Munich As part of its new US offensive, the Siemens Group is building a train plant in Lexington as a first step. “The US market is one of the most exciting in the world,” Mobility CEO Michael Peter told Handelsblatt. “It’s a country the size of Europe with a lot less passenger traffic, amazing potential.”
Many new connections are being planned, especially along the coasts in the east and west. The new production facility on the east coast is scheduled to go into operation next year and create 500 new jobs.
The technology group is currently focusing more on the USA. Siemens boss Roland Busch also sees great growth potential there because of the subsidies as part of the “Inflation Reduction Acts” (IRA). His China euphoria, on the other hand, has been significantly dampened due to the geopolitical tensions.
The US railway market currently offers particularly great opportunities. “America is investing in rail – and we’re investing in America,” said Busch. The group initially wants to put 220 million dollars into the new plant for passenger trains, a later expansion is already being considered.
With a share of 20 percent, Siemens sees itself as the market leader in the USA if you do not include freight locomotives. “We benefit from the fact that we localized production early on,” says Peter. Siemens is perceived as an American company and can also participate in government programs.
In 2021, the group had received a record order from the US rail operator Amtrak for 3.4 billion dollars. Peter is confident that more will follow. When it comes to the route network, infrastructure and trains, there is a lot of catching up to do in the USA.
However, in the past many projects progressed only slowly. But in the meantime there is movement, for example with the planned high-speed line between Los Angeles and San Francisco by the private provider Brightline West. In 2021, Brightline signed agreements to have eight high-speed trains built by Siemens Mobility.
The price calculation of the California High-Speed Rail Authority, which is responsible for planning and implementation, rose from 40 to more than 100 billion dollars. Republican politicians in particular are calling for the money to be invested in highways and airports.
But the IRA and other initiatives by US President Joe Biden are now moving the issue. “I believe that something is really moving now,” says Siemens manager Peter. There are many city pairings between which high-speed connections would pay off. The new plant will be built in Lexington (North Carolina). It is to be equipped with the latest automation technology, from robotic welding to 3D printing.
In North Carolina, people are happy about the investment by the German group. Gov. Roy Cooper said, “North Carolina is the best state for manufacturing because of our state’s skilled workforce and proven education and training systems that help people develop and develop these skills.”
Mitch Landrieu, White House infrastructure implementation coordinator, added: Siemens’ announcement is proof that “we can build a better America when the public and private sectors work together – fueled by a world-class sustainable mass transit system, that makes it easier for families to spend time together, domestic production that strengthens our global competitiveness, and well-paying jobs for all.”
Other German companies also want to invest more in the USA
Many German companies currently have expansion plans in North America. “The USA is particularly popular with industry,” says Marcus Berret, Global Managing Director at strategy consultancy Roland Berger. The environment is already attractive with lower energy prices and a large, growing sales market. Now add the IRA.
According to a survey by the Association of German Chambers of Industry and Commerce (DIHK), almost 40 percent of German companies intend to invest more in the USA in the coming months. Lanxess, Bosch and the plant manufacturer Exyte, for example, have announced such plans.
However, other regions also remain important for Mobility. In January, the state Indian railway company Indian Railways ordered 1,200 electric locomotives. Including service, this contract has a volume of three billion euros.
The Siemens business will be stabilized in the coming years by the full order books in the mobility division. Most recently, the technology group’s business with industrial automation, which is sensitive to the economy, has been booming.
However, in the first quarter of the 2022/23 financial year (September 30), incoming orders in the Digital Industries division fell by 13 percent to EUR 6.3 billion. Although group insiders do not expect a real downturn, business is not getting any easier.
Siemens is examining the establishment of further production in the USA
In train technology, new orders also fell significantly to just under three billion euros. But that was solely due to record orders in the same period of the previous year. The new orders were well above the turnover of 2.4 billion euros, which promises further growth. The train orders are processed over many years, while the orders in automation are implemented much faster.
But the group is also examining the construction of a plant in the USA in automation technology, as the Handelsblatt learned from supervisory board circles. Since many companies like Siemens are planning new production facilities there, the market for factory equipment, for example with Simatic controllers, will also grow. In addition, Siemens has long wanted to buy shares from US competitor Rockwell Automation in its home market.
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