German engineering conglomerate Siemens AG is betting on strong growth in Canada in coming years, underpinned by the stability of its resource-focused economy and a pending free-trade agreement with Europe, chief executive Peter Loescher said in an interview on Tuesday.
Mr. Loescher, accompanied by Canada head Robert Hardt, said growth will come from across the company’s $3-billion worth of operations in Canada, divided into health care, industry, infrastructure and cities and energy.
Siemens Canada, with particular focus on business with the mining and oil sectors, has turned in double-digit growth in recent years, the executives said.
Siemens is looking for ways to maintain growth and fill its order books even as its chief market, the European Union, struggles with a recession and growth slows in other key markets, from China to the United States.
The Munich-based company said in reporting its fiscal third quarter on July 26 that orders came in 23 per cent lower than in the year-ago period.
The company has a tradition of looking for growth abroad that began when it was founded in 1847 and quickly spread its wings to Russia and the United Kingdom.
It has been in China since 1872, where it has had a hand in powering everything from telegraph lines to electric street lights and high-speed trains.
“We would anticipate that Canada becomes a growth engine, not just for the world, but for the Siemens organization,” Mr. Loescher said shortly after inaugurating a new headquarters for the company’s Canadian division in Oakville, Ont.
“We just put $500-million in the last 12 months into Canada, and we will continue to see employment growth, investment growth and great growth opportunities for us.”
Among other opportunities, Siemens is betting on the wind energy business as potential driver in Canada, even though renewable energies are suffering some setbacks in other markets around the world.
A free-trade agreement with the European Union, due to be signed before the end of the year, is expected to bolster Canada’s importance to Siemens still further. The pact will boost Canadian economic output by at least $12-billion annually, according to a bi-national economic study released in October 2008.
In Toronto to celebrate the company’s 100-year anniversary in Canada, Mr. Loescher said Siemens also sees strength in the emerging markets, particularly those outside the powerful BRIC nations of Brazil, Russia, India and China.
“We are no longer just looking at the so-called BRIC countries, but we are looking to the second wave of emerging economies, and there you are talking about countries like Chile, Colombia, Mexico, Indonesia and Thailand,” he said.
The emerging-market space is already a source of one-third of the company’s global business, with 8 per cent of that coming from China.
Mr. Loescher expects global economic uncertainty to continue, but he said he was confident European countries are taking the right steps to emerge whole from the crisis.
Siemens plans to unveil a plan in the fourth quarter that will help it pare down and become more efficient as it faces continued economic uncertainty.
Mr. Loescher declined to give details about the plan, saying only that it would make Siemens leaner and faster.
“Quite frankly, what we would anticipate is for it to continue to be a difficult, volatile environment” in Europe, he said.
“It takes time and one cannot anticipate overnight to see magic scenarios, but in the medium term I have no doubt that current reforms are the right reforms.”