By John Revill
© Thomson Reuters
FILE PHOTO: Siemens CEO Busch attends China Development Forum 2023 in Beijing
ZURICH (Reuters) -Siemens will spend 2 billion euros ($2.16 billion) on a new global investment plan, the German engineering and technology group said on Thursday, as it gears up to meet increased demand triggered by global stimulus packages.
Siemens will build new factories, research and development centres and training sites around the world, the company said in a statement, as it aims to tackle problems exposed by the COVID pandemic and rising geopolitical tensions.
As part of the investment programme, which will cover announcements made during 2023, Siemens will spend 200 million euros on a new plant for its industrial automation division in Singapore.
“Siemens is experiencing significantly above-market growth. Today we announce an investment strategy to boost future growth, drive innovation and increase resilience,” said Siemens Chief Executive Roland Busch in a statement.
Siemens will also increase its research and development spending by 500 million euros this year, the company said on Thursday.
The company, which employs 311,000, is seen as a bellwether for the health of the global industrial economy. In 2022 it increased its annual sales by 16% to 72 billion euros.
“This wave of investments is supported by our record order backlog and reflects our confidence in the future,” Busch later told an event in Singapore.
The company has previously said its expects its total addressable market for its products, which range from trains to industrial software, to expand by 7% per year between 2022 to 2027.
The increase will be partly driven by stimulus programmes, such ase the Inflation Reduction Act in the United States and Europe’s Green Deal. Siemens also wants to grow faster than rivals and increase market share, Busch told analysts last month.
The investment programme – which will see further investment in Europe and the United States – could also be a response to the global COVID-19 pandemic, which gummed up supply chains and logistics.
Rising tensions between Beijing and Washington have made many companies wary of their dependence on China, especially with U.S. attempts to block China’s access to the latest technology.
Busch had originally favoured China as a location for the Singapore project but he faced resistance from Siemens’s supervisory board worried about the growing geopolitical tensions in the region, German business newspaper Wirtschaftswoche said earlier this week.
Still, on Thursday Siemens said it was also investing 140 million euros to expand its digital factory in the Chinese city of Chengdu and building a new R&D centre in Shenzhen.
($1 = 0.9245 euros)
(Reporting by John RevillEditing by Tomasz Janowski)