New energy head at recast Siemens

Siemens in a broad restructuring will eliminate the administrative level of its current four business sectors, cut the number of divisions from 16 to nine and see the head of its three principal energy divisions located in the US.

The company also is acquiring the gas turbine and compressor business from Rolls-Royce Energy for about €950m ($1.32bn).

Under the reorganisation labelled “Siemens – Vision 2020,” the industrial giant will position its nine divisions along the “growth fields” of electrification (meaning energy), automation and digitalisation.

Within the electrification field, the company will be organised in divisions for Power and Gas, Wind Power and Renewables, Power Generation Services and Energy Management.

Lisa Davis, from August 1 on, will be responsible on the managing board for those divisions and also the regional management for the Americas. She will replace current Energy head Michael Suess, who is resigning from the board with immediate effect for “personal reasons and by mutual consent,” Siemens said.

The energy sector until Davis takes over will be headed by Randy Zwirn on an acting basis.

Davis currently is the executive vice president for strategy, portfolio and alternative energies at oil firm Royal Dutch Shell.

Markus Tacke, currently CEO of Wind Power has been named CEO of the new Wind Power and Renewables division that will serve, among other things, the rapidly growing field of onshore and offshore wind power generation that had a revenue of about €5bn last year, Siemens said.

Siemens in a presentation said it aims at remaining world leader in offshore wind through innovation and industrialisation, helped among other things by its recently announced new offshore facilities in the port of Hull, UK.

The company said it wants to push the levelised cost of energy (LCoE) in offshore wind to below €0.1 per kilowatt hour by 2020, and aims for onshore wind to reach grid parity.

German media reports suggest that along with private reasons of Suess not wanting to move to the US with his family, Siemens chief executive Kaeser also favoured Davis, as he wants to orient the company more towards renewables and put less emphasis on fossil energies.

Siemens says its renewed focus is the result of an in-depth analysis begun in August 2013 in order to gear the company towards fields where it will be able to achieve long-term growth and high profitability.

“Our Vision 2020 addresses our company’s long-term perspectives along the modern electrification and automation value chains,” Kaeser said.

In electrification and automation, Siemens says it already holds a clear No. 1 position in many markets.

“The growth fields in these two areas include the markets for small gas turbines and offshore wind turbines, which are profiting from a growing demand for secure and sustainable power supplies," the company says.

Those fields also are areas in which Siemens is competing with GE, whose take-over offer for France’s Alstom it is trying to thwart, among other reasons to avoid a larger-than-life global competitor in energy.

Bundling the divisions and eliminating the sectors level will reduce bureaucracy, cut costs and accelerate decision making, Siemens says, in addition to increase productivity by some €1bn a year.

the new structure will be in place as of the beginning of the 2015 fiscal year starting in October 2014

The measures are expected to be fully effective by the end of fiscal year 2016.