Future-proofing Mexico: Siemens' approach to R&D and sustainability

German technology company Siemens is eyeing Mexico’s market for technological and sustainability solutions, including automation and electrification processes to reduce emissions.

The company also plans to invest more than 2.2bn pesos (US$128mn) in Nuevo León, Jalisco, Querétaro and Chihuahua states, creating over 1,000 jobs.

BNamericas talks with Alejandro Preinfalk, CEO for Mexico, Central America and the Caribbean, about the company’s key areas and plans.

BNamericas: Can you tell us about Siemens' areas of interest in Mexico and how you are set up in the country?

Preinfalk: We're celebrating 130 years of presence in Mexico … so what we're achieving this year is a great milestone. We have five factories, plus a headquarters in Mexico City and two research and development centers.

These factories are in Ciudad Juárez (Chihuahua), Monterrey (Nuevo León), the city of Querétaro and Mexico City. They mainly focus on developing, designing and producing medium-low voltage electrical equipment for the industrial and residential sector.

We have 26 sales and service offices in the region. We also have a global shared services center in Guadalajara (Jalisco) and we're responsible for both Mexico and Central America and the Caribbean – 26 countries in the region. We serve key industries such as automotive, food and beverages, chemicals, pharmaceuticals, cement, mining and the electrical industry.

We have three main areas of focus. One is the industrial sector, that is, manufacturing, processes, automation and control. The other is infrastructure. Here we have electrical infrastructure, especially for electrical systems, for smart buildings and for electric chargers, for example. And the other is mobility, that is, trains, subways, smart systems for handling people and chargers.

BNamericas: What can you tell us about the investments announced to expand operations?

Preinfalk: We are in a stage of expansion, which is highly motivating, not only in Mexico, but globally. In the middle of last year, we announced an investment of 2bn euros [US$2.14bn] worldwide for important investments in Asia, Europe and the US, especially in new high-tech factories and innovation laboratories.

As part of this, in Mexico, we have several important investments. The first we call the Mitras Project in Santa Catarina, Nuevo León, which is a new plant of about 20,000m2, involving around 1bn pesos of total investment. We hope to inaugurate that this year.

At the end of last year, we announced an investment in Querétaro in a new plant in the Kaizen industrial park, which we hope to open in the middle of this year. The center will be specialized in product manufacturing and we're going to double production capacity.

We have a plant in Querétaro, in Balvanera, but that would be our second plant. The same in Monterrey. We have one plant and Mitra would be the second. In the case of Querétaro, the investment would be 900mn pesos.

Finally, earlier this year, we inaugurated a plant in Ciudad Juárez, called Itesa 4. At the 16,000m2 plant, we're manufacturing measurement equipment to distribute energy for the construction sector. We're going to have four product assembly lines and, later, six more for metal components, aluminum bars.

BNamericas: Is this expansion in Mexico part of a strategy to take advantage of nearshoring?

Preinfalk: There are lots of reasons, the market is clearly growing and these investments have been justified. On the one hand, nearshoring has helped this vote of confidence in the region by the corporate sector in Germany and the performance we have seen by being very close to our clients in Mexico, in North America. Mexico is taking advantage of the situation very well because it's a key player in the global economy.

We're an open economy. We have lots of free trade agreements. It's because of the geographical location of course, neighboring the US. We have everything to continue this growth path in the businesses we're in, in infrastructure, in industry, in mobility.

Our economic and political stability also helps create investment certainty. This is reflected in the potential and growth that we're seeing in the energy industry. It's necessary to replace gas processes or inefficient procedures to produce with electrical processes with clean energy to reduce, mitigate CO2 emissions and mitigate the effects of climate change. 

What we do here is a broad electrification portfolio that ranges from medium-voltage energy systems, low-voltage distribution and energy automation to smart electrical networks. We also have systems, solutions and products for buildings that are large energy consumers, where around a third of CO2 emissions are emitted.

BNamericas: What potential does Siemens see in Mexico for electrification?

Preinfalk: We participate on a large scale in the electrification and control of the conditions that a datacenter requires to make it reliable. We're strongly participating in this trend, not only in Mexico but also worldwide.

On the other hand, in electromobility we have a broad presence in several areas of the chain, ranging from battery manufacturing to automation, digitization and electrification of battery plants. In the assembly of select battery packs, the assembly of the battery cells, we also do that – we automate these production lines. We train operators who will manufacture or work in these plants with new technologies, with virtual reality so that when the plant is ready, the operators are ready.

So, it's a broad presence from the beginning. We're present with software tools to design the electric car and optimize it. Then, to manufacture the batteries, we're present in the cell production factories and after that the assembly of the battery packs. And of course, in one of our most important sectors, the automotive sector, where the complete vehicle is assembled, we have a presence at practically all manufacturers in Mexico.

Then, outside the plant, we also have a very robust portfolio of electric chargers for vehicle charging stations, trucks, fleets, delivery trucks, that is, we're present in different aspects and both are clearly growing sectors at the national level, electric vehicles and charging infrastructure.

BNamericas: What about decarbonization and sustainability?

Preinfalk: Sustainability is one of our pillars. What's more, over 90% of our portfolio has a positive impact on the sustainability of our clients. We have important solutions that we're implementing in Mexico to track the carbon footprint of each product, not only in the final assembly stage, but throughout the supply chain, including throughout the state.

For example, we've signed an agreement with Querétaro state to have our platform, called SeaGreen, as a basis for collecting CO2 consumption data from the entire industry and incentivizing optimization and CO2 emissions reduction projects.

Regarding generation, transmission and distribution of energy, we also have a big impact because we're present at all stages with smart systems, smart electrical networks to be increasingly more efficient. And, obviously, with the generation, transmission and distribution of energy, whether with electrification equipment, low- and medium-voltage, but also with smart substation controllers to make energy management increasingly intelligent, to be able to automate electricity generation to decide what type of energy we’ll require.

We provide consultancy on energy efficiency, transition, gas production or adequate temperature management in processes that require steam.

BNamericas: The government is betting on states in the southeast, while nearshoring is concentrating in the north. Do you see potential in other areas?

Preinfalk: We see a lot of potential in the region, which is why we launched the Siemens Xcelerator initiative last year to accelerate the sustainable digital transformation of the industry for our clients. It's a portfolio related to what we call industrial metaverse, which is connecting the real world with the digital world and being able to simulate real-world operations, but digitally, make them much more efficient, much faster.

So, this is about collaboration. For example, we signed an agreement with Deloitte and Softec, two very important companies in the consulting sector, for developing digital projects. Why? Because we see potential in the sectors we serve, in industry, in infrastructure, in mobility, and it is a good frame of reference to celebrate our 130th anniversary.