Shaken not stirred

Shaken not stirredSiemens is in the process of rethinking its business strategy towards the UK electronics industry now its involvement with GEC has gone sour. Richard Wilson spoke to UK chief executive Alan Wood about where Siemens will position itself for a successful future in this country
Not so very long ago Siemens teamed up with GEC to stir up the UK electronics industry with the joint takeover of Plessey, the 60 year old semiconductors to defence and telecommunications systems group.  
  History forgotten… Karlheinz Kaske and Lord Weinstock were the architects of the Siemens/GEC mega merger in the early 1990s, which nine years later both firms are trying to forget.
Nine years on the joint venture has turned sour and both Siemens and GEC are in the process of changing the nature of their separate involvements in the UK electronics sector. For GECthis has meant the sale of the GPS semiconductor business and its Marconi defence electronics arm.
Siemens on the other hand has sold its UKdefence business, closed the Tyneside DRAM wafer fab and terminated its telecoms joint venture with GEC, which was the cornerstone of the original Plessey takeover. The UK has been caught up in a change of business philosophy within Germany’s largest electronics group and Siemens’ UK chief executive, Alan Wood does not play down the significance of what is happening. “There is a very different wind blowing through the business compared with two to three years ago,”says Wood. “Bullets are being bitten.”
When Wood sees change on this scale his views are worth listening to. His own experience of the company goes back 17 years. “There has been ten years of decentralisation. When Ijoined, Siemens was a monolithic company where everything was controlled from the centre,”says Wood. “We have broken down the traditional corporate functions and business managers are encouraged to be highly entrepreneurial.”
Despite the sale of its stake in GPT, the nine year old telecoms joint venture with GEC, Wood is quick to counter any suggestion that the UK telecommunications market may not be as important to Siemens as it once was.
“The UK is still a key telecoms market for us,” says Wood, who makes no attempt to minimise the challenge facing the company particularly in the important public telecoms infrastructure market, which used to be addressed through the GPTjoint venture. “We are working from the ground up again, working from scratch,”says Wood. “We are already bidding in our own right for contracts with BT and other UK operators. I won’t say it is straight-forward, but it is very much a business we want to be in.”
Siemens UKcommunications business is centred largely on the former GPTsite in Nottingham. There is product development and manufacturing there for the private switch (PABX) business. It is also involved in the company’s Internet protocol and telephone integration businesses.
By comparison the public systems business is having to reform itself “from scratch” as Wood puts it following the breakup of the GPTjoint venture. At present there are just 30 sales staff and support engineers in Milton Keynes. However, Wood emphasises the importance of this business and the company’s commitment to expand it. “It is very much a question of timing,” says Wood. “We need a degree of commitment to get on to the starting gate in that business.”
He points to the recent investment in the company’s Roke Manor research centre (one former part of Plessey which Siemens has hung on to) which is supporting the telecommunications business through its research into mobile communications and broadband systems. There is also to new semiconductor design group set up earlier this year at Bristol.
However, something has changed in the approach of Siemens to the UK telecommunications market. There is a very definite emphasis on developing telecommunications services businesses along side the traditional equipment businesses. “We are a bit of a trail-blazer in that part of the Siemens business,”enthuses Wood. “Already 30 per cent of our UK business is in providing services and Icould well see that business dominating the over all UKbusiness.”
The type of services business Wood is referring to includes the design, building and running of computer and communications networks for large companies and most notably the civil service. It provides and maintains the computer and communications infrastructure for 4,000 staff in National Savings.
The “new” Siemens UK may also join the race for one of the UK’s operator licences for the next generation of mobile communications service. “It is not beyond the realms of possibility that Siemens could be involved in the bidding for a UMTS licence as part of a consortium,” says Wood. “I definitely could see us becoming involved.”
But it is not just IT services, Siemens is a broad based engineering firm so it also over services such as maintaining railway rolling-stock and running the baggage handling systems at Heathrow Airport.
Wood says the company is taking advantage of a general trend for outsourcing of services by large organisations, a trend which is very advanced in the UK. “We in the Uk got into the area of outsourcing ahead of many other European countries. We are in the middle of a change from manufacturing led industry to services led industries. A change which is analogous to the shift from agriculture to manufacturing a 100 years or more ago,” says Wood.
But do not run a way with the idea that anyone at Siemens UK – the post-Tyneside, post-GPT, post-GEC Siemens – is playing down the importance of manufacturing businesses. “We must not fall into the trap that manufacturing is not important anymore,”insists Wood. “This is a mistake many politicians make. But manufacturing is still crucial and we will always be a manufacturing company.”


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