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Buyouts raising regional profile of German giant Siemens
Out of the Shadows
Tuesday, April 24, 2007

V.W.H. Campbell Jr., Post-Gazette
Siemens Corp. Chief Executive Officer George Nolenis silhouetted against the company flag on the grounds of the Large Drives Applications plant in Westmoreland County.
By Dan Fitzpatrick, Pittsburgh Post-Gazette

It is almost lunchtime in a rural Westmoreland County industrial park, and Siemens Corp. Chief Executive Officer George Nolen is strolling through one of 100 U.S. factories under his control, greeting a few of his 70,000 employees.

"Hi, I'm George," he says, extending his hand, reaching over desks to make contact.

The 50-year-old is a superstar in Upper Burrell. Employees step forward to greet the man in charge of U.S. operations for the quiet German engineering and electronics giant, which recently acquired Robicon, a twice-bankrupt, cash-poor maker of power conversion products based in the Westmoreland Business and Research Park. Siemens paid $184 million for the business in summer 2005 and then spent $8.5 million on new equipment and real estate, allowing the operation to double its sales to $200 million and add 191 jobs in less than two years. Officials cut the ribbon on a 30,000-square-foot factory addition last Friday.

V.W.H. Campbell Jr., Post-Gazette
Regional Sales Manager Glenn Davis talks to Mr. Nolen during the CEO's visit.
Click photo for larger image.
The Siemens-led turnaround, said Gary Rauscher, general manager of the 475-person plant and veteran of the two prior Robicon bankruptcies, is "pretty amazing."

The rest of southwestern Pennsylvania also might be amazed to learn that Siemens, with 1,250 employees scattered throughout the area, is now one of the region's largest employers following four acquisitions in nine years. Bayer Corp., which has its North American headquarters in Robinson, is the area's largest German-based firm.

Two of Siemens' local operations have ties to the old Westinghouse Electric conglomerate. Robicon (now called Siemens Energy & Automation) was founded in 1964 by former Westinghouse Electric engineers -- and now is the world leader in power control systems and variable-speed drives, crucial components in motors used by water treatment plants and oil and gas pipelines. The other connection from Siemens to Westinghouse was the 1998 purchase of Westinghouse's old power generation business for $1.53 billion. The bulk of the business moved to Florida, but it still has a Churchill-based research and development unit exploring new ways to generate electricity -- in 2001 it promised to build a $122 million fuel-cell plant in Munhall but never fully occupied the 140,000-square-foot building, due to an economic slowdown. Other local purchases include the 2004 acquisition of Marshall-based water and wastewater treatment firm US Filter and the 2005 pickup of Downtown-based air-pollution-reduction firm Wheelabrator Air Pollution Control Inc.

In each case, Siemens is employing its worldwide scale to open up new markets and cut supplier costs while making investments in capital equipment.

"What we tell people is we don't want to do that to be fifth place," said Mr. Nolen, in an interview. "We want to be No. 1 or No. 2 in the markets we're chasing."

For the first time, on Friday, Siemens hosted a town hall meeting for all of its employees in the Pittsburgh area -- now "a major hub for us," said the Virginia-born Mr. Nolen, wearing a maroon-and-orange Virginia Tech tie to honor those killed recently at his alma mater.

It was clear from Mr. Nolen's visit last week that Siemens wanted to raise its profile in Pittsburgh and across the United States, where it has a presence in all 50 states yet remains an obscure name to most American households despite its widespread influence on daily life.

Not many know that Siemens generates about a third of the power in the United States; that it moves 90 percent of the mail through Siemens-designed sorting equipment; that 70 percent of U.S. automobiles operate with some piece of Siemens technology, from electronics to lighting; that its bomb-detection devices can be found at 438 U.S. airports, including Pittsburgh International.

"The most common response I get is, 'Wow, I had no idea,'" Mr. Nolen said.

"Would it surprise you if you looked at the Fortune 100 companies and I would pop in somewhere around No. 85 just on what we do in the United States?" he added, citing U.S. sales of $22 billion. "People don't think that."

The CEO promises that people will see more of Siemens as it begins a national print advertising campaign touting its contributions to American life. The goal, said Jack Bergen, Siemens' senior vice president of corporate affairs and marketing, is to "Americanize the brand."

That explains a deal inked a year and half ago to put the Siemens name on the iconic Spaceship Earth sphere at Walt Disney World's Epcot Center, in Orlando, Fla., and remake the time-travel exhibit to feature technologies being developed by Siemens for the fields of medicine, transportation and energy. Students from Carnegie Mellon University's Entertainment Technology Center are working with Siemens and Disney on a collection of arcade games designed to explain how Siemens' products influence daily life.

Even as Siemens tries to raise its public profile in the United States, it is trying to recover from a widening corruption scandal and allegations of bribery in Germany, where Siemens is a better-known name. The chairman of Siemens AG, Heinrich von Pierer, resigned on Thursday without admitting any responsibility for the alleged bribery of potential customers and the head of a labor group -- until 1999, bribes could be written off in Germany as business expenses. Hundreds of millions of transactions at the company's telecom-equipment division are under scrutiny.

The abrupt board shake-up forced Siemens AG Chief Executive Officer Klaus Kleinfield, who has said he was unaware of any corruption, to cancel his plans to take part in the Pittsburgh area town hall meeting Friday and catch a plane back to Germany to deal with the crisis. During his remarks to Pittsburgh-area employees Friday afternoon, Mr. Nolen said he was "stunned" by the "massive allegations of illegal behavior by individual employees," according to his prepared remarks.

"I am sure all of you felt the same way."

Citing new rules put in place to prevent any future violations and a team hired to conduct an independent review of Siemens' internal controls, he pledged that Siemens would emerge from this as a "model of transparency" with "zero tolerance for illegal and unethical behavior." He said in an interview that the investigations had been a "distraction," but stressed that as head of U.S. operations, "I have not seen any illegal behaviors."

First published on April 23, 2007 at 8:34 pm
Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752.