Exclusive: Siemens to open global airport and cargo unit in Dubai

Siemens, Europe’s largest industrial conglomerate, has created a global division catering to airports, cargo and logistics in Dubai in conjunction with a digital platform, or industrial internet of things, near the Dubai Expo 2020 site. The new unit will be operational from the first quarter of 2018 and is part of the German industrial major's focus on innovation and its core technologies.

“We see this really as a growth market and we thought it's best to build it there where you have one of the biggest hubs in the world which is Dubai…We are starting that as we speak, we are ramping it up,” Roland Busch, chief technology officer of Siemens said in an interview with The National.

“It has two legs. One is on Expo 2020 in Dubai. We are bringing the MindSphere technology platform to it,” he said. “The other leg is that we are locating our headquarter for airports and cargo into Dubai, driving digitalisation there. This is very much digitalisation driven, the way you optimise your flow in your airport or cargo is definitely impacted heavily by digital transformation.”

Siemens, which ranks among the 10 largest software companies globally, has been investing aggressively in research and development (R&D) and acquisition of software companies as it seeks to strengthen its position to leverage data analytics and the global economy’s pivot towards digitisation, automation and electrification. The company plans to increase R&D spending by 8 per cent in 2018 to €5.6 billion (US$6.57bn) from €5.2bn a year earlier. About €1.2bn of the total is invested in its digital business. Since 2014, the company has increased R&D spending by 40 per cent.The company’s MindSphere Application Centre in Dubai and the new business unit dedicated to airports and cargo will be based in the Dubai South area next to the Expo site. The Mindsphere platform facilitates data analytics with a view to increasing efficiency and optimisation of businesses.

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The efficacy of the platform will receive a boost when Siemen’s partnership with Amazon Web Services, the most popular cloud provider, comes into effect next month.

“MindSphere is an open operating system. You can connect all the different dots, the energy system, the buildings, mobility under one umbrella, a sector coupling so to speak,” Mr Busch said. “So you can gather data, store the data and make them available for creating cases and applications. Northbound of our operating system, we have open APIs [application programming interface], any third party can use the data and program their applications on it.”

Siemens, which competes with General Electric, has about 40,000 employees dedicated to R&D. The company has 200 data and artificial intelligence (AI) analysts who added to the number of software applications last year by 250. Siemen’s leveraging of AI and digital technologies such as 3D has already led to Strata and Etihad to develop the region's first 3D-printed parts for aircraft interiors.

Mr Busch is dismissive of critics who ask what happens when machines no longer need humans to direct them as AI becomes more advanced.

“If you would have worried about the people feeding the horses and taking care of them in the past, we would never have combustion cars,” he said. “It’s technology rolling in, it kills certain jobs, you don’t need so many horses anymore. In these kind of disruptive changes you always some jobs which are transformed and others which are created,” he said.

An aging global population is also adversely affecting the world’s economy and technology can provide the reboot that can foster growth, Mr Busch said.

“We are living in an aging society globally. China’s labor market has peaked,” he said. Making his point Mr Bush cited a study by the consultancy McKinsey that illustrated waning growth over a 50-year period compared to a previous period, that was due to the lower number of people entering the labour force because of an ageing population. The gap in productivity can be bridged through the deployment of new technologies, Mr Busch said.

“It’s not worrying about not creating enough jobs to feed people,” he said. “It’s more about new jobs coming up, where people have to be trained and deployed.”

Siemens spends €500 million on training employees annually.

The Munich company has been trimming, restructuring and spinning off businesses as it vies to become more nimble and efficient. Siemens plans to list a minority stake between 15 to and 25 percent of Healthineers, its medical equipment business on the Frankfurt stock exchange in the first half of 2018, Mr Busch said. The IPO is slated to be Germany’s largest offering since Deutsche Telekom’s IPO listing in 1996 and is estimated to value the unit at €40 bn.

“Let’s see how the market reacts. We are going to IPO it… We are just about to make the market for it and introduce it,” Mr Busch said.

Brexit and the ensuing uncertainty over Europe’s relationship with the United Kingdom did not dissuade Siemens from listing the company in London, he said.

The lingering question for Siemens is related to how Brexit will impact the pound and the UK’s economy which may adversely affect the company’s overall performance.

“It’s about the valuation of the pound. We are not really changing our strategy there. The only thing worrying about Brexit is the way trading happens between the UK and European countries if that slows down the economy in the UK it has an impact on our markets…If the market slows down it will pull some of our business down too.”

The company continues to collaborate with Rolls-Royce and Airbus to develop a single-aisle 100-seater hybrid electric aircraft that is likely to be operational commercially by 2030, he said. The prototype and testing will be complete by 2020, Mr Busch said.