In an interview with Andre Clark, Senior Vice President Siemens Energy Latin America and Vice President Siemens Energy Brazil
Senior Vice President for Siemens Energy Latin America, Vice President of Siemens Energy Brazil
Mr Clark, the Ukrainian War caused a huge crisis regarding the commercialization of natural gas, which was largely supplied by Russia. In Brazil, natural gas production is still in its infancy. How does Siemens Energy see natural gas, especially in view of the energy transition issues?
Natural gas is an excellent substitute for coal, so it is an energy transition gas. Today, Siemens Energy does not have a client in the world who, when buying an infrastructure to transform gas into electric energy, does not ask us if the structure is already prepared for hydrogen. So, gas is not only the transition fuel, the exit from coal, it also provides the opportunity for the arrival of hydrogen because the infrastructures are similar. And our products are already prepared for this leap.
Here is a classic transition situation: Brazil discovered a very large amount of offshore oil and gas, which is the famous pre-salt, in 2006. By 2025, we will be the fifth largest hydrocarbon oil producer in the world – and there is a lot of gas associated with this.
However, given the wealth of green resources, the question today is whether Brazil will jump straight to green hydrogen. That answer is not clear yet. But as we are increasingly pressured by climate change, a scenario in which Brazil will skip the gas transition and go straight to hydrogen cannot be ruled out. This may be possible in the next 10 years. And this timeframe, in the energy world, seems like a long time.
What are the key points of Siemens Energy’s strategy for the coming years regarding renewable energy investments, and how does Siemens plan to achieve these goals?
First of all, the first and most obvious strategy of Siemens Energy was to acquire 100% of the shares of Siemens Gamesa, because we believe that wind power is a very important business for the future.
Siemens Energy’s strategy is to do everything – from generation to transmission to decarbonizing the industry. We want to be a one-stop shop. We generate energy from wind and gas, we transport this energy, and finally we help industry to use hydrogen, take fossil fuels out of their processes, improve their equipment by compressing gas, by doing carbon capture storage, for example. We are an equipment company, a technology company dedicated to the energy transition of its customers, of its countries, and so on.
Demand for this equipment has been growing very fast thanks to green packages in the European countries and the United States, as a consequence of the Ukraine war and climate change. Since the start of the war countries have been preparing for a new energy matrix. For the world’s energy transition, we will need 22 times more copper and 30 times more steel, for example. This will change the way value chains are organized. Besides these countries realize that it is very important to have at least a certain self-sufficiency, to have several partners. This also sheds light on Latin America’s role.
For Siemens Energy, this means that we need to prepare our industrial processes, our plants, for a much higher level of productivity, competitiveness, and reliability. What we are doing today, together with Staufen, is exactly that, going to work there on the shop floor, there in the value chain, where things start, to ensure that we have a well-coordinated value chain, one of high quality.
The world has become more demanding, riskier, and costlier, with high interest rates, so today you must make a lot more profit because money has become more expensive. Our value chains have certainly become more volatile, less predictable. This means that our production must be more agile. Any really important problem on the shop floor must be communicated to management so that it can be solved quickly. It is no longer that ultra-efficient just-in-time chain with everything running like clockwork. It is almost a “just in case” chain, where, if something happens, we can change it quickly. We hired Staufen to do this change management on our production floor. How do we react fast? How do we solve problems quickly? These are the goals of Staufen’s work. And the question for us is how you treat the worker not only as labor, but with intelligence and heart simultaneously.
Siemens Energy emerged from the breakup of Siemens Gas & Power in 2020. Since then, we know that you have been investing heavily in the development of your leadership and management models. How do these initiatives contribute to supporting the growth that the company expects to achieve in the coming years?
This is at the heart of this goal. Siemens Energy is undergoing a profound reorganization, flattening hierarchical levels. In a nutshell, it is proximity, which is to say, less hierarchy. We are transforming a hierarchical and pyramidal company to a much flatter structure, in which the leaders are closer to the workers on the shop floor – to those who produce, deliver, and sell.
This organizational change, where several hierarchical levels were removed, requires a very different management model, an easy, fast, agile method. So, it is accompanied by a lot of exercises about changing culture, behavior, values, that is, leadership essentials, and the new management model we are building with Staufen brings the practical results of this transformation, in a very concrete way, to the factory floor. Communication and change management must be much more concrete, and leader have to go to the shop floor to implement, listen to what the problem is, solve it together, in a systemic way, and develop an appropriate solution. Lean Management is transparent, more methodical; problems are escalated from the shop floor to the higher management levels quickly, and when necessary, has everything to do with our cultural change.
How have employees accepted all this change that is happening?
The teams’ reaction has been as good as it can be. They are already applying a management style that we are rehearsing, and when you apply things, you take away a certain anxiety. We had feedback from culture surveys that showed that we had a two-class citizenship model; that is, the employees in the factory felt they were treated differently than employees in the office. One important change was to move the whole office into the factories. So, this division no longer exists. All employees are in the factories, closer to the client, closer to the projects, closer to reality. We need to see that our employees at the base of the pyramid are thirsty for knowledge, want to climb their career ladders, want to educate their children. We need to be more attentive to them and make sure they have this opportunity. Valuing people increases productivity, brings more quality, allows us to increase traceability.
The spinoff of Siemens Energy in 2020 opened a new chapter in the history of Siemens power engineering. As an independent, exchange-listed company, Siemens Energy has broad expertise all along the energy value chain, in addition to a comprehensive portfolio for power utilities, independent power generators, transmission grid operators, the oil and gas industry, and other energy-intensive industries. With around 90,000 employees worldwide, the new company helps shape the energy systems of today and tomorrow.
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