German engineering and technology group Siemens (SIEGn.DE) will spend 2 billion euros ($2.16 billion) on a new global investment plan as it gears up to meet increased demand triggered by global stimulus packages. The company will build new factories, research and development centers, and training sites worldwide, Siemens said in a statement on Thursday.
The investment program will boost capacity for high-tech manufacturing, including constructing a new plant in Singapore for its industrial automation division and expanding at the site where Siemens produces factory automation devices in Chengdu, China. This year, it will also increase its research and development spending by 500 million euros.
Siemens also wants to be quicker than its rivals at implementing technologies such as Industrie 4.0, electric vehicles, and digitalization of the workplace. It is also trying to expand its presence in developing markets.
In healthcare, Siemens is investing in a facility near Philadelphia that will produce Acuson ultrasound machines, which will help it compete with market leader Philips (PHIA.N). The plant, which will have a production capacity of 1,000 machines per year, is due to be operational in 2023 and will employ 270 workers.
The investment program is expected to increase the company’s global production capacity by about a third, Siemens said. It will make the company one of the world’s largest healthcare equipment manufacturers. It will also strengthen the group’s position as a supplier of advanced technology.
The announcement comes as Siemens tries to recover from a string of profit warnings and one-off charges over project delays, pricing problems, and cost overruns. Its chief executive, Peter Loescher, was voted out of office by the company’s supervisory board last month and replaced by Joe Kaeser, who had previously served as the chief financial officer.
Loescher had been hailed as a hero who would lead Siemens out of bribery and price-fixing scandals that blackened the company’s image and finances after 2007. But his misjudgments of demand in key markets proved costly.
Siemens is also working to boost efficiency, cut costs and improve the quality of its products in the face of growing competition from cheaper Chinese firms. It also faces pressure from governments to cut subsidies for green energy, a trend hurting the profitability of its wind power business.
The company’s outlook is based on the management’s current expectations, considering the assumptions and known risks and uncertainties. This includes the economic and financial conditions, the development of the industries in which Siemens operates, and other external factors. Consequently, there can be no guarantee that the forward-looking statements will come true. Against this background, Siemens reserves the right to change its financial outlook at anytime. This applies to all published forecasts and projections. These are not binding; therefore, no obligation is assumed to update them. This also applies to all forward-looking statements of third parties in this report.
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