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Interview

with Jean-Luc Vieux-Pernon, Mexico, SCHNEIDER ELECTRIC

01.09.2011 / Energyboardroom

Results of the company Q3 shows that a significant growth of the company was impulse by the “new economies” (being in this category LATAM +Mexico) what have been the contributions of Mexico/ LATAM to the overall growth of the company?

Schneider Electric has achieved broad based growth in the third quarter with sales well in line with our expectations. The performance illustrates once again the strength of our position in new economies and the growing contribution of solutions and services business. In Latin America, particularly in Mexico, we have experienced a two-digit growth. The growth in “new economies” has been a clear factor for the good health of Schneider Electric in 2011; therefore, we aim to keep on delivering best-in-class performance through global product leadership, innovation in customer-focused solution offerings, and further expansion in both mature and new economies.”

What have been the solutions and services that have driven the growth in Mexico and Latin America?

Schneider Electric has been growing extremely fast in the past five to seven years; during 2011 we were especially driven by integrated solutions across multiple market segments, including leadership positions in energy and infrastructure, industrial processes, building automation, and data centers/networks, as well as a broad presence in residential applications. Also, the company has grown in size, part of it has taken place organically but also through acquisitions. Over the past years we have seen a very large number of acquisitions that have impacted North American operations and in particular Mexico. These worldwide acquisitions have been very substantial and focus on the company pulse or core business which is energy management. I would like to mention two of the most significant and recent acquisitions Schneider has had, in 2010 we acquired Areva’s distribution division and in 2011 Telvent, an IT company specialize in software and technology that will give us a huge potential growth for the future, specially in all related to smart grid applications and the Oil & Gas sector. Telvent has 6,000 people worldwide and 130 people in Mexico. In the other hand, one of the reasons for the success of Schneider Electric is that for several years now the company has been moving from a traditional approach – which was a product sales – to a complete solution one. Now, we focus more and more on operational and efficiency issue our customers are trying to resolve.Regarding the Oil & Gas sector we’ve grown though three main solutions:1. Energy Audits2. Modernization of installed based equipment3. Critical applications security solutions4. Pipeline monitoring (Telvent SCADA)

How is integration of Telvent going in Mexico?

Telvent’s strong positioning in infrastructures and best-in-class software and IT capabilities fits particularly well with Schneider Electric energy and process management expertise and global presence. Together Schneider Electric and Telvent will be able to offer customers smart solutions, software and services across numerous market segments. The integration will provide customers comprehensive solutions for energy management and intelligent and efficient infrastructures in several areas: • Within Smart Grid, Telvent grid monitoring and control software complements Schneider Electric field level offer, to enable a more efficient, flexible and secure grid; • Within Oil & Gas and Water infrastructure, Telvent complements Schneider Electric integrated energy management architecture, EcoStruxure, to deliver a leading information management solution for piloting, monitoring and optimizing networks; • The world-class Telvent weather information services will add significant value across all existing and future Schneider Electric offers, delivering considerable operational benefits in Energy, Transportation, Water, and many other markets; • For Smarter Cities and Transportation, Telvent intelligent traffic solutions complements Schneider Electric offer in Electrical Vehicle, Security Monitoring and Energy Management; • Telvent’s strong Agriculture and Global Services businesses will be further expanded through Schneider Electric global coverage. Telvent is a very dynamic and fast moving company. Its integration is going very well here in Mexico. In deed for several months now we have been working on some concrete projects, especially in the oil and gas sector.

Can you mention them, if possible?

Without being too specific, I can say that the projects where we find the most synergies in Mexico are in the oil and gas sector particularly in refineries, gas and exploration pipelines where Schneider Electric has a huge installed base of electrical distribution equipment and Telvent controls around 20,000km of Pemex pipelines though the Oasis SCADA System, Today Schneider Electric is involved in the management of pipelines that goes along with the large electrical infrastructure, and now with Telvent who brings more than 25 years of experience building business applications for major names in the petroleum industry and serving customers on six continents, managing more than 60 percent of total hydrocarbon movements in North American and Latin American pipelines, we definitely have a strong, comprehensive portfolio to take to Pemex, that is really our scope, managing and installing the electrical infrastructure around the pipeline with end-to-end pipeline solutions.

Five years ago when we last met Schneider, there were clear ambitions to become the leading automation and control company in the oil & gas sector. Did the plans change?

No, the plans did not change and actually Telvent is part of its reinforcement. It will apply not only in oil and gas, but also in transport and infrastructure projects. Telvent will actually help us keep growing not just in the automation part, but in providing complete solutions which we cover under a term which we called, “EcoStruxure”, a solution architecture, an approach which unites our unique expertise in power, datacenters, process and machines, building control, and physical security to enable intelligent energy management solutions for customers seeking to optimize energy efficiencies across multiple domains of their businesses.We deliver end-to-end solutions, helping our clients look for one vendor, one solution provider.

Since you took position you have express your will to further push Schneider renewable energy business. Can you please tell our readers about your plans?

Mexico over the last couple of years has driven a very proactive policy in terms of renewable energy, in particular wind power. We have seen the country growing from a few hundred megawatts a few years ago to around 2,000MW by the end of 2012. This is a very significant progress that has taken Mexico to a privilege position in Wind Power generation, the second largest generator in Latin America, and the 27th worldwide according to the the Latin America Wind Energy Association (LAWEA).In addition, the government issued during 2011 a new set of authorizations, “temporada abierta”, which would aloud a wave of 2,000 to 3,000 megawatts coming from renewable energies by 2015. In all of these wind farms, Schneider Electric is taking an active role in providing the electrical infrastructure. We do not produce wind turbines, but we do provide the automation and the electrical distribution and grid connection solutions of the Wind Farm. We have also been active in several geothermal projects, the last one being los Humeros in Puebla where we supply the electrical equipment to our business partner Alstom. This was an important project as it positioned Mexico as the 4th country worldwide in geothermal energy generation. The renewable energy that has been lagging a bit is solar. We are now seeing many initiatives from CFE and private companies at different scales. All of a sudden it seems that there is renewed interest in solar energy, because the potential in Mexico due to its high insulation levels. However it is true that today the technology is not yet as affordable as it is on wind farms. While the investment per kilowatt is still higher than on wind parts, solar carries other positive aspects such as scalability and flexibility. We provide solutions that take the energy captured by solar panels to the grid.

I guess that in the future new economies will continue fuelling the growth of the company. What are Schneider Electric’s ambitions in this part of the world for the next five years?

Schneider Mexico has around 8,000 people and 11 or 12 factories in the country. 2/3 of our production goes to the US and the rest to Central America, therefore we want to keep consistency in our exportations levels and increase our participation in New Economies. Aside form our manufacturing activities; we will keep moving more and more in the direction of being a privileged provider of complete solutions around energy management. This is our core business and it won’t changed, this will keep positioning us in the different sectors of the market, whether it is utilities, oil and gas, industrial facilities, data centers or green and smart buildings.

What would you like to be your final message to our readers about Schneider Mexico?

Act towards a more efficient future. Many people, including myself, believe that we absolutely need strong collaboration from government, business and academia to solve the energy dilemma that threatens our future.We need federal and state governments to step up their regulations that mandate and encourage a smarter, more energy efficient nation.We need CEOs of business to understand their energy usage and put standards and requirements in place to reduce consumption. As business leaders, we have standards in place to ensure the quality of our products and the safety of our employees. We can and must devise similar standards and requirements for our respective companies’ energy usage, putting sustainable energy management programs in place and taking responsibility for them on a day-to-day basis. It’s good for the bottom line and good for the environment.We need academia to start to educate and train the future workforce that will make this a reality. There are far too few programs in place at universities that give our future employees the skills and competencies they need. For example, these are the kind of skills that can help a business analyze a building’s energy use, understand the dynamics of a building and show the facility manager how they can save 30 percent or more on their energy bill.We also need to stop ignoring one of the simplest solutions available to us today — so let’s be smarter about the way we use and conserve energy, which could enable us to effectively generate energy for tomorrow by saving it today. Energy efficiency is the world’s cleanest, quickest and cheapest energy resource. The technologies and services are proven and commercially available today.Mexico has grown in the last couple years by beating other countries in developing technology and fostering innovation, and responding rapidly and appropriately during times of crisis. We are in an energy crisis. We cannot be neutral or indecisive. Our next step needs to be action. And any action needs to include the one issue that everyone supports – energy efficiency. This will be the defining factor in our country’s collective success – or failure – in securing our energy future.

What has been the most pleasing part in working in a country like Mexico?

What make the difference is the people; their willingness to do things and the kindness they have to help you. You find that at a personal and at a professional level.

Has your managerial style change within the Mexican context?

As a foreign leader, you need to blend in. You need to balance your personal culture, with the local culture and the company culture. Combining these three elements will allow you to obtain optimum results though efficient team work resulting on a positive working environment. So, based on this, I would describe my managerial style as straight-forward, honest, direct and challenging but above everything, a team player. You have to have an ability to engage people to believe in you, while being lucky enough to be in the right place at the right time, you must be able to marshal the resources to achieve that vision.

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