SPEECH: WITH HIGH SPEED TO SUCCESS

Transcription

1 SPEECH: WITH HIGH SPEED TO SUCCESS Hans-Jörg Grundmann CEO Mobility Division Saint Petersburg, September 13, 2009 Check against delivery!

2 Title slide Speech Dr. Grundmann / CEO Mobility Добрый вечер! My warmest welcome to St. Petersburg, the northernmost millioninhabitant city in the world. I am especially pleased that you have joined us as our guests for this press tour with the Velaro RUS from Siemens. It is the first train of its type in the area that one calls the 1520 region where trains operate on a broad gauge. The Hanover Industry Trade Fair in 2005 marked the beginning of the history of the high-speed train for Russia s railway. At that time, a development contract was signed in the presence of the then Russian President Vladimir Putin and German Chancellor Gerhard Schröder. The order itself for eight trains was subsequently signed in Sochi on the Black Sea coast in May Shortly afterwards, Siemens was also awarded a 30- year service contract by RŽD. Production of the trains began at Siemens Krefeld plant in 2007, where RŽD President Jakunin personally gave the signal for the production start. And here in St. Petersburg in December 2008, we presented the first train to the Russian public in the presence of Prime Minister Putin, Vladimir Jakunin and Siemens CEO Peter Löscher. The fifth train was delivered last month. And the remaining three trains will be arriving in St. Petersburg early in As part of the test phase, the Velaro RUS set a Russian speed record. It reached a speed of 281 kilometers an hour. Since the train is intended to operate at a maximum of 250 kilometers an hour, it has plenty of upper reserves available. The Velaro RUS is scheduled to enter regular service at the end of Passengers will travel in great comfort in air-conditioned cars with ergonomic seats and be able to use the Internet while on board. By the way our customers call the train Sapsan, which is Russian for peregrine falcon. It s a perfect name for this high-tech product. For me, the image of these beautiful falcons evokes thoughts of the unbelievable expanse of this great land. And you, our guests, will be able to experience this tomorrow on board the train as we speed through the vast countryside similar to being in flight. 2

3 Today, we d like to answer the following questions: How does this train fit into the Siemens portfolio? What successes we have already had with the train? And finally, what hopes and perspectives do we have for the train and the Russian market as a whole? The high-speed rail business, ladies and gentlemen, is part of our Rolling Stock Business Unit. And this unit, in turn, is a key part of the Mobility Division. We have concentrated the entire spectrum of mobility solutions at Siemens in the Mobility Division. It is a business that generates over 6 billion euros in revenue and has more than 22,000 employees worldwide. And what does our spectrum of offerings look like? Slide 2: Portfolio For major long-distance routes, such as between St. Petersburg and Moscow, we offer the Velaro platform. For freight transport, we offer high-performance, energy-efficient locomotives that can also be used for extensive cross-border routes. For regional and mass-transit rail lines within urban areas, we have energyefficient and climate-compatible regional light rail train sets, metro trains and trams in our portfolio. For long-distance, regional and mass-transit rail networks, we offer systems that increase passenger throughput. This, in turn, improves the productivity and flexibility of rail systems. Our traffic control and management systems for road transportation help prevent traffic congestion, keep traffic flowing and ensure greater safety and for highways as well as for urban street networks. And regardless whether you are traveling by car or arriving at an airport via high-speed train, Siemens baggage handling systems ensure that your suitcases reach the plane on time. The same is true for air freight as well as letters and packages handled by post offices. We provide post offices with highly automated sorting centers that can direct mail to its destination in the shortest possible time. With our comprehensive concept which we call Complete Mobility we want to develop and market highly efficient mobility solutions that sensibly network and integrate various transport modes with one another in order to transport passengers and goods as efficiently and safely as possible, with the least harmful impact on the 3

4 environment. Complete Mobility improves people s quality of life and helps protect the climate as well. Slide 3: Climate protection portfolio Siemens is an infrastructure company that has focused its portfolio on products, systems and solutions for Industry, Energy and Healthcare. We are busy perfecting the technical possibilities for increasing energy efficiency, and thus protecting the climate and environment. In fact, we are Number One in the world for environmental technologies. In fiscal 2008, the Siemens Environmental Portfolio generated a business volume of 19 billion euros. Of that total, by the way, 17 percent was contributed by the Mobility Division. By the year 2011, we are aiming at generating 25 billion euros a year with our Environmental Portfolio. As the world s leading green technology company, we are developing our environmental products and solutions in close dialogue with our customers. And can this be done? Only by understanding the daunting challenges that are confronting the world and our company. We are shaping the Siemens portfolio to provide answers to the challenges of the coming years and decades the global megatrends: urbanization, demographic change and climate change. These trends are driving the growing global demand for energy and are accelerating the depletion of natural resources. In my view, the trend toward urbanization is an especially urgent and important challenge. Since 2008, more than half of all humans live in urban centers. And this trend is accelerating. Even now, around three-quarters of the world s energy consumption and global greenhouse gas emissions are directly and indirectly attributable to cities. Yet cities only cover a tiny percentage of the earth s surface. It is clear that cities face enormous challenges ahead and particularly in regard to their transportation infrastructures. Obviously, the battle against climate change and environmental pollution will be won or lost in the cities. So what can the optimization of traffic flows and the efficient management of mobility contribute to this battle? 4

5 Slide 4: Greenhouse gas emissions We have compiled the world s energy-related greenhouse gas emissions on this chart. I don t need to read off the figures. But the conclusion here is obvious: Every effort should be made to reduce motorized private transportation as well as the resulting CO 2 emissions. Preferably both and simultaneously. Rail transportation, in contrast, is environmentally friendly per se. The more traffic that can be shifted to rail systems, the better. Slide 5: Megacity Challenges The importance of mobility for the quality of life in cities and the very competitiveness of cities are also underscored by scientific studies. Siemens in cooperation with prominent research institutions and consulting firms has already conducted a number of such studies. The first Siemens study on the challenges facing huge cities appeared in 2007 under the title Megacity Challenges. This initial study of the infrastructure challenges confronting megacities made it clear that responsible officials in politics and business see traffic, transportation and mobility as the biggest challenge that all cities face. In other words, the main issues are not considered to be energy or water supplies, or even healthcare but transportation and traffic. Solutions for traffic problems were ranked as decisively important for ensuring the quality of life and the competitiveness of megacities, urban conglomerations and cities. Here, we also asked the scientific community for support. In the meantime, a series of joint studies have been conducted and released. They center on the possibilities for saving energy and reducing CO 2 emissions in major cities such as London, Munich and Dublin. The most recent study focuses on Vienna. It answers the question why Vienna and its public transportation system are so successful: 35 percent of all individual commuting and movement in the city is done via public transportation. This is a record level for Europe. The reason behind this success is a long-term transportation policy shaped by 5

6 consensus, and an efficient and attractive mass transportation system operating with the most modern light rail trains, trams, metros and buses, as well as an effective system for managing the city s street and highway traffic. The Vienna study has once again proven that Siemens has the most comprehensive portfolio for meeting the challenges of mobility. We are the only supplier worldwide able to offer integrated traffic and logistics solutions from a single source. This portfolio enables our customers to develop a fully integrated system that manages their rail, road and airport traffic. Regardless whether the system is designed for Vienna or for St. Petersburg. Slide 6: Velaro platform Ladies and Gentlemen, The Velaro is an outstanding product from our portfolio in every sense of the word. It represents the cutting edge for trains, and is the true S-Class of trains. And when one thinks of the S-Class, everyone in the room immediately thinks of high tech: Five meters long and able to cruise at 250 kilometers an hour. And the word high tech applies even more to the Velaro: 200 meters long and capable of 400 kilometers an hour! This world speed record for series-built train sets isn t the only superlative for the Velaro. With more than 200 trains sold to date, it is the world s most successful highspeed train with a distributed traction system. In the meantime, it is operating in half of Europe. And also in China. And soon in Russia as well. And whatever colors the train is painted, it is green! Because high-speed trains based on the Velaro platform consume the energy-equivalent of only 0.33 liters of gasoline per seat and 100 kilometers. That s the amount of gas that fits in a cola can. Beginning in December, this new train will connect St. Petersburg with Moscow in three hours and 45 minutes which is 45 minutes faster than the previous fastest train connection. And, after all, this is the entire half of a football game that one can now watch at home. 6

7 And the Velaro also has an advantage over planes flying the same route. Although the flight itself between Moscow and St. Petersburg takes only 1 hour and 20 minutes, we all know from our own experience how the travel times to and from the airports and the airport waiting times can add up. The Sapsan s sister train in Spain demonstrates that the Velaro makes an important contribution to the attractiveness of rail travel and thus helps protect the climate. The rail route between Madrid and Barcelona is in fact so attractive, that more and more passengers have decided in favor of the Velaro E. According to the Spanish Ministry of Transportation, the number of passengers using the new high-speed trains has tripled since they went into service. From February 2008 to March 2009, a total of 2.3 million passengers used the high-speed link between Madrid and Barcelona. Around half of all people traveling this stretch now sit in a train. And no longer in a plane. It can be assumed that there will be a similar development for the link between Moscow and St. Petersburg. Ladies and Gentlemen, For us as manufacturer and certainly for the RŽD as well, the Velaro RUS is the flagship of the fleet. But it is about even more. The train is a fitting symbol for our ambitions in the Russian rail and mobility market. Slide 7: The rail market Due to its sheer size, this market is and remains impressive. According to the 2007 UNIFE study, the accessible market of the CIS countries represents around 6 percent of the entire global market. Russia has the second biggest rail network in the world, exceeded only by the United States. Russia s rail network encompasses around 88,000 kilometers. Nearly half of the total is electrified. The famed Trans-Siberian Railway alone is over 9,000 kilometers long. The country s system transports 1.3 billion passengers a year and 1.3 billion tons of freight. This huge volume ranks Russia as Number One in Europe. In fact, the country s rail system handles more than 80 percent of Russia s total freight transport. We can only dream of such percentages in Western Europe. 7

8 These numbers and dimensions make it clear: This market offers enormous opportunities. And we want to seize these opportunities. Our goal is to establish ourselves as the leading foreign manufacturer in the Russian market. We have already made considerable progress toward this goal. For instance, we are planning the production of freight locomotives with the joint venture Sinara-Siemens. And we have recently received political support for these plans from Chancellor Merkel and President Medvedev on the occasion of their meeting in Munich in July At that time, a Memorandum of Understanding was signed for founding a joint venture with Sinara and producing 100 locomotives a year. Production is planned at the Ural Railway Machine Building Plant (Russian: УЗЖМ / UZZhM - Уральский завод железнодорожного машиностроения»,) in the industrial center of Yekaterinburg in the Urals. We expect to finalize details of the agreement in the coming weeks. In regard to energy efficiency and operating costs, the locomotive will offer clear advantages for the customer: A new double locomotive will replace one-and-a-half of the previous model. The demand for modern locomotives for Russia s freight transportation is substantial. And the investments planned for replacement and expansion reflect this demand. At present, the RŽD operates 10,000 electric locomotives and 10,000 diesel locomotives. According to its own estimates, RŽD will need a total of 11,700 new locomotives in the period between 2008 and As one of the leading locomotive manufacturers, we are naturally striving to help RŽD master this challenge. We can also book our first success in another field in the Russian rail market. One example here is the order received from RŽD in the current quarter for 200 sleeping cars, which we will build together with the local car producer Tverskoy Vagonostroitelny Zavod AG, or TVZ. The sleeping cars can be used by RŽD in cross-border routes and throughout Central and Western Europe such as on the Moscow-Paris route or the Moscow-Berlin route. In addition, we recently signed a Letter of Intent with RŽD for the delivery of regional trains for the Olympic Games in Sochi in The trains will operate on the Black Sea coast between Adler and the sport venues in Krasnaya Polyana. For Siemens, this would mean a very important entry into Russia s 1520-gauge regional train business. 8

9 There are also many major opportunities here as well. A recent market study indicates that RŽD is currently operating a fleet of around 15,000 electric multiple-unit trains. The fleet will have to be replaced and at the same time expanded in the coming years. So there is an enormous demand for replacement and expansion investments in this field. To meet all these needs, Prime Minister Putin approved a railway development program in He is allowing the Russian railway company RŽD to invest around 380 billion euros by the year And the sheer size of what is to be accomplished in the next two decades is enormous. You can see the concrete numbers here. According to the program, the state is prepared to bear 20 percent of the investments, while 31.5 percent is to be borne by RŽD and the remainder by the private sector. There are certainly concerns now that the economic recession could interfere with these plans since the Russian freight transport market is also being noticeably impacted by the crisis. At any rate, recently it was indicated that the strategic plan was only to be adjusted but not fundamentally changed. We will have to wait and see in this case, as in all regions and industries, how the global economy develops. Regardless of the current economic developments, we can speak of a trusting partnership between the main Russian railways customer and Siemens when looking at the Russian market. We have long prepared ourselves to meet the special demands of this market and have in the meantime convinced our partner of our advantages. As a result, our partner has also rewarded us with its trust even in the midst of the global economic crisis. One can t rate this trust highly enough, since the Russian rail industry also offers a high standard and is able to satisfy large parts of the domestic Russian needs. There are no golden rules for guaranteeing business success in Russia, but the Siemens examples show that some prerequisites are at least helpful. Slide 8: Siemens competencies In the infrastructure and transportation sector, the demand is, above all, for innovations that increase energy efficiency and cut costs, while at the same time reduce CO 2 emissions. Energy efficiency is becoming increasingly important in Russia. The 9

10 Committee on Eastern European Economic Relations has estimated that Russia currently consumes twice as much energy per production unit as China, and four times as much energy as Western countries. If the country succeeds in improving its energy efficiency, the savings in energy resources will also help moderate international prices. Another major success factor is a broad mobility portfolio, such as offered by Siemens with its Complete Mobility concept. In addition to rail systems, operators and mobility providers can also be provided with networking capability with other transportation modes as well as logistics solutions from a single source. In St. Petersburg and Moscow, for example, the Velaro isn t the only transportation solution we are providing. Siemens will also equip the St. Petersburg and Moscow ring freeways with traffic control systems. The St. Petersburg ring freeway, which is 115 kilometers long, is one of Russia s biggest highway construction projects. And we have also provided a mail sorting system for the Russian Postal Authority in St. Petersburg. The system will be inaugurated in the spring of Finally, a long-term and sustained presence and proximity to the customer is essential for business success in Russia. Siemens, for example, is a provider of infrastructure solutions in the Sectors of Industry, Energy and Healthcare in Russia, and has offices in all of the country s seven federal districts. Siemens has been operating in Russia for the past 155 years, throughout all of the country s historical phases. Let me give you just a few examples: Siemens built the country s first electric tram system in Nishni Novgorod, way back in A few years later, we supplied tram systems for both Moscow and St. Petersburg. In 1883, Siemens provided electric lighting for the Nevsky Prospekt in St. Petersburg. At the end of the 19 th century, theaters in St. Petersburg and Moscow were equipped with electric lighting systems from Siemens. And our close business relations continued in the era of the Soviet Union as well. Among other projects, Siemens delivered a series of freight locomotives using innovative silicon-controlled rectifiers in This is the way a company can build up and maintain a long and thorough understanding of a country s culture, people and business practices. And ultimately this is an advantage when it comes to working closely with domestic partners to meet the frequent requirement for localized production. 10

11 What are the market perspectives? If we look at the development program planned for rail transportation in Russia up to the year 2030, then it is obvious that a large spectrum of partnership possibilities is opening up for Siemens. At the same time, railway systems in the CIS countries, the Baltic States and Finland will also be developing further. That s why the development of systems and solutions to meet the needs of the 1520 market will be such an important priority at Siemens in the coming years. But the rail sector isn t all. We want to be a partner in all mobility and logistics sectors in Russia in the spirit of our Complete Mobility concept. This would involve, for example, providing state-of-the-art traffic management systems as well as solutions for light rail systems. We are also working actively with the Russian Postal Authority on modernizing the infrastructure of the Russian postal system. We will be participating in the upcoming bidding process for mail-sorting centers. And finally, airport projects in Russia can also be covered by our business portfolio. Final slide: Thanks for your attention We at Siemens Mobility are determined to become a long-term technology partner for Russia s transportation and logistics sectors, and hope to write a new chapter in the long history of Siemens presence in Russia. In doing so, we and our customers are following the wise advice given in that Russian saying: An old friend is better than two new ones. Or in Russian: СТАРЫЙ ДРУГ ЛУЧШЕ НОВЫХ ДВУХ. The train we will be traveling on tomorrow the Velaro RUS has been built by an old friend. But don t worry: The train is new! And it inaugurates a new chapter in the history of Russia s rail transportation. We at Siemens are proud that we have been able to participate in this project. I look forward to the tour with you tomorrow. ************************************************************************************* 11