Siemens will spend 2 billion euros ($2.2 billion) on a new global investment plan, the German engineering group said on Thursday, to make its operations more resilient against supply chain disruptions and geopolitical tensions.
Siemens will build new factories, research and development centres and training sites around the world, the company said, as it also aims to take maximum benefit of stimulus packages in the United States and Europe.
Under the investment programme, which will cover announcements made during 2023, Siemens announced a new 200 million euros plant for its industrial automation division in Singapore.
“Siemens is experiencing significantly above-market growth. Today we announce an investment strategy to boost future growth, drive innovation and increase resilience,” said Siemens Chief Executive Roland Busch.
Siemens will also increase its research and development spending by 500 million euros this year, the company said.
The company, seen as a bellwether for industrial demand, has seen rapid growth since the post-COVID restart, increasing its sales to 72 billion euros last year from 62 billion euros in 2021.
“This wave of investments is supported by our record order backlog and reflects our confidence in the future,” Busch later told an event in Singapore.
FURTHER INVESTMENT IN EUROPE AND US
The company has previously said it expects its total addressable market for its products, which range from trains to industrial software, to expand by 7% per year between 2022 to 2027, although Busch wants to grow faster.
The expansion programme – which will see further investment in Europe and the United States – could be a response to the global COVID-19 pandemic, which gummed up supply chains and logistics.
Busch said a lesson learned from COVID times was that efforts to save money on supply chains “made us over-dependent on certain countries”.
“Reducing this dependency is in everyone’s mind,” he told reporters in Singapore. “This is why you see investments in places in Southeast Asia, places like Mexico.”
Rising tensions between Beijing and Washington have also made many companies wary of their dependence on China, especially with U.S. attempts to block China’s access to the latest technology.
Still, on Thursday Siemens said it was investing 140 million euros to expand its digital factory in the Chinese city of Chengdu and building a new R&D centre in Shenzhen.
“We have a high market share in China, we will defend and expand our market share in China,” Busch told reporters. “At the same time, you see us diversifying and making a more resilient operation.”
(Reporting by John Revill in Zurich and Fanny Potkin in Singapore; editing by Tomasz Janowski and Emelia Sithole-Matarise)