Executive Briefings

Robots Help Siemens Sustain Productivity During Brazil's Prolonged Crisis

As part of its operating philosophy, Siemens, the German conglomerate operating in more than 200 countries and regions, applies a yearly target range of 3 to 5 percent of productivity growth to each of its subsidiaries, to go along with certain cost objectives. Not unexpectedly, Siemens Brazil has had a tough time hitting those targets over the last three years or so.

A wholly owned subsidiary that takes in about $1.5bn a year in sales, the São Paulo-based company has faced "a very particular situation here because of the economics and political crisis in Brazil, mixed with a very high inflation," says Martin Kerkhoff, Siemens Brazil’s finance chief.

Although Brazil has shown signs lately of emerging from the biggest economic morass the country has ever known, it’s still in the grips of the consequences of the aftermath of a massive government corruption scandal. The nation’s inflation rate hit a 12-year high of 10.67 percent in 2015, and its unemployment rate hit a five-year high of 13.7 percent just this March.

All these factors have made growth a hard thing to come by for any company in the country, including Siemens Brazil. The subsidiary sells such things as turbines and other power-generation equipment; factory automation systems; and health-care X-ray and MRI machines to large Brazilian organizations. Peril to its customers, of course, imperils the company.

Lacking substantial growth, Siemens Brazil’s targeted productivity gains had to stem from some other source. “If we don’t achieve productivity through growth, we have to work on the other side of the equation, which is basically adjusting the cost levels,” Kerkhoff says.

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A wholly owned subsidiary that takes in about $1.5bn a year in sales, the São Paulo-based company has faced "a very particular situation here because of the economics and political crisis in Brazil, mixed with a very high inflation," says Martin Kerkhoff, Siemens Brazil’s finance chief.

Although Brazil has shown signs lately of emerging from the biggest economic morass the country has ever known, it’s still in the grips of the consequences of the aftermath of a massive government corruption scandal. The nation’s inflation rate hit a 12-year high of 10.67 percent in 2015, and its unemployment rate hit a five-year high of 13.7 percent just this March.

All these factors have made growth a hard thing to come by for any company in the country, including Siemens Brazil. The subsidiary sells such things as turbines and other power-generation equipment; factory automation systems; and health-care X-ray and MRI machines to large Brazilian organizations. Peril to its customers, of course, imperils the company.

Lacking substantial growth, Siemens Brazil’s targeted productivity gains had to stem from some other source. “If we don’t achieve productivity through growth, we have to work on the other side of the equation, which is basically adjusting the cost levels,” Kerkhoff says.

Read Full Article