Wednesday, May 27, 2009

Slowing industries limit Siemens in Thailand

But it expects higher turnover in 2009

By: GREG LOWE
Published: 26/05/2009 at 12:00 AM
Newspaper section: Business

The global recession and domestic political turmoil have clipped Siemens Thailand's growth expectations this year but the company still expects its turnover to increase in 2009, says CEO Anthony Chay. The impact of slumping global demand on Thailand's heavily export-oriented economy is the major factor crimping the profits of Siemens' industry-dependent operations.

 

''We are seeing the postponement, and even cancellation, of some projects,'' he said. ''All industries are intertwined.

''For example, power plants and steel mills [which Siemens supports] depend on supply and demand. So if the auto industry slows down, the steel mill's capacity is not fully utilised and that leads to a postponement of further investments.''

Despite the slowdown the company remains positive about opportunities in the power generation and pollution control sectors, as well as the new tenders for the BTS.

The lack of political stability presents a challenge for the recently appointed chief executive. But it is one he says the company, which has been doing businesses locally since 1900, can overcome.

 

Siemens Thailand CEO Anthony Chay has high hopes for the Airport Rail Link, which is scheduled to open on Aug 12. The company deals with a number of industries in Thailand, and their struggles will depress Siemens’ outlook. SUKUM PREECHAPANICH

''Our main challenge here is to maintain and grow the momentum of our business,'' he said. ''We can bring along what we have. Good people, good products and good solutions. But we do need stability and continuity here.''

While Mr Chay said the company expected growth this year, he would not disclose by how much, or give the firm's overall net profit and percentage growth, or revenue by business sector.

Siemens Thailand, which was established in 1995, generated revenues of about 290 million (14 billion baht) last year. Thailand, the second largest market in Siemens 10-country Asean cluster, after Singapore, accounts for 20% of the regional group's trade.

So far the firm which employs more than 1,800 people locally, has not cut any staff as a result of the spiralling economy, he said.

Despite a gloomy outlook this year, the government's infrastructure projects present growth opportunities for the company.

''We have strong confidence in the government's medium-term plans to improve the country's infrastructure, such as power plants, pollution control, rail transport,'' he said, adding that the company's three core business sectors _ energy, industry and health care _ had the necessary skills and services to support all of the government's megaprojects.

The company has supplied turbines and other equipment to two recently built power stations, the 750-megawatt (MW) Chana Power Plant in Songkhla, and the 700-MW Bang Pakong Block V Power Plant in Chachoengsao.

Siemens industry group has five divisions. Industry services, which provides a range of solutions from metal plating to waste-water treatment and pollution control, is the biggest earner.

Mr Chay said the division could benefit from recent government policies such as the declaration of Map Tha Phut as a pollution control zone.

Siemens Medical Solutions provides medical technology and health care information systems for industry.

Building public health care is another aim of the Abhisit Vejjajiva administration.

Thailand was also recently made the SAP Global Development Center for the company's cross-sector business Siemens IT Solutions and Services, which supports Siemens Group AG worldwide and external customers.

The company is also playing an integral role in developing the 28-kilometre Suvarnabhumi Airport Rail Link, which is scheduled to open on Aug 12. Siemens Thailand said all of the parts of the system that it is responsible for, which includes the signals, points, and rolling stock, will be ready by July.

''As far as Siemens is concerned, we are more than ready,'' he said. ''But a lot of things are out of our hands.''

Mr Chay was appointed the company's president and CEO in January, making him its first Asian chief executive. Prior to that the Singapore national had been based in Germany, Singapore and Taiwan. He has held a diverse range of positions in the 18 years he has been with Siemens, including roles in sales and marketing, procurement, and auditing, as well as setting up a global manufacturing base for the company's audiology and health care sectors.

He said this diverse background has prepared him for the challenges of managing the company through the current financial and political crises.

Siemens places a heavy emphasis on training, and Mr Chay said the company would continue to develop staff skills throughout the downturn.

While the general standards of university education in Thailand are very good, according to Mr Chay, specialist engineering courses could help develop the local skills necessary to support infrastructure development.

''We could provide specialist train engineering courses at the Thai-German Graduate School, a joint-venture between RWTH Aachen University in Germany and the King Mongkut's University of Technology.''

Siemens Thailand has also discussed investing in a local train assembly plant with the government. But the venture would require a critical mass of about 100 train carriages to make it a viable business, said Mr Chay.

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