Germany is down but Siemens stayed on top
Last week, German company Siemens bought the American firm Altair, a software provider in the AI-driven industrial simulation and analysis market for around 10 billion euros.
While Germany’s industry is struggling, as recently highlighted by Volkswagen’s plan to reduce wages, another German industrial giant, Siemens, is buying American companies. Instead of the usual other way around. Perhaps Europe’s industry can learn something from Siemens’ strategy and evolution.
Most consumers likely know Siemens for its home appliances and electronics such as washing machines or medical devices. But over the last fifteen years, Siemens has quietly become a leader in industrial software and the world’s biggest company in automation technology.
The revenues from its digital industries segment rose by 8% in 2023.
And with its acquisition of Altair, Siemens is further strengthening its dominance in industrial software and AI for manufacturing. Not too bad for a European company.
Lesson for Europe’s industry?
So does Siemens’ strategy hold a lesson for Europe’s industry? Like most other industrial giants, it rose to dominance by manufacturing high-quality products. But lower-cost global competition and increasing energy prices have made it difficult to maintain its position.
To survive, Siemens heavily invested in innovation and steadily expanded into the digital and software sector.
This brings us to the most important point: Siemens’ focus on innovation and digitalisation. Two things that Germany’s economy and industry are not particularly known for in recent years. In its report on Germany’s innovation policy, the Organisation for Economic Cooperation and Development criticized the country’s lack of digitalization—a crucial shortcoming as its industries are being reshaped.
One major caveat in this story though is that Siemens is able to invest billions and to buy other companies simply because it’s an industrial giant with billions in revenue. There aren’t too many European companies that can put up the billions that Siemens can.
But its proof that European companies can be competitive.