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

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

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

06 Industry Journal | 02 | 2011 | Big Picture .

and can accommodate more than 2.000 measuring points are collected. group Carnival Corporation. and self-sufficient emergency shutdown system are integrated in it as well. Because they do not know how much effort. high-tech. She will be launched in the spring of 2013 and has many innovations and even more innovative technology in store for her future passengers. and innovation are needed for it. 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. and control functions on board. Two 12.5 MW electric motors from the Siship Drive MV production range for the diesel-electric drive system. .000 cabins. Also the ship automation system Siship Imac that is based on the Simatic PCS 7 control system and manages all monitoring. Much of this innovation comes from Siemens. Altogether. a subsidiary of the U.Industry Journal | 02 | 2011 | Big Picture 07 The Big Picture She is 252 meters long. Germany.000 passengers – the as yet unnamed new club ship of the Aida Cruises shipping company in Rostock. alarm. The ship belongs to the third generation of AIDA cruise ships. For Siemens and the Meyer Werft (Meyer shipyard) from Papenburg. The safety management system. for instance. data from some 13. which was named in 2007 (photo).S. The smoothly running luxury at sea is a matter of course for the passengers. Germany. air conditioning plan control. has 1. Among them is the AIDA diva.

The system calculates the optimal values for the drying process based on these parameters and adapts them to the process. 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. fuel consumption is very low. Additionally. It is projected to save 25 percent of fuel and emissions compared to today’s most efficient technologies. significant amounts of energy are saved. An inverter from Siemens provides the electric motor with energy from battery and generator. The monument features two huge fountains with a capacity of 2. Every minute.000 liters have to be pumped and 23. The technology is .000 filtered. Germany. 2011. As the combustion motor always runs evenly and on low power. Additionally. With sensors. The plane uses a serial hybrid electric motor as integrated power train. A Siemens electric motor drives the propeller. The world’s first hybrid plane with an electric motor meant to be used in large aircraft in the future. Rhein Papier GmbH in Hürth near Cologne. In a pilot project. 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. Energy-efficient paper production Producing steam in order to dry paper consumes a large amount of the energy required for paper production. located in Florida some 1. Sipaper APC Drysec calculates process variables that are not monitored. This is made possible by the controller-solution Simatic S7-300 with added features. A small Wankel engine with connected generator provides power.500 km away. Siemens has developed the world’s first plane with a serial hybrid electric motor.3 million liters of water each. This feature alone leads to savings in maintenance costs of up to 200. 120. such as humidity and temperature of the paper webs. This enables the localization of errors in the process at an early stage. The battery is recharged in cruising flight. The motor glider “DA36 E-Star” is still in the testing stage. In cooperation with partners. During start and climbing stage a battery system from EADS provides additional power. was able to lower their steam consumption for drying by more than three percent and to reduce energy costs and CO2 emissions accordingly.000 US dollars a year.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 stability of these protecting walls is meant to be closely monitored with sensors. the software learns under realistic circumstances to interpret the measurement data correctly.400 kilometers. Siemens was honored with this distinction in recognition of its contribution to a sustainable Chinese economy and society for the second time running. USA. 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. Software is able to predict dangerous situations based on these measurements in order to implement actions. Siemens experts are employing software originally meant for the monitoring of production plants. saving 30 megatons of CO2 emissions a year. Intuitive. Netherlands. They enable users to understand information better and to classify the meaning of data faster. and Roland Berger Strategy Consultants have awarded the “Best Company Award in Green Competitiveness 2011” to Siemens China. for instance. Here. They use research dykes. The HVDC connection enables a highly energy-efficient transmission of power. and heterogeneous collections of data into knowledge. In 2010. At the moment a two-year trial period is under way in Eemshaven. in 2005. visual presentation of product data from various sources can be presented in a customized format. 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. Financial Times.Industry Journal | 02 | 2011 | Spotlight 09 “Greenest” foreign company in China China Central Television (CCTV). distributed. which are destroyed in different ways. It connects the provinces of Yunnan and Guangdong over a distance of 1. HD-PLM has been developed to transfer large. In future. For this research project. for instance. which is now adapted to the characteristics of dykes. an experiment simulated water causing a tunnel in the dyke. Siemens commissioned the world’s highest-performing High Voltage Direct Current (HVDC) line. 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. Based on the flooding catastrophe in New Orleans.

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

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

These are images of production plants to be built. the demand for affordable vehicles will rise. engineering. there are billions of options of ordering due to the many equipment variations for one car. energy as well as cost efficiency. A lot of the local manufacturers do not only look at the regional markets any more. As the average purchasing power in those countries is considerably below the one in Western industrial nations.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. and the auditing company PricewaterhouseCoopers prognosticates 83 million sold units for 2012. but increasingly at Western ones as well – with the target of meeting the high European and American standards. too. and services for infrastructure as well as automation and drive technology. one in ten new cars around the world will run on electricity and 30 percent will have a hybrid drive in 2025. and so does the demand for customization. With them. especially in China. Time-to-market. The automotive industry is doing well again after its dramatic slump in 2009. The growth rates are predicted to be an average 5. The trend towards globalization has reached all manufacturers by now. flexibility in production. 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. Siemens is leader here as well (compare box: “Flexible production plants”). But in Western countries. but also Southeast Asian states. Mathematically. Experts predict sales of 75 million cars for this year. the production of cars rose by 24 percent. Indonesia. where production capacities are on the increase. With a continuous PLM platform. Siemens as a global partner provides products. . Since then. The speed of innovation increases as well. New plants and production facilities are built mainly where the highest market potential lies. a global trend towards comparatively small and affordable models is on the rise. Korea. 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. solutions. production processes can be simulated and procedures optimized – to meet the increasingly stringent regulations for energy efficiency. Alongside them. The number of car owners is rising by more than 35 percent each year in China alone. and Russia. and not least e-mobility will decide about success. More than 30 new production facilities in the Asia-Pacific region will take up operation by 2017. The digital plant plays an important role in this as a key technology. too. Car manufacturers have to rethink their technological positions. expanding markets are developing in Thailand.5 percent per year until 2017. and India. Such variety demands increasingly complex IT and production concepts for virtual engineering and digital plants. New markets are emerging in Asia. for example. India. Important drivers of this growth will mainly be China. the one of utility vehicles even by 32 percent. and Malaysia. too: According to the study “Automotive Landscape 2025” by Roland Berger Strategy Consultants. systems.

with a higher degree of customization. for instance.7 India 3.5 % +9.4 % * in million units ** average growth p. the gap between product development and production of a car is closed.5 27.8 +5. or that production plants can be virtually commissioned.3 % +0.0 European Union 16. This means that production processes can be simulated cost-efficiently and flexibly.9 Japan 9.0 6. 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.1 Russia 1.1 4.2 South Korea Flexible production facilities are virtually planned and analyzed with the help of PLM solutions in the framework of the digital plant. With it. The result: New models can be brought to market in shorter time. and more profitable than before.0 % +14.2 +7. China 14.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.1 9.6 10.1 % Source: PricewaterhouseCoopers .1 5.a. USA 7.3 3. Growth of car production* 2010 to 2017** Brazil 3.3 4.3 % +2.3 19.5 % + 0. This shortens the time to market.7 % +12.

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

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

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

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

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 environment. Integrated security concepts ensure the fault-free operation of the plants and protect employees. The world’s most advanced butyl rubber production plant has a nominal capacity of 100. The distributed control system enables the extremely flexible reaction to changing demands of the market. machines. The auditing company PricewaterhouseCoopers (PwC) conducted a global survey among managing directors and chairpersons of managing boards in early 2011.000 tons per year. According to it. An example: The starting signal for building LANXESS’ new rubber plant in Singapore came in May 2010. The generally optimistic industry is occupied with annual growth rates of six percent. 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. The time to reap what they have sown has now come: After a slump in turnover of more than six percent in 2009. The result: the plant availability increases and the total cost of ownership decreases. and increasing scarcity of resources.18 Industry Journal | 02 | 2011 | Markets Chemicals: Stable growth Chemicals worth 3. LANXESS employees during an inspection round on a production plant for technical rubber. deliver. nearly all businesses in chemical industries had initiated extensive savings measures during the crisis and strongly aligned their strategy toward yield growth. Chemicals . and commission the process automation as well as the power distribution for the production site on the basis of Simatic PCS 7.1 trillion Euros were produced globally in 2010 – a gargantuan market. Siemens was asked to design. a regional shift of the world markets. individual solutions. rising costs of energy.

The field of business is facing great challenges in spite of the generally good opportunities for growth. The profitability of production plants has to be increased throughout their entire life cycle. security. 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. has had to fight price jumps and exchange rate effects for years. the consumption of chemicals rose by 23 percent from 2005 to 2010. 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. and energy demand the modernizing and retrofitting of existing production sites in those regions. the production gradually shifts towards the emerging countries. Higher energy costs across all fields of business as well as scarce natural resources make the business difficult as well. The basic chemicals area (inorganics. 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. This becomes increasingly possible with innovative lifecycle management solutions. This is hardly a surprise: In China alone.Industry Journal | 02 | 2011 | Markets 19 23 percent in 2010. But plant engineers still have a lot of work in the USA and Europe. VCI . and polymers). Especially the stringent conditions regarding environment. According to the PwC survey. which generates 45 percent of the entire turnover of the chemical sector. today’s leading chemicals regions. 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. in Brazil by 14.5 –2 2009 13 –20 –15 –17 2010 Source: Chemdata International. 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. petrochemicals. They compel businesses to invest in measures for higher energy and resource efficiency. and contribute to the shortening of innovation cycles and the increase of production flexibility. and in India by 12 percent.

But South American and Asian states such as Brazil and Indonesia increasingly discover expansionoriented business opportunities in Pulp & Paper. Whereas an Indonesian consumes only an average 20 kilograms of paper annually. it is more than twelve times this amount in Germany at a per capita consumption of 250 kilograms. China is leader as an individual country in front of the USA. other paper and cardboard varieties (96 million). it will be less about new plants and the extension of capacities. The industry is facing a geographical change as well: About the third part of its production capacities are still in Europe. 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. digital cameras. on the one hand. Manufacturers of paper and pulp around the world are occupied with energy efficiency. production and consumption have always developed differently depending on the region. The demand is projected to increase by an average 2.4 percent every year until 2020. the emerging countries on expansion. This trend will probably continue. the positive global economic outlook speaks for an increase in demand on both sectors. Apart from that. A lot of smaller and. so that the markets will probably note a new regional distribution in the medium term. or about refuse recycling or disposal. as well as tissue and sanitary products (34 million). and Germany. increasingly stringent environmental regulations demand innovative and efficient solutions. It is more and more about intelligent processes for water and wastewater treatment. The situation could not be more different in South America and Asia. through this. In the classical markets. Japan. The reason is the economic growth of the BRIC states. A whole lot of modern high-performance plants are built here at the moment to meet the rising local demand. but rather about modernization and services. catalogue. This promises interesting orders for the manufacturers of corresponding production plants. Either way. and e-books contribute to noticeable declines in photo. rising raw material costs. and sustainable production methods. The industry produced more than 370 million tons of paper and pulp in 2009. Only Finland and the leader USA use more than that. graphic papers (152 million tons). It looks entirely different for graphic papers: Internet. It consists mostly of cardboard and packaging paper (171 million tons). At the moment. a lot of companies in these regions rely on consolidation. . In the ranking of nations. The segments do not develop in parallel. too: Cardboard and packaging papers have been important drivers of turnover lately. 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. Market observers estimate that the production will amount to 453 million tons in 2014. On the other hand. as was the tissue and sanitary segment. comparatively inefficient plants have already had to shut down. for instance. not on expansion.20 Industry Journal | 02 | 2011 | Markets Pulp & Paper: Good times in the east – Bad times in the west The traditional markets rely on consolidation. and newspaper papers. However.

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

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

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

” 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). What about training? End users seem to have a high demand for this. 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.24 Industry Journal | 02 | 2011 | Markets ! “As the automation market emerges from the recession. that consider automation services to be a core competence and capability. they want to be fast and agile. They can afford specialists that focus on one specific item only and can deploy resources just when needed. de Leeuw: It’s vital to consider the people aspects. it was important to delay Capex. 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. for which we see significant potential. 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.” 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. Hoke: We have been offering both online and classroom training for years and we will strengthen this service regarding automation. de Leeuw: And the providers benefit from collaboration and specialization as well. Our customers’ core competencies are in production. That included the challenging part of involving and gaining buying-in from our people. We also have the skills and resources our customers need. But a huge and increasing majority see their core competence in manufacturing. ours are in industrial automation. as well as to reduce their costs. They have a global understanding of automation. Within the project. they can maintain skills that are used every day – which can reduce costs for their customers as well. to optimize assets. This means that Siemens has the resources to invest in Research and Development and be ahead of the crowd.” . We all do best if we stick to our core competencies. In January. 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. Siemens started a project called “Growth in Vertical Markets and Services. There will ! “Automation suppliers can provide users with the resources needed for new projects. And as nobody knew when the recession would end. Plus. I strongly encourage you to continue this approach. we have put a strong focus on communication and telling people about the advantages and benefits this has for them as well. some of whom are joining us from other service units. such as from our Divisions Industry Automation (IA) and Drive Technologies (DT). and for operations management. de Leeuw: There are multinationals. which is easier to do with outsourced services. These figures include value-added services. Doing this the right way can lead to a successful quickstart. external automation services will lead the way in growth. but will go shopping for providers that can deliver what they need. however. Hoke: During the financial crisis.

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

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

for instance). technical support. 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. Its task is to develop and expand the service business. They shared their experiences with us very openly. and how many would refuse to recommend us.com . Afterwards. First. our top priority is to ensure that the people in the regions understand our service approach thoroughly. in cooperation with the Divisions Industry Automation (IA) and Drive Technologies (DT). we will not be able to have the same competencies on the same level worldwide.Industry Journal | 02 | 2011 | Markets 27 03 on some 18. we have done a lot of service benchmarking to identify blocking points and key success factors. CS delivers product-oriented services as well as value-added services. The Division employs around 17. how many are neutral. But at present. we are much further than that. de Leeuw: Is the business planning and execution iterative in your case. and holistic plant management. remote maintenance. Among the product-oriented services are online support. 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”. as main automation contractor. such as automotive. The new Siemens Division Customer Services The new Siemens Industry Division Customer Services (CS) was established on October 1. and field services for industrial plants. Information and order: rkilies@arcweb. and metal. The 203-page study costs 6.000 customer interviews every year. we cooperate with partners. we have done that with our own business units. we extended that to companies that are complementary to our service offerings such as MAN Turbodiesel Services USA or Schindler elevators.” Hoke: We don’t see ourselves in such a role. The provider. we have to focus on what to do first according to our resources. if needed. This score tells us how many customers would recommend us.300 Euros. can coordinate this system. Hoke: Certainly. This means that it is most important to overcome internal hurdles before rolling out a service strategy externally. ! “An ecosystem of provider and integrator services can provide full lifecycle services.000 people around the world and advances the service strategy for products as well as for industries. Siemens is present in almost every country of the world. In some cases. The value-added services comprise consulting (regarding energy and environmental management. pharmaceuticals. ARC examines the automation sector up to the year 2015. plant monitoring. 2011. But we will always find solutions that are best for our customers. and is responsible for all services within the industry sector. paper. These comments are always extremely helpful. Since we’re organized regionally. 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. Obviously. then with the Siemens Healthcare and Energy Sectors. For example. like in “planning by discovery”? Hoke: No.

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

. landfills.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. nickel. According to the Bavarian Ministry of the Environment. One ton of old printed circuit boards contain 200 grams of gold (right). They are not only extremely valuable. copper pipes. electrical devices.000 tons every year. but can be reused infinitely without quality losses. Lots of money. Scarcity of resources and rising prices of raw materials push the so-called “Urban Mines” in the focus of economy. In the walls of buildings awaiting demolition. Studies by the Hessian Ministry of Environment claim that today an average landfill contains metals worth 30 million Euros. The company Umicore alone recycles 7. 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 houses over decades. unlike materials like plastics or paper. waste disposal and recycling companies save an annual four billion Euros for the German economy. which is headquartered in Brussels and specializes in precious metals. And in China. Savings of four billion Euros There are an estimated 100 billion megatons of metal in German buildings alone.” says Markus Mehl. politics. 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. Recycling is a profitable core business for the international Umicore Group. 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 can make money in scrap recycling. and all the way to slags and flue dusts containing precious metals. Germany. four tons of gold. because it fetches cash immediately. and research. “There are no stolen goods better than scrap metal. But even without resulting to criminal activities. CEO of the largest recycling plant in Bonn. The EBIT adjusted to special influences even rose by 68 percent. 28 tons of silver. and 6. The theft of entire power lines. railroad tracks. too.000 tons of copper are thrown away every year.5 billion tons of reusable materials every year. Zinc. and shopping trolleys is becoming more frequent. On an international scale. The gold alone has a value of 100 million Euros – that is equal to the monthly production of some gold-mining countries. and scrapyards around the globe lie huge amounts of valuable raw materials that were built into cars.” But it is true indeed that rising prices on international raw material exchanges lead to rocketing burglary rates at many a country’s scrapyards. All sorts of metal are of greatest interest. on recycling depots. the potential is even more impressive: Europeans dispose of 1. and lithium batteries are a valuable source of raw materials when recycled (left).

But with polysubstance materials . In regard to recyclable materials. And thanks to modern recycling facilities.” The Umweltbundesamt (Federal Bureau for the Environment) estimates that disused cell phones containing materials worth 65 million Euros lie in the cupboards of German households. and cobalt in Central Africa – increase the risk of supply bottlenecks as well as price leaps. But multiplied by 1. the business is futureproof. Three percent of the annual global production of silver and gold are used for the production of computers and cell phones. Recycling reduces dependency on raw materials To ensure a secure supply with technological metals at affordable prices is of the utmost economical importance. And the precious metals they contain make up 80 percent of this value.000 tons. the average recycling rate in the EU-27 lies at only 30 percent.30 Industry Journal | 02 | 2011 | Markets European recycling rates Electrical junk is utilized in a lot of different ways across Europe. there is still a lot of potential. together with a regional concentration of indispensable metals – such as rare earths in China. this is an enormous amount of money – tendency rising. In most cases.3 billion cell phones sold worldwide. This means that raw materials have to be mined abroad and imported. not even three percent. the focus is on throughput and cost. “And end-of-life products are a huge storage facility that has to be used. Other materials cannot replace them. and special metals as well as pollutants. glass. The global recycling potential for cell phones only is more than 80.000 tons. for instance. platinum metals in South Africa. divisional director Business Development of Umicore Precious Metals Refining. In recent years the costs for this have risen by 80 percent in Europe. Rate of utilization and recycling in % 80 79 82 83 Germany Spain 60 65 82 Sweden 76 86 75 Great Britain 78 76 85 France Consumer electronics Monitors and controls 63 72 80 Poland IT and telecommunication 23 39 Source: Eurostat 2011 A future-proof business As the demand for precious and special metals is constantly on the rise. The same is true for 13 percent of the palladium and 15 percent of the cobalt mined. The problem of many Western countries is that “there are. The considerable dependency on import. most metals can be used again. Electronic scrap. next to no primary storage facilities for technological metals in Europe. All those are good reasons for the targeted use of end-of-life products. “The importance of this source of raw materials is as big as the environmental risk it constitutes on landfills and in technically inadequate recycling. basic. The de facto reuse is less than 2. These metals weigh only a couple of milligrams per cell phone and are not even worth one single Euro. With pollutant-free monosubstances such as glass or steel scrap. especially for regions lacking raw materials.” says Hagelüken. for instance.” explains Christian Hagelüken. halogens. or by more than 300 million PCs and laptops a year. plastics. is a complex mixture of precious. and others. One of the challenges of Urban Mining is the extraction of reusable materials without causing further damage to the environment. because the specific characteristics of so-called technological metals are irreplaceable in the production of many appliances – from consumer electronics to production facilities.

considers this to be a significant contribution to securing raw materials for Europe: “We want to .000 tons of metal from 300.2011 found in complex components. yielding an average 200 grams of gold per ton.700 tons of CO2 emissions. today. And no wonder – one ton of rock contains only five grams of gold. This has been recognized by politics as well: last March. The path leads away from conventional scrap business towards hightech recycling. ecological. 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. 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. there are 60 – that is half the periodic table.” says Umicore’s expert Hagelüken.” Hagelüken says.000 tons of rock have to be moved. Metal recovery of 95 percent At Umicore’s metal works near Antwerp the utilization of these end-of-life-materials can be seen.000 tons of mainly secondary materials. 600 500 400 300 200 Gold Silver Palladium 100 0 13. which integrates the complete registration of old devices. And the extraction of one ton of gold from a conventional mine causes 1. This is as much as the weight of 45. catalysts. “Compared to the ore content of the primary deposits. the stopping of sinister exports. “This kind of recycling does not only bring valuable raw materials back into the cycle.01. And the process is becoming increasingly complex: IThardware of the 1980s contained about eleven different valuable elements.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.2001 02. the collection rate is meant to rise from today’s 30 to 65 percent within eight years. the Ministers of the Environment of the 27 EU states agreed on more stringent conditions for the disposal of electrical scrap.Industry Journal | 02 | 2011 | Markets 27 03 31 Explosion of raw material prices (Price index 2001–2011.300 1.” 14 tons of electrical scrap yield approximately one ton of copper.” Recycling is a business with high economical. mostly in mining and processing.2006 03. computer circuit boards are a veritable bonanza. and lithium-ion batteries. It is high time for a fundamental change: “This is about responsible management of resources. it should be on eco-friendly extraction of trace elements and on improving the reclamation of value.000 mid-range cars. in US dollars) 1. “The goal has to be the focus on quality and economic relevance of raw materials.200 1. and a global cycle economy. It is also a significant contribution to climate protection.07. To mine that much. The German Federal Secretary for the Environment. Katherina Reiche. Less than a quarter of the potential yield of precious metals is recovered in those plants. Calculated for the entire recycled material this means an annual yield of 70.” says Hagelüken. Accordingly.100 1. “The energy demand for the recovery of precious metals through modern recycling is just a fraction of the amount required for mining. Printed circuit boards are 40 times as profitable. up to 1.01. and social relevance.

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

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

and ambitious employees make South America’s largest country an interesting market. The partly undiscovered jewel is the B in BRIC – Brazil. a reformed economy and society. . Vast natural resources. Experts expect Brazil to be among the top five of the world’s largest economies in less than two decades. high domestic demand. attractive. an upcoming middle class.34 Industry Journal | 02 | 2011 | Markets Brazil – booming. a central position in Latin America. and laid back The euphoric mood of the emerging nations as well as the BRIC states and their vast growth are the talk of the whole world – which mostly thinks of China and India only.

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

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

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

The search for specialists is not made easier by the current boom.” says von Waldow. When Peter Rösler. travels the country. Somebody trying to find cheap labor in a Brazilian metropolis will hardly succeed. Most companies prefer to employ native employees.” Rösler remembers.38 Industry Journal | 02 | 2011 | Markets Siemens in Brazil Siemens was one of the first European companies to venture towards Brazil.800 people in Brazil and is the country’s largest electric company. “With President Lula’s assumption of office in 2003. As early as 1867. And that strong domestic economic activity has significantly reduced the dependence on the global economy. he is always impressed by the South Americans’ dynamics and will to advance. from periods of hyperinflation. “But the great quality of training at the Brazilian universities is a huge advantage.” The salaries on management level have almost reached the European level and factory workers are well paid. . Rösler: “This is an incentive for Brazilian specialists. They know that a lot has changed fundamentally. Too long they have suffered from the exchange rates’ rollercoaster rides. That the country has become more stable and reliable.8 billion Euros was implemented with Brazilian customers and orders were secured for 2. many Brazilians get additional training. as well as the social security and good wages that German companies in Brazil can offer.” Education. In 2010.1 billion Euros. 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. which they recruit from the country’s universities. political instability and their economical consequences. Unlike many other countries. Nevertheless: A lot of established businesses watch the current euphoria skeptically. especially at specialist companies such as GERB. a turnover of 1. The Brazilians are full of vigor. The desire for self-improvement is enormous. Especially among the career-oriented younger people. It is complemented by one or two years of experience at different stations in the parent company. The shown casting machine was supplied by Siemens VAI. Removal of a slab in the Brazilian steelworks ThyssenKrupp CSA. Brazil does not have its own vocational training system. Brazil expert of the trade association Lateinamerikaverein (Latin America Association) in Hamburg. companies from the Western countries with a systematic in-house training system are favored. That the economical development has largely been severed from changes in the political mood. Highly qualified specialists from Brazil The formulas for success of foreign companies in Brazil resemble each other in many aspects. Training on the job has proven to be a success. Siemens employs more than 10. “The Brazilians themselves were skeptical not so long ago. But the scars of the past still smart. Today. Siemens built the country’s first telegraph line between Rio de Janeiro and Rio Grande do Sul. for example: Even after a long working day. his program of reform and the opening to the world came a strong change of mood.

Siemens technologies for process-gas use.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. 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. The company is one of Siemens’ most important customers in Brazil. Petrobras produces some 300.2 billion barrels. Petrobras will have tripled its daily production volume by 2020. The orders have a value of 600 million US dollars. 160 kilometers off the Brazilian coast lie the Barracuda and Caratinga oil fields. 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. they contain an estimated 1. as well as communication support the production. In addition to this. According to their own estimates.” says Carlos Tadeu da Costa Fraga. One of the most impressive success stories of Siemens is the implementation of automation systems on 13 oil platforms in 2010. Together. and all the way to healthcare technology.000 barrels a day from them. 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. By 2016. “For this. Siemens systems provide half of Brazil’s power.100 meters. Siemens will have built two new plants for the country’s oil and gas industry and one for medical appliances. . we need partners that can cope with such gigantic volumes – partners like Siemens. head of the Petrobras research center. On an island off Rio de Janeiro. Siemens is building its own research and development center in the Parque Technologico – close to Petrobras’ research center. from public infrastructure to power supply. Petrobras is the world’s fifth-largest oil company. sometimes from a depth of more than 1. 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. alarm and emergency shutdown. Siemens is successful in the steel industry as well.

the market with its ever-new requirements. Not even a different attitude towards punctuality and commitment can change this. oil. where facts and arguments are presented in a more friendly manner in most cases. as well as taking off your watch. can take almost two hours. people are very warm-hearted.5% 4. and the country. because Brazil works differently than Europe. profit from the strong German community. new terms of tender and new projects. Businesspeople quickly learn the unwritten rules. More than 500. soccer. “Brazilians are used to directing their attention at many aspects simultaneously. German companies.40 Industry Journal | 02 | 2011 | Markets High crime rates remain a specific regional problem. tax and customs regulations. for instance. Or follow the natives’ example and throw on jeans and T-shirt in the evening. First talk about the plot. preferably over a good meal. 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. for example.700 billion US dollars 5.” Nevertheless: Brazil is a good portal into the emerging countries for Western companies. The cultures and languages are closer than the ones of India and China.” Brazil expert Rösler says. Newcomers do well to establish a network very quickly.5% 2.” Rösler knows. one way or the other: Do not take a stroll on the beaches of Rio in a business outfit. diamonds.” BDI expert Haddad says. 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.” Sentences like that – unthinkable in Brazil. Small talk about family. He advises finding a Brazilian partner who is familiar with the authorities. for example.5% 6. “Cultural differences are easy to underestimate. then about the building and machines and finally about sales? “A Brazilian may start with sales and turn to production afterwards. “All this is very complex. especially in the urban centers. Partnerships are very important. They make up five percent of the population. High bureaucratic effort A further specific obstacle of the country is the inefficient bureaucracy: complicated approval procedures. for example. “You made a mistake here: The figures are not correct this way. And always have some 50 Euros in cash with you to be able to buy your way out of robberies.6% iron ore. tin . You feel at home quickly.000 Germans or people with German ancestry live in São Paulo alone. natural gas. too.

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

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.S. . foundation Carbon War Room.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. who was born in India. talks with Industry Journal about financing models for green technologies. Shah. the failure of the market economy. and Brazilian cows.

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

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

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

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

offers of financial support. and service providers whose offers pay off in next to no time.48 Industry Journal | 02 | 2011 | Management Save. And this despite the fact that there are competent consultants giving free advice. don’t squander Thousands of small and medium-sized enterprises in Germany literally pour their money down the drain – for avoidable energy costs. A broad awareness for the fact that energy-saving measures do pay off and are easy to implement is slow in building up. .

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

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

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

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

Intelligent software. microgrids as part of energy management. and innovative storage technologies can make this work. .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. 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.

15 min) 12 10 8 6 4 2 0 Weekend Weekend Energy consumption during non-production periods to date: approx. saving costs and reducing the CO2 footprint. “This load during standstill is equivalent to the average consumption of about 50 households. presses. Germany. equipped with measuring equipment for power consumption and for the analysis of production control data. such as short waiting times on equipment or technical problems. Unbelievable but true: Even in modern industrial plants and factories. and we captured all values once per second. 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. 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. in Hanover. wants to make the industrial power consumption more transparent: On behalf of the PROFIBUS usersʼ organization (PNO). AIT staff. This is why Professor Frithjof Klasen from the Institute for Automation & Industrial IT (AIT) of the University of Applied Sciences of Cologne. showed up in plants of Daimler in Sindelfingen and Volkswagen Nutzfahrzeuge (Volkswagen utility vehicles). he examined the power consumption of machines in the automotive industry – in October of last year. 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. better information about the usage of valuable energy is indispensable from an economic and ecological point of view. machines.” says Klasen. This is more than an embarrassing knowledge gap: only they who know the energy consumption of pumps. “Each measuring cycle took seven days. 60 percent of energy consumption during production. “During our long-term investigations.54 Industry Journal | 02 | 2011 | Management Potential energy savings with PROFIenergy Load profile (kWh values. Germany. it is hardly known what parts of the plant consume how much energy. and compressors over time can increase the efficiency of plants. we took measurements at different levels – from the main feed to the plants to individual consumers.” This combination of a long measuring period and short measuring intervals provided the experts from Cologne with detailed insights of the energy flows. and no less than 17 kilowatts during idle periods – this means 50 percent for doing nothing.” reports Klasen.” Such interruptions can have a variety of causes: some are scheduled (for example on a weekend). and the associated electrical loads is largely unknown. 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. while others occur in an unpredictable manner. . Energy savings of up to 80 percent with PROFIenergy. Therefore.

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

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

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

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. Taking the risk paid off. For a Chinese steel manufacturer the nightmare became reality. The procurement of spare parts would have taken months. . Therefore. the management made a hard decision and went for a highly complicated. faster repair instead – with uncertain outcome.

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

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

8 Italy –9. At the same time.3 Mexico –17.5 France –4. 38 2004 2010 2020 2030 2004 2010 2020 2030 Oil (barrel) Coal (ton) Gas (BTU) Source: Hamburgisches WeltWirtschaftsinstitut.000 trillion BTUs (British Thermal Unit) of fuel in 2030.6 Russia +1.2 South Africa –10.000 4.000 175.1 Source: Low Carbon Economy Index 2010.000 2004 Coal Power Renewable Energies Total 246.9 FACTS & FIGURES . “The world will now have to reduce its CO2 emissions by 3.7 Indonesia –5. Demand increases by 28% by 2030 Consumption (in trillion BTU) The global industry alone will use 246.000 48.0 Brazil –3. PricewaterhouseCoopers calculated how much the G20 states would have to cut compared to their economic performance. engineering and plant construction. turnovers.3 Japan –3.2 Turkey –3.7 Germany –7.000 42.1 Canada –10.4 South Korea –13. Success factor energy efficiency Companies for which energy and energy efficiency are of strategic importance generated a global 36 trillion Euros in 2008. World Energy Projections plus 2009. PricewaterhouseCoopers CO2 emissions have to be reduced to meet the global warming target of a maximum 2 °C by 2050. From 2000 to 2009. information technology and IT services. Sources: Siemens AG: EIA.000 60. International Energy Annual 2006. in %) 0 Spain +2.000 3.3 Saudi Arabia –37.000 60.8 percent each year to be able to meet the climate protection targets.4 Argentina –4.1 India –3. Liquid fuels 70. industries with high power demand. Australia –8.9 Great Britain –6.0 USA –6. this is the largest part.000 43. its economical importance grows due to increasing power prices – especially for sectors with high power demand. Siemens AG.” the study says.7 China –17.Industry Journal | 02 | 2011 | Management 61 Energy efficiency Energy efficiency accounts for 54 percent of the global climate protection measures.000 Natural gas 63. only Spain and Russia exceeded their targets.9 EU –5. Global power consumption 2030 Prices for fossil sources of energy explode Price trend 2004–2030 (nominal. building technologies. According to estimates of the Deutsche Energieagentur (German Energy Agency). Transport and traffic.000 26. This is about 40 percent of the entire turnover. 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. and the energy industry are among the sectors obtaining highest Source: McKinsey & Co.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.

did not bring spectacular inventions to market for decades.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. . About a world in which man and machine become one. Ray Kurzweil’s current vision is about artificial intelligence. had not been honored as an inventor by President Clinton. For a long time. even ardent believers in progress took this for science fiction. But the latest innovations support his theses that span from autopilot cars to learning computers and all the way to voice-operated industrial robots. And Kurzweil’s fame is on the rise.

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

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

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

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. So it is an advantage for a company to produce more economically than the competition. for example – just like f | glass from the eastern part of Germany. By 20 percent. And it consumes a vast amount of energy. automotive. . and solar industries is technologically challenging.66 Industry Journal | 02 | 2011 | Innovation The optimum is just about good enough Glass is one of the oldest and one of the most innovative materials of the world at the same time. Its production for the construction.

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

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

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

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

If the EU’s ambitious climate agenda is good or bad news is a matter of debate among experts. Moreover. the EU’s ambitious climate protection policy will speed up economic growth and create six million new jobs by 2020. 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.” 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. It sounds too good to be true: Better protection of the environment leads to growth. When considering factors and side effects such as technological progress. it is a decisive step for the growth opportunities and competitive position of Europe. 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. and changing investor expectations as well. Norbert Röttgen. The German Minister of the Environment. They fear that the climate targets will only lead to a displacement of production and emissions to regions with lower climate . Europe is giving the long-expected signal. welcomes the model: “Finally. enhanced competitive ability. because they lead to rising costs and lower international competitiveness. According to it. the European Commission introduced their “Agenda for a low-carbon economy by 2050”.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. When considering projects for climate protection from outside Europe as well. It will make the international process of climate protection more dynamic. even the 30 percent mark could be reached. A new study by leading European scientists comes to a revolutionarily different conclusion. Previously. Last March. and higher innovative strength. learning effects.

1 2. CO2 reduction by . related to base year 1990 Unemployment rate 2020 (in %)* at a … Country Germany France Great Britain Italy Netherlands Sweden Spain ..6 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. CO2 reduction by 20% 8. With a corresponding increase of the climate target. The economic output would rise by 620 billion Euros..9 5.3 4. Source: European Climate Forum..1 2.3 3.5 5 3. National Technical University of Athens.7 3.7 2.4 2..6 *Gross national income in % p.8 10.0 2. there are immediate suspicions that the result does not accidentally coincide with the interests of the commissioning party.6 5. The so-called Carbon Leakage would not only be detrimental to the fight against global warming.8 1.1 7 * Related to base year 1990. CO2 reduction by .1 4..6 30% 5.3 1.a. . The opposite is true. Where studies like this are concerned.72 Industry Journal | 02 | 2011 | Innovation protection stipulations.5 8.. There could be six million new jobs.. the total economic growth in the EU would rise by 0.6 3.4 3.8 2.3 2. At least this is what the latest study “A New Growth Path for Europe” commissioned by the Federal Ministry of the Environment shows. 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 .4 7. CO2 reduction by 20% 1.0 30% 2. 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. But neutrality and seriousness of this study are undisputable: It was conducted by a group of internationally renowned scientists from Oxford University. and the European Climate Forum. with Carlo Jaeger of the Potsdam-Institute of climate research (PIK) responsible.6 percent by 2020 (green growth scenario) compared to the maintenance of the 20 percent mark (business as usual scenario). too. but an obstacle to the development of the European economy... Université Paris 1 Pantheón-Sorbonne.

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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

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