This is the latest in our “Masters of Manufacturing” series, presented in partnership with The Indiana Economic Development Corporation. Each month we share insights and ideas from innovative, growth-minded manufacturing CEOs from across the nation as they navigate this tricky time in history.
For Siemens in the United States today, conditions are full speed ahead. The Germany-based industrial giant has been picking up momentum in orders amid a slowing global economy. Its recent performance notably contrasts with that of chief rival General Electric, which has been trying to avoid corporate meltdown.
It’s up to Barbara Humpton, CEO of Siemens USA, to help keep that contrast going in the here and now for Siemens’ $23 billion in annual revenues and more than 50,000 employees in the company’s largest market. And yet for Humpton, another urgent priority is to position her company for a future that can look cloudy even for a giant that has dominated in many traditional areas of industry and technology — but isn’t assured of the same dominance as manufacturing and markets undergo ongoing digital revolution.
So Humpton is overseeing an 11-percent year-over-year increase in Siemens USA’s R&D investments, now reaching $1.4 billion annually. She is leveraging synergies from the company’s 2018 acquisition of Boston-based Mendix, which made Siemens one of the world’s 10 biggest software companies. And Humpton is continuing to press the digital transformation of the operations she manages even while launching a new initiative for Siemens USA to help other companies with their own journeys into an uncertain digital future.
Part of the challenge and opportunity for Siemens is structural change. “So we’re creating more pure-play businesses under the Siemens corporate brand to take advantage of our reputation while enabling our businesses to tailor business processes to their own markets,” Humpton tells Chief Executive. Under the company’s recently announced “Vision 2020+” initiative, Siemens intends to give its individual units more autonomy and entrepreneurial freedom.
The role of Mendix is increasingly important as well. The company is a leader in developing and deploying “low-code / no-code” platforms that enable “citizen developers” to come up with software advances without specific training as coders.
“There simply aren’t enough programmers in the world to meet the rising demand for app development,” Humpton explains, “so we sought out a company that created a development platform which makes it possible for average people to become citizen developers and, with just a minimal amount of training, to assemble codes themselves. There’s tremendous demand for this kind of capability because of record-low unemployment and because educational institutions can’t churn out enough [programmers] to meet demand.”
Under Mendix’s approach, she says, “there is encapsulation of reusable chunks of code, and all we have to do is put those building blocks together to accomplish” specific customized objectives. “As we all now instinctively use Word, eventually many of us will instinctively put together software applications.”
It’s a similar spirit of democratizing digital advances that, in part, has led Siemens USA to create a new initiative: a consulting group that is “supporting customers in their own digital journey,” Humpton says.
“Customers are making these digital transformations, and we’re helping them apply applying the same techniques and tools we use for our own operations.”
Siemens had a similar outside-consulting group until several years ago but in recent years turned such efforts on helping transform internal operations, Humpton says. “Now we’ve decided to turn that group around again and face externally, and we’re building that organization again because we see such demand from folks who need that ongoing support.” Siemens is working with “major consulting firms” in its new outreach, she says.
“What you can quickly see is that every company has a unique challenge,” Humpton says. “In some companies, what we’re trying to do is help solve a particular operational problem; others are trying to create a new business model; and others are just trying to get started and take the first step” in digital transformation.” Siemens’ new group provides services that range from advice to execution of full-blown pilot projects with customers.
“Our experience already is that if customers are taking steps and getting started, see that through and then take the lessons learned and expand pilot projects, that works really well,” Humpton says. “It’s fun to see the adoption rates as people get their feet wet, and realize that this isn’t as massive as something like ERP. This is a completely different kind of change.”
At the same time, Humpton and Siemens USA have work to do on their No. 1 issue internally: talent. That’s why she’s ordered expansion of workforce programs including an approach to job apprenticeship that the U.S. arm has borrowed from decades of the parent company’s experience in Germany.
“It combines an education program with a [field] such as mechatronics, where people can learn to do the computerized manufacturing that we have in so many plants now,” she says. “They get a hands-on experience in the factory itself and get paid for their time while they’re in school. They come out with no student debt and great jobs.”
Humpton was a veteran of Lockheed-Martin and Booz Allen Hamilton when she was recruited to Siemens USA in 2011. Siemens AG CEO Joe Kaeser tapped her for the top U.S. job last year. She has benefited from an industrial economy in America and worldwide that was burgeoning for several years. Siemens also has acknowledged that its U.S. business got big boosts from the late-2017 corporate tax cuts, “and the reduction in regulations has been well received” by the company, she says.
But she’s concerned about recent developments that have hamstrung growth and forced companies to make difficult decisions such as Siemens AG’s decision to cut 2,700 jobs worldwide in its Power and Gas division as part of a plan to spin off the embattled business. And Siemens would like to see new Trump-administration trade agreements.
“We have been making prudent adjustments,” she says. “Overall we are pretty well situated in the U.S. and expecting normal operations here, and the market is doing quite well. Our industrial customers do have concerns about tariffs and their impact, and in some cases they may be delaying decisions about what to invest in and why. But it hasn’t carried into our own business outlook in any significant way.”