just not prepared to pay for refurbishments. With 60. It became the largest of its kind in the USA. Unfortunately. Are there other examples of success? We are only two years old. an off-balance-sheet transaction would be required. one successfully implemented initiative is really good. we introduced an efficiency ranking for ships that made their consumption transparent for customers. a huge investment would be necessary. For a conventional loan financing following the usual calculation to be feasible. who could not distinguish between efficient and less efficient ships until then. the engineer sold his business for 200 million US dollars. which cannot be shown in balance sheets in a standardized way. UPS is not an expert for this kind of project financing. It is similar to the efficiency categorization of fridges. The crux of our work is the creative financing of projects. But in reality. . In that case. It is responsible for three percent of the global CO2 emissions. for example. because they were able to pass on 70 percent of fuel costs to their customers. we integrated large consulting companies such as McKinsey.000 billion US dollars. Why should you succeed where even Fortune-500 businesses with large financial departments seem to fail. This transparency will lead to the assertion of efficient ships. the savings did not amount to this. We are talking about a gigantic amount of investment – 1. But ship owners did not introduce these technologies. Therefore we analyze. where he founded the solar company Sun Edison in 2004. Many technologies that can lower the CO2 emissions of ships by 30 percent have already been developed in the 1970s and 1980s. In these cases we can give support with our expertise. We adapt them for the construction industry at the moment. The logistics company knows that it could fly more efficiently with autopilots in the cockpit.Industry Journal | 02 | 2011 | People To watch 45 This is the reason why some deals. To fit in the autopilots in spite of that. which are really interesting for both partners. Great technologies are already available for this sector as well. For cases like that. He was born in India and lives in the USA. The value of many buildings has decreased since the financial crisis. even though the modernization of buildings would make financial sense in the long run. the borrowing costs and amortization rates are paid back over many years through kerosene savings. savings of 30 percent are significant. The Carbon War Room does not want to be a Think Tank but rather a Do Tank. He has invested all his occupational energies in the Carbon War Room ever since. Two years ago. Cap Gemini. To fit this technology into all planes. the investment would have to lead to immediate savings of at least 15 percent of the amount invested. In this case. What has the Carbon War Room de facto achieved until now? Our first great successes are in the area of shipping. and Accenture into the process. He developed the business model of Sun Edison for a concept competition of Harvard Business School and won the first prize.

Now we want to give an incentive for cities to participate in a kind of competition to be the first to be truly green. and Mark Shuttleworth. many lucrative innovations in aviation. Chairman of the supervisory board is the former president of Puerto Rico.). a free operating system based on Linux. and pension funds. Michael Haas. You are interested in venture capital as well. Vancouver. This is the core idea of our philosophy: every approach to saving carbon dioxide has to be economically feasible. founder of the South African telecommunication company Econet Wireless. We bring together local banks. London.46 Industry Journal | 02 | 2011 | People To watch What do these models look like? It is pay-as-you-save financing that can be entered off-balance-sheet. founder of the Dutch Postcode Lottery. Vancouver hosted the Olympic Winter Games in February 2010 and they were the first to host CO2-neutral Olympics. . who is renowned for his sustainability policies around the world. Washington DC. The non-profit organization aims to reduce global CO2 emissions drastically. An overview of the Carbon War Room The Carbon War Room was founded in Washington DC in 2009. Models like this already exist and they achieve competitive returns for the financing banks. Is this mainly about renewable energies? No. The Carbon War Room identified 25 so-called “battles. founder of the Virgin group. and investors together to quickly implement green technologies. Boudewljn Poelman. Birmingham. Don’t such investment companies know best. What does it entail? We developed the Green Capital-Global Challenge from our conversations with the mayor of Vancouver. Strive Maslylwa. which future technologies will yield the highest returns? You would think so. Capital investors alongside Branson are. thanks to waterpower and green building standards. investment consultant Shelly Meyers of Palisades Management. Does nuclear power feature in your calculations for the possible CO2 reduction? No. On the other hand. attention goes where the best marketing is. rail traffic. “Communications and Logistics” deals with new media to better spread the knowledge gained. shipping. The work of the Carbon War Room consists of three military-sounding sectors: “Intelligence and Reconnaissance” collects information and backgrounds. who founded the Ubuntu Project. Toronto. the main focus is on the energy efficiency of commercial buildings. The Carbon War Room has a program for CO2 neutral cities. forestry. In the course of “Battle Operations” the organization considers itself an operative driver of innovation. Lithuanian entrepreneur Vladas Lasas (Skubios Sluntos Ltd. We assess data to find possible CO2 reductions in the dimension of a gigaton. We are still trying to find interested cities in Germany. As opposed to other forms of a new energy infrastructure. founder of the Orion Renewable Energy Group. Because according to scientific insights we need those volumes to remain below the global warming target of a maximum of two degrees Celsius. and industrial applications cannot be financed with them. the Kreditanstalt für Wiederaufbau (KfW development bank). New York City. wouldn’t you? In reality. One could say that venture capital follows the hype. too.” 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 tremendous changes we want to initiate cannot be asserted in any other way. Initiator of the Carbon War Room is the British billionaire Sir Richard Branson. What is the Carbon War Room’s general position as regards nuclear power? We do not select winners or losers as a general rule. These credits are repaid from energy savings. Gregor Robertson. the money of venture capitalists piles up in a few mainstream sectors such as wind and solar power. Copenhagen. even brand-new nuclear power stations are not cost-efficient in most countries. It has 20 employees and brings people like scientists. José María Figueres. If countries such as China manage to build a safe nuclear power station in a cost-efficient way. Until now. entrepreneurs. and Chicago are participating. for example. mayors.

One cow needs one hectare of grazing area. Each of them have their personal carbon footprint – nobody is perfect. Branson is founder and CEO of the airline Virgin Atlantic.carbonwarroom. customers buy solar power for a fixed price for a couple of years. though. At the moment. An admixture of 50 percent of fuel from renewable sources is held to be risk-free. The sector as such is flying relatively efficiently already. we are glad that a gigaton of CO2 has not been produced by other means of power generation. not a new technology. too. Sun Edison makes buying solar power easier.com) creates attention with its external presentation as well. If planes could land in continuous descent. It already is cost-efficient today. and founded a Formula 1 racing team 2009. For most OECD countries. Richard Branson. because it would be about a new generation of aviation control. about 15 percent of kerosene could be saved on each flight. nuclear power is not a cost-efficient way to reduce their CO2 emissions. which are more efficient. The next big step would have systemic consequences. supporting the Carbon War Room financially. But the manufacturers of those fuels cannot yet scale this. But cattle farming leads to a large amount of legal deforestation. I made a business out of solar energy as a service. we are trying to find out how we can help. How does this match your goals of CO2 reduction? Richard is one of our founding members. We want to make green technologies easier to use and to employ this principle in various sectors.Industry Journal | 02 | 2011 | People To watch 47 Inventive not dogmatic – the Carbon War Room (www. because every interruption of an approach costs a lot of fuel. We try and find ways to pay for the seed at the moment. Brazil is the largest beef supplier to China. Doubling the amount of cattle normally means doubling the required space as well. which means without waiting loops as well. Sun Edison finds investors and locations. How big is the potential of agriculture? One of our approaches concerns Brazilian cattle farming. But to implement it on all airports worldwide is a huge challenge. And this is my inspiration for the Carbon War Room. you come from the solar energy sector and sold your start-up Sun Edison for 200 million US dollars in 2009. founder of the Carbon War Room. wants to take a tourist into space soon. . Airlines have tested this principle successfully. Mr. How do you employ your entrepreneurial experiences for the Carbon War Room? Sun Edison was an innovative business model. Another topic is renewable fuel for planes. Shah. But there are new varieties of grass and cattle. How committed is the Carbon War Room in the aviation sector? That’s a difficult field. And we protect the rain forest. We should easily convince Brazilian farmers: They will make more profit if their cows grow faster and need less grazing area.

don’t squander Thousands of small and medium-sized enterprises in Germany literally pour their money down the drain – for avoidable energy costs. offers of financial support.48 Industry Journal | 02 | 2011 | Management Save. 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. . and service providers whose offers pay off in next to no time.

” Marx explains. sensors can contribute significantly to saving power. “The companies do not want to spend money on cleaning. this is hard to understand. “For some managers this is a high-priority topic. Even though saving energy would be comparatively easy here. more than 100 injection-molding machines produce plastics components for the automotive industry. In many cases. municipalities. to track energy flows. which advises some 1. Compressed air becomes hot and the excess heat can be used for 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. “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.” Marx says. prevents lights constantly burning in a storage facility that is rarely frequented. Simatic powerrate shows the measuring values and documents their progress. others care less about it – independent of the size of the company or its line of business. “This means that the compressor’s pressure is turned up until enough arrives at the end. Germany. “And due to missing reflectors. one central compressor is used. as well as cooling and cooling water systems. It is among the leading plastics processors for the automotive industry. and employees that are aware of these issues in lighting. Sometimes another one is added next to it – but the problem remains: the machines have to push the pressurized air through long pipes. for example.000 companies and deals with nearly 20. an up-to-date energy management system. which feeds a network of pipes that grows over the years. and administrative bodies annually.” Objectively.Industry Journal | 02 | 2011 | Management 49 When Gerd Marx visits businesses. The family business has an annual turnover of nearly 300 million Euros and more than 2.” Outdated fluorescent tubes in combination with inefficient ballast add their part to wasting power. the cross-sectional technologies prove to be energy drains time and again: a lot could be saved through modern technologies. He has worked for 17 years for the publicly financed organization. Schneider Plastics Works Ltd. too. . In particular. Because there are high savings potentials everywhere – in the smallest businesses as well as in companies with thousands of employees. inTec advised the medium-sized business to use Simatic powerrate for WinCC. to implement systems for the recording of energy data and for the creation of energy management structures.” Another big savings potential lies in the area of pressurized air. as early as possible. and heating. A system for heat recovery can help saving. A lot of energy is wasted in other areas. cooling. for example. such as pump systems and heat supply. and asked inTec Industry Automation Ltd from Erlangen. A decentralized distribution of the compressors would be better. in the Bavarian Kronach. “Next to modern illuminants. The power meters that were already installed were connected to the Programmable Logic Control (PLC) Simatic S7-300 to process the measuring values. But it does not stop here: with the help of the energy measurement system consumption peaks will be recognized. Energy experts esti- Economical injection-molding machines At Dr.000 individual requests from companies. A simple motion detector. an option for the process visualization system Simatic WinCC for the analysis and interpretation of energy consumption values. effective from 2013. 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.500 employees. pressurized air.” Nearly half the energy is lost in this way. and there are always leakages. And Marx has visited a lot of companies. so the plants are often dirty. and avoided through the equalization of the start-up processes.” Marx says. The management wanted to meet the DIN EN 16001 standard for energy efficiency. the light is not efficiently focused and directed to where it is needed. By now.

50 Industry Journal | 02 | 2011 | Management Energy management systems create transparency and reduce energy costs (above). Additionally.” Financing is an obstacle But even if there is the will to investment in energy efficiency measures. “Approaching a bank is unpopular. energy efficiency is unfortunately only a side issue for them in many cases – as opposed to big businesses. Medium-sized companies lag behind Therefore. they have been supported by the German energy agency (dena) in this matter. mate the savings potential in this area to be an average 30 percent. a lot of functions are customized for the CEO. Only a simple application is required. With the Sentron Powermanager software energy consumption and measurands can be analyzed (r. “Due to their multitude of tasks.de) addresses private consumers and businesses committed to the efficient use . From 2013 onwards.” Seefeldt says. this privilege will probably be connected to the condition that an energy management system according to the DIN 16001 standard is implemented.” Seefeldt knows. “SMEs do not like to use their own capital for processes which are not connected to their core business. 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. Award for energy efficiency measures Since 2005. the schemes often fail in practice due to financing issues. But are they really doing this? “Especially in small and medium-sized companies (SMEs) there are still a lot of obstacles. 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. a leading scientific consulting company for economy and governments.initiativeenergieeffizienz. Seefeldt researched the role and importance of energy efficiency in SMEs within a study.). in ventilation another 25 percent.” 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. It verifies the experiences of energy advisor Marx: “In SMEs. 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. Its “initiative for energy efficiency” (www. Last year. businesses would be well advised to rethink their energy management. too. which have staff positions for it.” reports Friedrich Seefeldt of Prognos AG. because entrepreneurs would rather use reserve funds for investments than to borrow.

Industry Journal | 02 | 2011 | Management 51 Efficient cooling systems Since some 80 years. but bestow the Energy Efficiency Award every year as well. On the other it is a large and costly energy consumer. Bürger’s most important goal was to lower the energy costs of the plant without impairing the process quality. Because there is an increasing number of energy service providers on the market that finance and even operate the entire energy system. Because according to prevailing stereotypes.” the expert Seefeldt says. as winners are lauded publicly. have to be replaced. 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. But in many cases the opposite can be proven easily: “A lot of measures already pay off after two to four years. such as a heating system.” Seefeldt argues. With the help of the sensors. This means that they can focus on what they do best and what is most important to them: their core business. Another bonus: Simatic powerrate for WinCC provides information regarding necessary maintenance of the machines. Only if entire energy supply systems. “We do not only provide information and support. on behalf of their customers – even the procurement of energy is included. the settings were changed – and the overall consumption reduced by over ten percent. reports. But SMEs do not even have to make these capitalintensive investments themselves anymore and thereby strain their balance.” Even more interesting for businesses is the PR aspect. In the production of the stuffed pasta. One of the biggest challenges remaining for energy advisers is to do away with old prejudices. it can take up to ten years until the investment pays off.5 million pieces a day. 12 consumption measuring devices of the Sentron PAC3200 type were installed. divisional director of dena. For power measurement. investments in energy efficiency cost more than they help save in a reasonable time. causing a high peak in consumption. or parts of it.” Steffen Joest. Bürger GmbH & Co. Another advantage: “The companies do not have to concern themselves with the complex topic of energy any more. They could be integrated into the existing communication structure of the company. Today. Because a significant increase in the power consumption of individual machines can be an indicator for mechanical wear or leakages. On the one hand it is necessary for ensuring a high product quality. .000 Euros altogether. Siemens solution partner Heitec AG recommended the use of Simatic powerrate for WinCC in order to achieve transparency. Accordingly. of power. “The winners receive a cash prize of 30. Apart from that. the experts realized that at the beginning of a shift a couple of cooling compressors started at the same time. KG produces Maultaschen in the Swabian Crailsheim. the company has 700 employees and produces some 1. optimized cooling technology is of central importance.

“We assess every measure according to savings potential and investment needed.” The detailed analysis that includes all energy media such as power. which is based on the communication protocol PROFINET.Data). the optimization is way more complicated. and first thoughts on how they can be met. or sectors. heat.52 Industry Journal | 02 | 2011 | Management Higher efficiency through integration Identify.” says Lang. “Most of them have only one electricity meter at the central point of infeed. evaluate. countries. “First of all. Siemens’ experts expand the analysis.” Lang says. we have to create awareness for this topic. First indications for energy-saving potentials result from it. too. “This is about the current state. information that is missing in most companies. In most cases the experts recommend the introduction of a technical energy management system. Transparency regarding the individual consumers as well as the flows of energy has to be obtained. takes: “The first stage can be concluded in one day in most cases. Siemens’ experts conduct a computer-assisted interview with their customers.” And the feasibility study can take a couple of months. 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 . such as frequency converters and soft starters that already provide energy data. It spans from components on the automation level. “How much power is used by the individual parts of the plant is unknown. The result is a value that shows the position of the company in comparison to other locations. and show the return on investment that can be expected. The new energy efficiency profile PROFIenergy.” Lang reports. because the sustainability of the energy efficiency measures can be controlled in the best way with it. For cases like this. a lot can be gained from switching off machines – on weekends as well as during breaks and disturbances. the energy management option powerrate. In the next step. we can start a targeted search for energy-saving measures. It spans from measures that can be implemented quickly and cost-effectively to the installation of a heat-recovery system. The company provides a comprehensive product range for enhanced energy efficiency. The result is a detailed implementation concept. Siemens offers project management and implementation. supports the selective shutdown of the plants. whereas the analysis by two experts can take five to ten days onsite plus additional work afterwards. Siemens has set up a special team focusing on energy optimization in the process industry. the savings targets. for example in the automotive industry. 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. 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. head of professional services energy management at Siemens. It deals with 22 topics in ten categories.” How elaborate the energy optimization really becomes depends on the individual case: in discrete production plants. from the first analysis to the end of the measures. In addition to consultancy. and all the way to the visualization (Simatic WinCC) and process control system Simatic PCS 7 as well as to the management level (B. for instance in the chemical industry.” To achieve this.” explains Engelbert Lang. to separate measuring devices (Sentron PAC). implement – this is how Siemens’ holistic approach can be summarized. 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. Even Lang cannot make a general statement on how long the entire process. which is efficient in the midand long-term. In continuous processes. too.

This emphasizes the importance of switching machines and equipment to sleep mode when they are not in use and of optimizing a factory’s energy consumption through production control – without affecting the production. Intelligent software.Industry Journal | 02 | 2011 | Management 53 The system consultants Electric power is bound to become considerably more expensive and may not always be available in unlimited quantities. and innovative storage technologies can make this work. . microgrids as part of energy management.

” reports Klasen. Germany. Germany. such as short waiting times on equipment or technical problems. better information about the usage of valuable energy is indispensable from an economic and ecological point of view.” says Klasen. it is hardly known what parts of the plant consume how much energy. “During our long-term investigations. . equipped with measuring equipment for power consumption and for the analysis of production control data.54 Industry Journal | 02 | 2011 | Management Potential energy savings with PROFIenergy Load profile (kWh values. machines. This is why Professor Frithjof Klasen from the Institute for Automation & Industrial IT (AIT) of the University of Applied Sciences of Cologne. 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. and no less than 17 kilowatts during idle periods – this means 50 percent for doing nothing. 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. presses.” This combination of a long measuring period and short measuring intervals provided the experts from Cologne with detailed insights of the energy flows. Energy savings of up to 80 percent with PROFIenergy. 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. and compressors over time can increase the efficiency of plants. showed up in plants of Daimler in Sindelfingen and Volkswagen Nutzfahrzeuge (Volkswagen utility vehicles). “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). 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. AIT staff. and the associated electrical loads is largely unknown. and we captured all values once per second. saving costs and reducing the CO2 footprint. This is more than an embarrassing knowledge gap: only they who know the energy consumption of pumps. Unbelievable but true: Even in modern industrial plants and factories. 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. wants to make the industrial power consumption more transparent: On behalf of the PROFIBUS usersʼ organization (PNO). in Hanover. while others occur in an unpredictable manner. he examined the power consumption of machines in the automotive industry – in October of last year. we took measurements at different levels – from the main feed to the plants to individual consumers. Therefore. “Each measuring cycle took seven days.

every notebook PC today has a standby mode that helps increase battery life. And why are idle plants not simply switched off in order to conserve expensive electric power during the breaks? After all. These are smaller versions of the intelligent power grids of the future (Smart Grids). the new standard saves about 70 percent of the energy during standstills and can thus reduce the overall power consumption by about onethird. so that the equipment can be switched off and on without a problem. “There are often problems during restart. 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. “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. The first machines with PROFIenergy have been available since 2010. “In a factory. annual savings of about 7.” And for good reason: According to the measurements of the efficiency experts from Cologne. . And it is the manufacturer that programs the standby software.Industry Journal | 02 | 2011 | Management 55 while longer standstills of at least 30 minutes accounted for about 25 percent. and electrical consumers interact. “In a typical production line. for example.” While some companies have already implemented isolated solutions to be able to switch their machines to standby during standstills.” calculates Klasen. and equipment from different manu- facturers can be interconnected easily and without major extra costs thanks to the common standard. 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. “Switching off via the main circuit-breaker is still state of the art. this can be very complex because the interaction of numerous components must be taken into consideration.000 Euros can be achieved. This eliminates the need for expensive isolated solutions. PROFIenergy helps energy savings For this reason. 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. 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. so that the operators prefer to keep the machines running even during idle periods.” Another reason is that many of today’s industrial plants are not even designed for this kind of standby operation.” according to Klasen. some plants of the automotive industry still require half the energy used for normal operation at standstill. 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.” From Smart Grid to microgrid The individual switch-off of machines and components is a major prerequisite to turn production plants into microgrids. A software program in the PROFIenergy components will then decide which components can be switched off or switched to an energy-saving mode. Shortly before the lunch break. the plant controller will send an instruction to all connected devices via the Profinet network (“30-minute lunch break!”). communication network. The result is “PROFIenergy” – an energy efficiency profile that builds on the popular Profinet communication protocol and in which plant control. Today. the energy costs can be reduced by a mid-range six-figure amount per year. “Since a great number of machines are involved in the manufacture of a vehicle.” says Klasen about the issue. this requires tailored software that is expensive and requires a high level of maintenance.

but in the future the companies will need to adjust their production to the availability of energy as well. only a few suitable sites exist. Other methods are still in the development state – such as pressurized air or hydrogen storage systems. This means that when. Director of Professional Services Energy Management in the Industry Sector of Siemens. Siemens will build a demonstra- Smart meters. it is possible to generate methane instead and feed it into the gas network. However. “After all. This presents a complex optimization challenge to the automation experts: on the one hand. or use the hydrogen as a fuel or basic material for the chemical energy. the yield from sources like wind and solar power varies widely. 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- . they can run the washing machine at night when the power demand is low. When the demand increases again. for example. By 2012. with the expansion of renewable energy. After all. a component of the Smart Grid. temporarily switch off the ventilation and air-conditioning. “In the future. and on the other hand there must be absolutely no negative effect on production. in other words when the wind is not blowing. companies will have to implement intelligent power management. 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. and the cost of building their own pumped-storage plant is simply prohibitive for companies. Here. 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.” predicts Engelbert Lang. where the company develops electrolyzers that produce hydrogen from electricity.56 Industry Journal | 02 | 2011 | Management Storage chambers for electric power They are an indispensable element of our future energy supply from the Smart Grid: power storage systems. This is already done today in some cases in order to avoid load peaks. Vice versa. “Today. 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). However. excess power is used to pump water from a lower into a higher basin. the wind is blowing particularly strongly and the wind farms deliver too much electricity. 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. 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. for example. the excess power is temporarily stored and fed back into the grid as required. the system can. For example. There is only one type of storage today that is available for large amounts: pumped-storage plants. while supply and demand must always be precisely balanced on the power grid. Basically. the plants are optimized for maximum productivity.” says Lang. driving a generator. energy costs need to be minimized.” Even parts of the production can go on a break if intermediate products from a warehouse are not available. The technology has been proven for many decades and has an efficiency of about 80 percent. this idea can also be adopted for production plants – and rising energy costs will make sure that this will be done. The latter is actively researched in Erlangen. a prerequisite for such scenarios is that automation technology and power supply will converge in the future. “Some savings measures are relatively simple – whenever the power is expensive. Alternatively. the water is allowed to flow downwards.

Martin Tackenberg from Siemens Corporate Technology.and downstream pretreatment processes like etching or cutting. A factor of ten and more is possible. for example.” says the expert. the costs are between 200 and 1. that will in turn send the “sleep” or “wake up” commands to machines and components.” says Dr. Is all this only a dream of the future? Not quite: in addition to the PROFIenergy energy saving standard.” Currently. In addition. products are already available that make energy flows transparent and enable effective power management. according to Tackenberg. the cost of this storage capacity should not exceed 100 Euros per kilowatt-hour. “These can be powered up in case of high demand. special intermediaries would remotely control these virtual power plants and supply the electricity to the power utilities. ecution System. This can already be used to optimize the contracts with the energy suppliers – the future of energy-efficient production has already begun.” With this model. Christian Urbanke.DATA power management system from Siemens provides a companywide overview of energy costs and permits direct integration with the enterprise software. MES) that knows the shift plans and break times and takes the interdependencies within the entire production line. “Powerrate” is an add-on for the Simatic automation system from Siemens. such as lithium ion or redox flow batteries. 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. depending on the battery type and load profile. It sends its commands to the individual plant controllers in the factory buildings. in which two liquid electrolytes in tanks are used to store the energy. and Environment of Siemens Corporate Technology. initiate independent up. at least in the case of difficult grid conditions. . and a first version of such an “Operations Manager” is already running in the lab.000 Euros per kilowatt-hour of storage capacity. Static grid operation has to become a flexible infrastructure enabling fast communication between producer and consumer.” Siemens is working intensively on the development of such software solutions. “The control system compares the current electricity offering with the production planning. 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. can. so that the companies will temporarily change from power consumers to power producers. “When the energy is available at a low price. “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. such as SAP R/3. head of Electronics.” explains Dr.” The B. Energy. more suitable for companies as intermediate storage are batteries (efficiency: greater than 90 percent). which determines the energy consumption of machines or entire parts of plants and permits “load management by switch-off. and fill certain warehouses with a stock of intermediate products. “However. However. Intelligent factory control will also include permanent communications with the power utility.Industry Journal | 02 | 2011 | Management 57 tion unit that fits in a container and is able to convert a maximum of 300 kilowatts of excess electric power into hydrogen.

faster repair instead – with uncertain outcome. Taking the risk paid off. The procurement of spare parts would have taken months. Therefore.58 Industry Journal | 02 | 2011 | Management What to do in case of fire It is a vision that frightens every entrepreneur: a fire paralyzes the entire business. the management made a hard decision and went for a highly complicated. For a Chinese steel manufacturer the nightmare became reality. .

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. This increases the complexity of repairs. A small task force arrives on the spot in a matter of hours.000 customers. providing professional products and services to over 4. maintenance. low-voltage cabinet manufacturer and automation engineering solution provider. SFAE is the professional Siemens automation and drives service center. What to do? An emergency plan does not exist – too extraordinary and unlikely the case that now occurred. Specialists from the steel manufacturer and drive experts of SFAE develop a plan for the repair in close cooperation. a fire breaks out in the control center of furnace No. A fast decision has to be made. in-house and field services. All of a sudden. best service” and set up 23 regional offices. The risk of having to order the spare parts after all and to lose several valuable weeks is even higher. SFAE has always held to the principle of “Customer first. It is a catastrophe for the company. This is dramatic in itself. Moreover. This is more than ambitious. there are not enough materials and spare parts available on-site for repair. examples. It was the first operating company that Siemens had invested in China's automation field and ranks among the 50 best businesses of China’s electrical industry (2010). A hazardous decision The responsible people long for blueprints. for example. The experts analyze the damages between mountains of charred cables and cabinets. It is vital to anticipate as many contingencies as possible and to include them in the concept. . (SFAE) is headquartered in Beijing. the company has a really big problem. 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. Because in the worst case. 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. But there has never been a comparable incident in the whole world. and experiences to help them make the right decision. spare parts business. SFAE receives an order to repair the plant within a single month. One would be back at the start. 2010.Industry Journal | 02 | 2011 | Management 59 Fire. But the fact that procuring replacements for the damaged and destroyed frequency converters will take four months is even worse. but a risk remains. The services of SFAE include. because in those four weeks not only the repairs have to be carried out. Its task: Find out if and how the damaged parts can be repaired in short time instead of waiting for months for replacements. Never before has a repair like this been carried out on so complex a scale. The management decides to take the risk – the financial losses of many months of production standstill would be too high. The risk of failure is high – from the technical as well as the financial point of view. not only considerable costs would be contracted in case of unsuccessful repair. but trial runs and approvals for frictionless normal operation as well. On May 8. After a few days it is definite: The repair could be feasible. benchmarks. Nobody would be envied for this task. and repairs. A crisis-management team is formed. Because nothing goes without the converters and the furnace has to be taken out of operation. Success through service Siemens Factory Automation Engineering Ltd. Each day of production loss costs the steelworker millions. Nearly 120 frequency converters are ablaze. 2 of a Chinese steel manufacturer – only one month after commissioning.

teams. the plant is working smoothly again. costs and contract details have to be negotiated in a fair process between equals. . plans are drawn weeks in advance for processes like this. demanding the permanent wearing of protective masks – six. cable by cable. employees cut several cables. not only electronics experts are required. This is not only about technology.600 parts were exchanged. In the damage area. the status of the project recorded. The fire in the control center of furnace No. it is cleaned. either reassembled or exchanged. they take care of tasks such as the disposal of destroyed parts and materials. Only authorized persons may enter the damage area from now on. In normal circumstances. the storage of materials and tools. 1. The multitude of employees. Following a structured and clear plan. This is only possible with a project team that works independently. This requires a lot of mutual trust. as well as the registration and procurement of spare parts. As it is nearly impossible to estimate the repair effort from the beginning. Good cooperation is vital Everybody involved realizes quickly that the form of cooperation determines the success of the venture. the team shuts off the damaged areas and mounts guards. ten hours at a time. nearly every piece has to be taken to parts with meticulous care. First of all. and the next day’s work prepared. The fire has left only the frame of some converters. but there is no time now.60 Industry Journal | 02 | 2011 | Management Between charred cables and cabinets a small task force from Siemens Service Factory Automation Engineering analyzes the damages. Undamaged units have to serve as models. Difficult conditions Work is extremely hard: the plant is full of dust and pollutants. especially in an emergency situation like this is. Subsequent meetings in the apartments last until the small hours: difficulties have to be discussed. but about money as well. There is no room for solo runs. one week ahead of schedule. In order to dispose of charred plant parts. To repair the 120 damaged or destroyed frequency converters. In only three weeks. Everybody works from morning until ten at night with only one short break for lunch. 2010. solutions developed. Everything has to be planned and coordinated carefully. Bit by bit. And finally there is success where many did not believe in it any more. eight. the division of working areas. and connected anew. On July 4. and competencies has to be coordinated quickly and efficiently. 120 frequency converters repaired – and losses of millions avoided. 2 has heavily damaged some 120 frequency converters. Responsibilities have to be assigned and a powerful as well as efficiently cooperating unit has to be formed.

9 FACTS & FIGURES . Liquid fuels 70.3 Japan –3.000 60.5 France –4.000 3.2 South Africa –10.” the study says.7 Indonesia –5.4 South Korea –13. this is the largest part.8 Italy –9. Siemens AG. industries with high power demand.7 China –17.9 Great Britain –6. Global power consumption 2030 Prices for fossil sources of energy explode Price trend 2004–2030 (nominal.0 Brazil –3.000 4.000 60.000 trillion BTUs (British Thermal Unit) of fuel in 2030. Transport and traffic. turnovers.3 Saudi Arabia –37.1 Source: Low Carbon Economy Index 2010. Sources: Siemens AG: EIA. its economical importance grows due to increasing power prices – especially for sectors with high power demand. 38 2004 2010 2020 2030 2004 2010 2020 2030 Oil (barrel) Coal (ton) Gas (BTU) Source: Hamburgisches WeltWirtschaftsinstitut. From 2000 to 2009.000 2004 Coal Power Renewable Energies Total 246.7 Germany –7.1 India –3.Industry Journal | 02 | 2011 | Management 61 Energy efficiency Energy efficiency accounts for 54 percent of the global climate protection measures. PricewaterhouseCoopers calculated how much the G20 states would have to cut compared to their economic performance.1 Canada –10.000 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. only Spain and Russia exceeded their targets. International Energy Annual 2006.6 Russia +1. Australia –8. “The world will now have to reduce its CO2 emissions by 3.000 42.000 43. 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. building technologies. At the same time. This is about 40 percent of the entire turnover.3 Mexico –17.8 percent each year to be able to meet the climate protection targets. According to estimates of the Deutsche Energieagentur (German Energy Agency). in %) 0 Spain +2.000 Natural gas 63. PricewaterhouseCoopers CO2 emissions have to be reduced to meet the global warming target of a maximum 2 °C by 2050. World Energy Projections plus 2009. and the energy industry are among the sectors obtaining highest Source: McKinsey & Co.9 EU –5.000 26.000 48.000 175.2 Turkey –3. Success factor energy efficiency Companies for which energy and energy efficiency are of strategic importance generated a global 36 trillion Euros in 2008.0 USA –6. engineering and plant construction. Demand increases by 28% by 2030 Consumption (in trillion BTU) The global industry alone will use 246.4 Argentina –4. information technology and IT services.

62 Industry Journal | 02 | 2011 | People to watch People to watch: Raymond Kurzweil A man’s dream If he did not hold 19 honorary doctorates. and was not frequently right with his apparently insane predictions – we would not take him seriously. did not bring spectacular inventions to market for decades. had not been honored as an inventor by President Clinton. About a world in which man and machine become one. And Kurzweil’s fame is on the rise. even ardent believers in progress took this for science fiction. For a long time. Ray Kurzweil’s current vision is about artificial intelligence. But the latest innovations support his theses that span from autopilot cars to learning computers and all the way to voice-operated industrial robots. .

just around the corner from Rockefeller Center. Life expectancy will increase rapidly. 15 years afterwards. I just missed by a few years sometimes. and artificial intelligence. seven for the cell phone.and nanotechnology seems to confirm a lot of his assumptions. He takes it for granted that progress is exponential and not linear. At the moment. A survey conducted by the renowned TIME magazine ranked him 31 among the world’s 100 most influential people. Today’s super-fast progress in bio. Kurzweil’s soft voice preaches radical thoughts. Three years later he was admitted to the National Inventors Hall of Fame. This will be the threshold of a new era – Singularity. Today. Later on he invented – amongst others – the flatbed scanner. According to Kurzweil. successful inventions Even if his vision of immortality sounds quite daring – the man undeniably is a genius of technology. and a nanotechnologist from California with his wife. to him. He holds 19 honorary doctorates and has friends with considerable resources in the financial and investment sector. A veritable triumph for the New York-born man: “I have never been really wrong. former President Bill Clinton awarded the National Medal of Technology. So it is hardly a miracle that the following of Kurzweil is constantly increasing. They will locate the signs of wear and repair them. Definitely. They can upload their brains on a hard drive. he made prognoses.” he confidently states. In 1965. he is pulling together and advancing the developments of sectors such as the decoding of genomes. “Ray. the information scientist has explained how our lives will be changed by artificial intelligence. The small man in front of him smiles and nods: is everything all right at home? Then he hurries to the stage. though. a reading device for blind people (first customer: Stevie Wonder). he wrote a computer program for classical music. they are real.” He is referring to Moore’s law. the highest US award for inventors. hardly anybody would take the theses seriously. As an inventor. If somebody other than Kurzweil predicted something of the like. salt-grain-small endoscopic cameras were inconceivable just a few years ago. two neat Wall Street bankers with briefcases. and three for social networks. Even in those days. he was wrong by only one single year (1997 instead of 1998). 50 years for the telephone. His marketing has constantly improved over the years. nanotechnology. Disposable. In 1999.Industry Journal | 02 | 2011 | People to watch 63 Raymond Kurzweil has made it. More than 50 percent of our body will be constituted from non-biological particles by then. The scientific community regards him as a global instance. “It took 400 years for the book to become a mass product. the founder of Intel. Daring theses. until humanity has reached immortality through merging with hyper-intelligent robots and people do not have to rely on their bodies anymore. we will reach Singularity: Human existence as we take it for granted today will not exist anymore. Maybe he really does remember. the 63-year-old had already achieved considerable reputation in the 1960s. New York. so his prediction. For more than 20 years. Brains on hard drives Standing on the stage of the Time & Life Building. Man will merge with computers and become immortal. There could hardly be more diversity: a colored man in a kaftan. such as in the 1980s the global linking of computers. He is surrounded by admirers at a reception in the Time & Life Building. when he was only 17 years old. man will turn into cyborg about the year 2030. Kurzweil is not surprised at all. Kurzweil is anything but a nutcase. do you remember me?” the latter asks shyly. people have started listening in earnest to his seemingly surreal theses. It implies that the number of transistors on a chip will double once every two years. They would be dis- missed as the science fiction fantasies of a seriously disturbed mind. which is named after Gordon Moore. . or get one implanted to raise their intellectual capabilities. and the electronic keyboard “Kurzweil 250”. In predicting when a chess computer would defeat a human champion. Tiniest robots will travel through our bodies in a couple of years. microstructure technology. Only recently.

Kurzweil is certainly not what one could call modest. A one-hour talk by the guru costs 50. which is said to be the Davos of utopists. The company Hanson Robotics. The system is not perfect yet – but it is already obvious that the robots will be better drivers than their human counterparts.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. This software is learning all the time and through this constantly improves its communication skills. too – as teachers. It throws together young enthusiasts and wellestablished masterminds such as Michael Gillam. Robots could soon reach a new level in interhuman affairs. it became a bestseller. the US magazine for intellectuals. the first of them could revolutionize our everyday life. Researchers in Israel are testing a chip that is meant to compensate the loss of brain functions of Parkinson’s patients. have 360-degree panorama vision. on the other hand. The first Toyota Prius prototypes are already cruising the highways around Silicon Valley on their test drives. voice-operated industrial computers (see box). Media reactions were cautions. for instance. Google. and most scientists did not acknowledge the theses. Director of the Microsoft Medical Media Lab. Kurzweil founded Singularity University. and do not get tired. The reactions are programmed. By now. One thing is certain: Even in the USA. kidneys. though. It hosts an annual “Singularity Summit”. Their colleagues in San Diego use a robot that looks like a small Martian for teaching simple vocabulary. the merging of man and machine is considered tough stuff. produces robots that look like humans. It is situated in the Research Center of NASA in Moffett Field. The course program spans from life-prolonging diets to genetic testing. Researchers of the renowned Carnegie Mellon University invented the “NeverEnding Language Learning” system. The era in which humans have had to learn the language of computers to operate them is nearing its end. humanoid robots teaching children. its courses are 40 times overbooked. IBM’s 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”. Scientists in North Carolina grow artificial bladders. The artificial teachers have one decisive advantage: they never get impatient. In partnership with the phy- . If the technology is used comprehensively. accidents will happen less frequently and street capacity will double. But reality seems to confirm Kurzweil’s predictions. “Kurzweil transformed Singularity from a speculation to a social movement. researchers use a machine called “Simon” for practicing simple movements of the body with autistic children. but the robots are constantly widening their scope through learning algorithms. They converse and can even show emotions. A university as an utopist’s Davos Another multiplier of Kurzweil’s ideas is the Singularity Institute for Artificial Intelligence in San Francisco. And just recently. a nation famous for its belief in technology.000 US dollars. When Kurzweil published his 650page work “The Singularity Is Near” in 2005. California. as the cars need less safety distance. the Fraunhofer Institut für Zuverlässigkeit und Mikrointegration (Fraunhofer institute for reliability and microintegration) in Berlin presented an endoscopic camera. This will drastically change and speed up many production processes as well. and muscles that could revolutionize transplantation medicine in a couple of years. and all the way to encountering robots. It is as small as a grain of salt and so inexpensive that it can be disposed of after a single use. Last year.” It is not only a movement– it is a business as well. is working on software that will automatically steer a car. At the University of Southern California in Los Angeles. According to “Wired”. Cars steered by machines. Only a couple of years from now. They react faster. Progress in medical technology is baffling as well. In 2008.

” says Kurzweil.” Huebner says. In 2001. Others. Berkeley. for example.” he says – although he does not really look as if he were 43. He says: “Progress is a part of our civilization. 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. the “Anti-Aging MultiPack” containing capsules of the allegedly life-prolonging substances resveratrol. and ubiquinol. Virtuality changes identities Ten years ago. Is that his way of coping with trauma? One thing is sure: Death is something the 63-year-old man finds hard to accept. An avatar called Ramona. The philosopher John Searle of University of California. Voice and movement came from the inventor himself – in real time. On his biological age at this point he does not comment. “In virtual reality.” is Kurzweil’s message. he created a three-dimensional virtual alter ego for himself. when –according to his prediction – Singularity begins. The headquarters of his company is a solid concrete building. had an avatar called Ramona as his alter ego. His goal is to become old enough to achieve endless life through technology. a concert pianist who died aged 58. phosphatidylcholine. He lives in one of Boston’s tranquil suburbs. To him. Considering this. however. Kurzweil.” Criticism of the scientific approach Somebody as radical. but slow down considerably: “Progress in this century will certainly not match the one of the hundred past. sician Terry Grossman he founded a company selling a broad range of expensive wellness products on a Website. At that time. He has been married for 35 years to the psychologist Sonya Kurzweil. It does complement and not replace us. are convinced that the speed of innovation will not increase. accuses Kurzweil of methodical weakness: he did not sufficiently substantiate his famous predictions. such as the physicist Jonathan Huebner. In 2045. rich. the „avatar“ was unknown to most people. Kurzweil himself takes a vast amount of vitamins and minerals every day. as Kurzweil believes. “My biological age is 20 years below my real one. the visionary will be 97 – in reality. or so he says – using DNA from the grave and his own stored memories.Industry Journal | 02 | 2011 | People to watch 65 Just like the private life of many intellectual eccentrics. They carry the promise of immortality – a dream as old as humankind. Kurzweil would like to revive him. . At the same time this takes away the fear of superior and hostile machines. Kurzweil’s is a model of stability. On the wall behind his desk is an oil painting of his father. his children Ethan and Amy studied at conservative Stanford University. One does not have to be a visionary to prophesy that the popularity of Kurzweil’s utopias will continue to increase. everybody can be whatever they want and even take on the role of their own partner. this was unbelievable. “Artificial Intelligence is nice. this is a taste of what will be possible in the Singular world: adopting various identities and the practically limitless living of fantasies. and famous always has critics that have to be taken seriously. There is.

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. By 20 percent. for example – just like f | glass from the eastern part of Germany. So it is an advantage for a company to produce more economically than the competition. automotive. Its production for the construction. . And it consumes a vast amount of energy. and solar industries is technologically challenging. 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.

24 hours a day. and sustainable glass manufacturers. it is boiling red-hot. . and a small technological miracle. It is the heart and soul of f | glass’ production plant. joined them a short time after that. f | glass has officially named it after the daughter.Industry Journal | 02 | 2011 | Innovation 67 They call him Maartje. Inside of Maartje. Maartje is the name of the daughter of one of f | glass’ partners. Maartje has been in action since about three years. In that year. It uses some 20 percent less energy than conventional glass furnaces. machines. energy-efficient. Thomas Belgardt. At a daily energy consumption of more than 100. Furnaces. But this furnace is something special. too. 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. 365 days a year. a small town in the eastern part of Germany. Herbert Köhler and Wolfgang Räbiger. who is responsible for processing. two experts with decades of experience in the glass industry. But Maartje is the name patron for the melting furnace of one of the world’s most innovative.000 cubic meters of natural gas – the equivalent of one million kilowatt hours or the consumption of a one-family house in 50 years –. for instance. industrial robots – such things do not normally get named. Order for a new. 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. this amounts to savings of several million Euros annually. The company produces flat glass in Osterweddingen. competitive plant To really get to know and appreciate Maartje. It began in 2007. one has to go back in time a little bit.

000 years – primarily molten quartz sand.000 degrees Celsius prevail inside of it. Storage. There are the slats for air intake in the outer wall next to the lehr. which are carted away with 50 trucks day after day to be delivered to customers around the world. which is produced with the so-called float method. Its basic materials are white glass sand. Because the glass is lighter than the metal. whereas tremendous 2. it floats over the tin and spreads out evenly. The storage alone is as large as ten football pitches. mixed with ingredients such as lime and metal oxides. from the construction to the automotive industry and all the way to the manufacturers of solar and photovoltaic plants. the customer-specific refining. and its output to a lesser extent.000 degrees Celsius. A challenging task in itself. quartz sand. automated. Because the entire production process breaks down if it fails only once. everything at f | glass revolves around those factors. The last steps of the process are the cutting and. maximum efficiency To meet their own demands. or both. depending on the customer’s order. Those materials are mixed in the batch house according to individual recipes – depending on the desired glass quality. But modern production methods for flat glass used for industrial purposes made with the float glass method are a technologically complex. A conveyor belt transports the mixture to the furnace where it melts at a temperature of 2. Humankind has the recipe for manufacturing glass since approximately 5. Energy efficiency and permanent operation Permanent operation and energy efficiency. who shares the position of managing director of f | glass with Räbiger today. such as a coating. and transport take place in the logistics center. and shards. Failsafe performance was decisive in the design of the furnace. One of the world’s largest and most efficient float glass plants came into being in Osterweddingen near Magdeburg – literally on the green field. too. It is more of an international object lesson for sustainable and energy-efficient glass production due to many innovative details. 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. The surface tension of both materials makes sure that extremely smooth glass surfaces are forming. The product characteristics of high-quality flat glass make it indispensable in many fields of business. Short construction time. The now viscous glass material is brought onto a layer of liquid tin in a continuous process. An ambitious goal through and through. The thickness varies between three and 12 millimeters. This would result in enormous financial losses. blowing devices remove the remaining foreign particles. The melting furnace plays an important part in this. the glass is carefully cooled down in the lehr.000 square meters. Its energy efficiency. too. 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. They are a part of the .” says Belgardt. was the center of the planning team’s attention from the word go. The daily production of float glass amounts to 700 tons. finally. commissioning. which is nearly 160 meters long. Goods of inferior quality are unknown here. dolomite. But the plant sets benchmarks with its short construction time. curing. its size. but the entire energy system of the production plant is designed for the utmost efficiency and sustainability. and energy consuming process (see box). 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.68 Industry Journal | 02 | 2011 | Innovation How float glass is made Float glass is a variety of flat glass. which is the highest that can be reached by technology. f | glass employs some 280 people and occupies premises of some 400. Afterwards. Not only the melting furnace. In the next step.

Industry Journal | 02 | 2011 | Innovation 69 Thomas Belgardt. In the so-called batch house. One of the first ones in the glass industry around the world. Thanks to the precise and secure processes. This means that we could cope with an outage of the external power supply. In this way. 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. there are three emergency power generators to supply the plant with power.” Wolfgang Räbiger says. Energy recovery by steam turbine The greatest influence on the plant’s sustainable operation has a steam turbine. f | glass can perform so-called campaign-changes within very short time. 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. which are stored under the ground. it increases the procedural safety. quality control. “The furnace is the heart of our plant. 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.). No matter if it is the delivery and mixing of raw materials. and exhaust fumes.). they contribute to tempering the air of the room without additional energy consumption. the process control system is of an uncompromisingly redundant design – similar to nearly every important part of the plant. We generate 60 percent of our power with it. The recipe has to be exact up to the per mille range. or the commissioning – the entire production and distribution process is automated at f | glass. which centrally controls and monitors all production processes. His company generates more than half of the power it requires in the innovative energy recovery plant (r. It works with electrostatic deposition in the electrostatic precipitator. energy values. too. the utilities are its blood circuit. This means that the company can easily meet the varying demands of its international customers comprehensively and without long waiting times. It uses the plant’s exhaust air to generate power. for instance. the melting process. 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. the raw materials are precisely measured and brought together. . building’s ventilation and open or close according to the outside temperature. Their most important tool is the process control system Simatic PCS 7 from Siemens. the processing and refining of the glass surfaces. A replacement module immediately takes over in case of a failure in the control system. managing director of f | glass (l. “The steam turbine does not only save energy.” At a last resort. And they need power. “The knowledge that all processes are secured so well lets me sleep soundly. is made by Siemens and the heart of a complex energy recovery system. production.” says Räbiger. The employees in the control center direct batch. This demands highest precision. To ensure a stable operation in every situation. 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.

for instance for the automation of very large production plants or integrated plants. • Expandability and modifiability – even online. The waste glass is automatically transferred into a large shard storage and fed back into the production circuit later on. • Control of configuration from all workstations. Thomas Belgardt and Wolfgang Räbiger feel optimally prepared for the future. • Controls over Ethernet with up to 10/100 Mbit/s and Profibus DP and PA for the communication on process level. With their partners – and especially intensive with Siemens –. Simatic PCS 7 is the director in the 160 meter long production plant and thus ensures process safety. Through this. they are working on new.” And another thing is sure. • Scalability – from the small single system. 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). Business is good. one thing is certain: “The material glass is just at the beginning of its evolution. • Redundant control and Profibus communication for highly available processes ensure interruption-free operation. • Functional modules and libraries that are customized to sector-specific demands facilitate the configuration. apart from a short and controlled output of waste glass.70 Industry Journal | 02 | 2011 | Innovation Simatic PCS 7 in the glass industry Simatic PCS 7 is the distributed process control system (Distributed Control System. its innovative finishing technologies. “We are proud of the furnace. too: Maartje will continue to play a part in all those considerations. even more energy efficient end environmentfriendly solutions. And we will be able to go on using it for a long time. Improvements are already in progress But the two visionaries are by no means satisfied. and a logistics concept that is designed for a fast flow of goods. to the distributed multi-user system with Client/Server-architecture. • Consistent visualization of all process data at all workstations. Attractive new customers. users can flexibly react to new demands in production facilities. Conventional furnaces have an average service life of twelve to 15 years. mainly from abroad.” according to Räbiger. With its cutting-edge and efficient production. DCS) from Siemens. . Outsiders do not notice much during a campaign change. for instance for a supply or intermittent plant. Maartje will surely work for 20 years. ensure that the entire production of a day is always sold out. Because for Räbiger. Simatic PCS 7 offers decisive advantages to glass manufacturers: • Time savings trough the use of a common engineering tool for the entire process.

When considering projects for climate protection from outside Europe as well. and higher innovative strength. The German Minister of the Environment. CO2 emissions in the European Union are meant to fall by 25 percent by 2050. This is at least an assumption of traditional economic models. Last March. If the EU’s ambitious climate agenda is good or bad news is a matter of debate among experts. Norbert Röttgen. and changing investor expectations as well.Industry Journal | 02 | 2011 | Innovation 71 Europe gets a green shock Restrictive guidelines for the protection of the environment issued by governments are rather unpopular with the economy. Or so EU politicians and internationally renowned scientists say. it is a decisive step for the growth opportunities and competitive position of Europe. the European Commission introduced their “Agenda for a low-carbon economy by 2050”. even the 30 percent mark could be reached. It will make the international process of climate protection more dynamic. It sounds too good to be true: Better protection of the environment leads to growth. the EU’s ambitious climate protection policy will speed up economic growth and create six million new jobs by 2020. Europe is giving the long-expected signal. According to it. learning effects. enhanced competitive ability. A new study by leading European scientists comes to a revolutionarily different conclusion. Previously. Moreover. When considering factors and side effects such as technological progress.” 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. because they lead to rising costs and lower international competitiveness. 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. welcomes the model: “Finally. They fear that the climate targets will only lead to a displacement of production and emissions to regions with lower climate .

At least this is what the latest study “A New Growth Path for Europe” commissioned by the Federal Ministry of the Environment shows. There could be six million new jobs. the total economic growth in the EU would rise by 0..4 3.5 5 3. CO2 reduction by .1 2. but an obstacle to the development of the European economy. The economic output would rise by 620 billion Euros.a. But neutrality and seriousness of this study are undisputable: It was conducted by a group of internationally renowned scientists from Oxford University..4 2. too..6 3.8 1..9 5.6 5.6 *Gross national income in % p.1 2.3 1..8 10.1 7 * Related to base year 1990.. . The opposite is true..6 percent by 2020 (green growth scenario) compared to the maintenance of the 20 percent mark (business as usual scenario).6 3. and the European Climate Forum. CO2 reduction by . related to base year 1990 Unemployment rate 2020 (in %)* at a … Country Germany France Great Britain Italy Netherlands Sweden Spain . National Technical University of Athens. with Carlo Jaeger of the Potsdam-Institute of climate research (PIK) responsible. Université Paris 1 Pantheón-Sorbonne. The so-called Carbon Leakage would not only be detrimental to the fight against global warming.7 2. CO2 reduction by 20% 1.6 30% 5. Source: European Climate Forum.3 2. CO2 reduction by 20% 8.3 3.0 2...0 30% 2.4 7. With a corresponding increase of the climate target.72 Industry Journal | 02 | 2011 | Innovation protection stipulations. 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.8 2.7 3. 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. 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 .1 4. Where studies like this are concerned.5 8.3 4. there are immediate suspicions that the result does not accidentally coincide with the interests of the commissioning party.

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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 (architect’s 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.

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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

Industry Journal | 02 | 2011 | Innovation 75

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 2007–2009 (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

Creation feedback communication GmbH Hendrik Leyendecker (CEO) Hannah Egelseer (project management) Mario Kienel (art direction) Geisseestrasse 63 90439 Nuremberg. efficiency. always up-to-date Keep your finger on the pulse of innovation. p. Jeanette Ohlerth (Siemens AG) Andreas Jung (das AMT GmbH & Co.: p. Be one of the first to learn about and profit from the latest developments for more productivity. Christine Mattauch. KG Andreas Jung (CEO) Tiessenkai 10 24159 Kiel. Germany www. 32. 58 © Jens Brosemann: pp. 48 Thinkstock: p. Technical details are subject to change. Andrea Wiedemann. p. Nele Husmann. and flexibility! Simply download the latest issue as a PDF file. 37. Germany www. p. 6/7 © LANXESS 2007–2011: p. 50 91052 Erlangen.com/industryjournal . p. Martin Wiedemann Editor Gerald Odoj Siemens AG Industry Sector Communications Erlangen. 29 right. 51 right © William George Wadman: p.feedback-communication. KG) Hendrik Leyendecker (feedback communication GmbH) Print Mediahaus Biering GmbH Freisinger Landstrasse 21 80939 Munich.de Concept Matias Ernst. Germany www. Germany journal.76 Industry Journal | 02 | 2011 Publication information Industry Journal Creating sustainable value through technological leadership Editorial staff das AMT Gesellschaft für individuelle Kommunikation mbH & Co. Jochen v.das-amt. 65 All other images: Copyright Siemens AG Published by Siemens AG Industry Sector Communications Werner-von-Siemens-Str. 63 © Courtesy of Kurzweil Technologies. Andreas Jung. Thomas Thiele. p. Anja Dilk.de Always well-informed.industry@siemens. Reproduction of this publication and use of its content are subject to prior consent.siemens. p. Mirjam Müller. 28. p. pp. Plüskow. or subscribe free to the printed magazine at www. All information provided in this document refers to general technical possibilities and characteristics that do not always apply as described in every individual case. 33 © Bürger GmbH: p. 2. Stefanie Heinrich. Germany Copyright © Siemens AG 2011 All rights reserved. 14 left © UNTHA Recyclingtechnik GmbH: p. 34/35. Inc. 29 left.com Contributors to this issue Christian Buck.biering. p. 62 © Fraunhofer-Gesellschaft: p. 53.net Photo credits Getty images: Cover.

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