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Interview

Javier Pastorino – CEO Argentina / Uruguay & CEO Power & Gas (South-America w/o Brazil), Siemens

The CEO of Siemens Argentina and Uruguay who is also the CEO of Siemens’ Power & Gas Division South-America (excluding Brazil), highlights the company’s strong commitment to Argentina and elaborates the role Siemens will play in the future of the country.

Could you please briefly introduce yourself?

We are very optimistic that the country will develop—predominantly in infrastructure—which will lead to growth across our entire portfolio

In the beginning of June this year, I assumed position as CEO of Siemens Argentina in addition to my prior role as CEO of the Power and Gas Division for South America excluding Brazil. In my 17 years within Siemens, I have held numerous management positions in Argentina and spent three years in our German Headquarters in a European business development role. Naturally, having two roles is a challenge, nonetheless, with the right attitude it is manageable. I feel honored to lead my teams here, to be able to develop and drive our business in a transparent manner and grow as business regardless of the ever increasing competition in our sector. I am fortunate enough to be thoroughly supported in facing and overcoming these challenges by innovative, environmental-friendly and competitive products in all common denominators of the Siemens’ offering.

What have been your immediate priorities upon assuming position as CEO Argentina / Uruguay and CEO Power & Gas South America (w/o Brazil)?

Frankly speaking, we are focusing on one big task: growth! We are very optimistic that the country will develop—predominantly in infrastructure—which will lead to growth across our entire portfolio, hence why we are very optimistic in the future of our Argentinean operations. This optimistic trajectory naturally inherits as consequence, that we prioritize substantial presence in all of our segments in order to thoroughly capture growth opportunities. Specifically the oil & gas industry will offer significant opportunities to realize for us; undoubtedly the oil & gas industry has experienced a very dynamic evolution in the last years and the resulting challenges of the market volatility and the decline in international prices challenge the business environment significantly, we are committed to face these challenges side by side with our clients. Maximizing efficiency throughout the entire value chain is a mandatory goal for new investments, in this context, innovation applied to technology, processes and business models becomes an excellent catalyst for achieving the necessary improvements in efficiency. Our technological innovation, leading products, systems and solutions, offer numerous opportunities for optimization if incorporated strategically and integrated intelligently.

Siemens has been doing business in Argentina for more than a century; how would you describe the company’s scope of business today in the Argentinian market?

Siemens is an active player in the sustainable development of Argentina since 1908. We have developed many projects along these 108 years in different areas, from infrastructure, transport, telecommunications, energy, health and all kind of other industries; the most prominent example probably being the Obelisco –Icon of Buenos Aires—which was built approximately 80 years ago by Siemens. Today, we are focusing all of our activities under three strategic pillars: electrification, automation and digitalization. In the power generation industry, for instance, this translates into numerous projects in thermal or renewable energy generation as well as into projects in the transmission and distribution arena, factory and industry automation and much more—the whole energy value chain. Of course, these three pillars also apply to our other business segments such as mobility or healthcare. All of these segments become increasingly complex and we are committed to develop, offer and apply integrated solutions!

Siemens’ Joe Kaeser (Siemens global CEO) said to President Macri, that he plans to further reinvest in Argentina and create another 1000 jobs directly and some 4000 indirectly in the next four years. Just how strategic is Argentina to Siemens’ regional and global footprint?

Siemens has more than 100 years of presence in Argentina, proving that Siemens has always been and still is committed to Argentina!

As aforementioned, Siemens has more than 100 years of presence in Argentina, proving that Siemens has always been and still is committed to Argentina! Our Argentinean operations are leading in the region in terms of turnover and revenues and we believe this will even further develop in the future—the visit of our global CEO Joe Kaeser can be interpreted as strong signal showcasing explained commitment. Especially since president Macri was elected, the government has created the basics and the required regulatory framework to attract further investments into the country and produce the growth that Argentina deserves and has been waiting for! President Macri and some ministers of his cabinet have recently visited Germany and produced a very positive image of Argentina to many German multinational companies, including Siemens. We plan to leverage on our recognition as brand and appreciation as business in Argentina – we are recognized as local player with multinational capabilities.

Speaking of Job Creation and Investments: President Macri also said that Argentina can learn a lot of German high technology companies – what can we expect in terms of know-how and technology transfer into Argentina from Siemens?

I completely align with that statement. Siemens is committed to extensive research and development efforts across all our business segments. Currently we invest roughly EUR 4.8 billion (USD 5.4 billion) into research and development yearly, producing patents and innovative technologies, solutions and business models on a daily basis thus building the foundation of our portfolio; clearly a unique value proposition considering the global footprint and added value locally! I am confident, that these innovations will ultimately result in high quality jobs, in Argentina for Argentineans, as these innovations will be implemented in local projects.

Around 1/3 of the energy consumed in the country is produced using Siemens technology. What is the role of the energy industry within your business in Argentina?

Undoubtedly Siemens is the leading company in the energy segment in Argentina. This segment is a significant part within our business in the country and this is not only as a consequence of the technological innovation of our products, services and solutions, but mainly due to the strong local expertise, which adds real value to our customers. We have a significantly strong presence in the power generation sector because we are introducing the most efficient technology in terms of heat rate and emissions in addition to considering environmental influences and always creating efficiencies. Every day, we are working side by side with our customers to help them building their projects and to maintain the availability of power plants; we have a genuinely spotless track record proving our capability and capacity in this area having achieved great results over recent years.

In 2014, 52 percent of all electricity produced was generated from natural gas, 16 percent from oil and only 2 percent from renewable resources – current trajectories as well as government ambitions show, that this balance will shift in Argentina’s future towards more usage of natural gas as well as renewables. How does Siemens position itself in Argentina in anticipation of these developments?

Natural gas is the cleanest source to generate power within the thermal power generation segment and –as aforementioned—we fully anticipate the developments on future use of natural gas by developing and providing the most advantageous and most efficient gas turbines in the world. What’s more, next to the its oil and gas resources, Argentina also has some of the best renewable resources in the world and from an Argentinian perspective we must exploit the renewable energy potential just as we will exploit the potential resulting from natural gas. I am confident, that our newly elected government has made the right decision on concentrating on further utilizing Argentina’s gas and renewable resources and as Argentinian citizen—just as Siemens as company does— I fully support the government’s current energy strategy!

Electric energy generation in Argentina will require USD 38 billion of investments until 2024, of which USD 25 billion is needed for generation and USD 13 billion for distribution. Updating and maintaining these investments will require another USD 50 billion over the same time period – What is your strategy to tap into this vast potential?

These developments will merely reinforce the strategic significance we already place on Argentina within our global perspective! We will continue to work closely with our key customers and strategic partners thus finding comprehensive solutions that go beyond offering innovative technologies and new business models while fully leveraging on our superior portfolio; especially so in the segments of thermal power generation, renewable power generation, transmission grids, distribution grids and ultimately bringing our automation capabilities across the whole energy value chain! The former combined with our strong local presence will enable us to fully tap into said opportunities.

There is currently a big debate around the productivity and efficiency of the energy industry in Argentina. How is Siemens helping Argentinean businesses to overcome this challenge?

In the oil and gas industry—as in other industries—adding more automation, leveraged by digitalization and migration towards electrification, are elements that can positively change some rules in this highly competitive game.

In the oil and gas industry—as in other industries—adding more automation, leveraged by digitalization and migration towards electrification, are elements that can positively change some rules in this highly competitive game. This potential is applicable to all steps of the value chain of energy: whether it be in a distant oilfield, an electrical network of a large city or an industry that consumes this resource. As a country, incorporating innovation —both in the supply and the demand side— is the pathway to rapidly develop towards the desired energy self-sufficiency. The challenge is clearly how to be really efficient in producing oil and gas with all of its rotating equipment; our solutions combined with automation, digitalization and electrification provided by us are already helping customers gaining desired efficiency in their production process.

Siemens has signed a project with YPF in Planta Profertil and using Siemens technology and the plant has delivered great results. The focus of our work is based on the creation of measurable value for our customers; and the most important fact in this project was that the results were achieved without increasing the feed stock of natural gas and nonetheless reducing 25 percent of energy purchases to the grid. This is a perfect example of how, by working close to our customers, we can provide and generate a huge amount of value through innovative solutions based on proven best in class technology. In the same line of work, we are supporting other customers develop ambitious Combined Heat & Power (CHP) projects, where we see fuel efficiencies above 80 percent. Certainly we are ready to support much more opportunities in this area.

Siemens is known for its innovation capabilities – and technological innovation is what defines the limits of the Oil & Gas Industry to a large extend. What will be the next innovative technology we can expect Siemens to introduce to the market?

We constantly innovate across all our business lines, hence why I cannot point out one specific innovation to come next. Nonetheless, the company is launching a bundle of measures to further increase its power of innovation. Our company’s success and its long-term future lie in our power of innovation, so we are creating the conditions that will enable clever minds, both inside and outside our company, to implement their ideas quickly and effectively: in this context, commencing October first, Siemens will set up a separate unit to foster disruptive ideas more vigorously and to accelerate the development of new technologies. The unit’s name, “next47,” plays on the fact that Siemens was founded in 1847. Pooling its existing startup activities at next47 will enable the company to unite the best of two worlds: it will couple agility, speed and independence with a global customer base, many years of experience, credibility and financial strength. The new unit will have funding of EUR 1 billion (USD 1.11 billion) for the first five years. The new unit will be open to employees as well as to founders, external startups and established companies if they want to pursue business ideas in the company’s strategic innovation fields.

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