August 27, 2000 Controlled Growth

Volume 3 | Issue 5

One of the world’s major industrial giants, Siemens has shown its ability to adapt to the U.S. market in electronic control components.

When top industries re-quire state-of-the-art control components, they call on the Industrial Control Products Division of Siemens Energy & Automation, Inc. (SE&A). SE&A is a $2 billion operating company within the Munich, Germany-based Siemens AG, the world’s largest manufacturer of electrical products. SE&A’s Industrial Control Products Division (ICPD), headquartered in Batavia, Ill., carries the responsibility for growing the controls business in the United States to the same lofty levels enjoyed by Siemens in Europe and much of the rest of the world. This is no small task because, while Siemens AG’s roots can be traced back to 1847, it is a relative newcomer in the U.S. market, dating only to 1978. This short history can spell “tall order” to any company attempting to make a splash in the mature and tradition-bound controls market. However, not only has SE&A jumped into the water, but, in just a few short years, it is already emerging as force to contend with in the controls marketplace.

Up until the last decade, SE&A’s control offering was largely made up of components manufactured by its parent in Germany and sold in the United States, primarily through its construction sales force. However, with the acquisition of Texas Instrument’s PLC Division in 1991 and Furnas Electric in 1996, SE&A has established a real U.S. flavor to its powerful international offering of controls. With 1,800 employees and plants in Johnson City, Tenn., West Chicago, Ill., Osceola, Iowa, and Reynosa, Mexico, SE&A’s ICPD is churning out products that not only meet the needs of the U.S. controls market, but also the rest of the world.

“We have led the global product development, management and manufacturing of products like 3RW34 soft starters, 3SB3 22-millimeter pushbuttons and 3RB10 electronic overload relays,” says Doug Pennington, the control division’s marketing manager. “Moreover, we have invested millions in our U.S. plants to give them state-of-the-art processes and to lay them out for maximum efficiency. What this all means is that we are no longer just an importer of miscellaneous control components from overseas. We are a coordinated, U.S.- and world-standards-savvy developer and manufacturer of a full basket of control products that can solve our customer’s problems — not only here, but anywhere on earth.”

SE&A manufactures and markets a wide variety of electrical and electronics equipment and systems. On the industrial end, the company provides factory automation, motors and drives, motor controls and integrated systems. On the construction side, products include residential distribution equipment, circuit protection components and power distribution equipment and solutions.

The control products include pushbuttons, contactors, sensors, PLCs, variable-frequency drives and electronic soft starters. “We sell to OEMs serving key U.S. industries such as food and beverage, automotive, pharmaceuticals, plastics and semiconductors,” says Pennington. “So, if we want to make inroads at a conveyor or packaging machine manufacturer doing business with a global beverage company, we have to deliver a solution that will be acceptable any place in the world.

However, a small OEM that builds stand-alone machines for U.S. customers could care less if they like our PLC in Singapore. He just wants someone who’s easy to do business with and provides great value. We do a great job of spanning this wide range of needs in the controls market.”

Shifting Business

Explains Pennington, to accomplish the goal of providing quality products conforming to U.S. and world standards, supported by U.S and world service levels and application support, the company needed to change the function of the Batavia facility, acquired from Furnas Electric in 1996.

“A shift was necessary as we examined how to integrate diverse company facilities that make products on three continents,” he explains. “Product development across multiple cultures and continents is a challenge because of different market requirements. The idea is to incorporate standard parts of products as practicable and adjust for unique differences in the regional marketplace. Making this happen requires enabling the use of the latest technologies via process redesign and restructuring production to suit core competencies of facilities.

“For these reasons, the Batavia facility was changed from a manufacturing site to a center for marketing, customer service, engineering, product development and business systems. When you link this U.S. capability to the power and presence of Siemens controls worldwide, you have a combination that is very difficult for the competition to deal with.” he continues.

Alliances for Products

The recent reorganization of SE&A’s Industrial Division has created new product alliances that are designed to penetrate the U.S. component OEM market, says Pennington. “Within the Industrial Control Division, we have established a U.S. Microsystems Business Segment.” This new microsystems team is focused on seeking out the OEMs that require basic, entry-level automation solutions, Pennington explains. The products involved are S7-200 Micro PLCs, LOGO logic modules, SITOP power supplies and AS-Interface. The main customer benefits are:

• Excellent value (big PLC features, small price)
• Ease of use
• Fast real-time execution
• Excellent and diverse communications capabilities
• Flexibility (micromodular PLC solution via system expansion, simple networking, etc.)
• Complete micro-automation solution (connections to drives, operator panels, sensors, etc.)

“The beauty of this new microsystems solution is that the suite of products can be positioned to meet a wide variety of customer needs.” Pennington explains. “Whether the customer needs a power supply, a simple relay replacer or a full-featured micro PLC that can hand off to a totally integrated automation solution incorporating our high-end products, this can be accomplished with one phone call to one company.” When linked with the company’s more traditional control products (position sensors, pushbuttons and contactors, these microsystems products provide the customer with a unique “micro-solution” not available from most companies. “What’s more, since we incorporate open communication standards into these products, we can easily communicate with other architectures. This is especially important to the machine builder who would like to take advantage of the leading-edge solutions we can provide for his application, but must still interface with the legacy systems existing in the other areas of the factory floor environment,” Pennington explains. “This kind of flexibility becomes an even larger advantage if he must also ship his machine overseas where coordination problems can be far more difficult to manage.”

Surpassing the Competition

Another element helping to elevate SE&A’s control presence is that Siemens is highly focused on research and development, Pennington points out. “Globally, Siemens spends $5.32 billion on research — that’s $21 million a day,” he says. “Over the last 13-year period, roughly 8.7 percent of global sales have been reinvested back into R&D.” That is why Siemens is viewed as a world leader in innovation and technology. “Our products are not only world-class, but they are leading edge, too. This really hits home when you look at our catalog. Eighty percent of the products in there were introduced within the past five years. That’s how we stay ahead of trends.

“When you sum up all of the above, it’s not hard to see why we’ve made the strides we have in such a short time. We pride ourselves in being able to provide a total solution at the best value. R&D drives state-of-the-art products of superior quality, global availability and support drive customer confidence in applying the products and U.S.-based engineering, marketing and manufacturing ensures that the right products are brought to market. These are the areas where we shine….and our customers get to shine with us.”

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