Inside Siemensstadt 2.0: the €600 million Berlin project Siemens City 2.0

A few days before announcing its Q4 earnings report, Siemens signed what it dubbed its ‘future pact for Germany as an industrial location’. That location is more specifically Siemensstadt (Siemens City).

The founding concept behind Siemensstadt in 1897 was to unite working, research and living and thus create an intact symbiosis for a successful future…and that’s what Siemensstadt 2.0 is all about (Joe Kaeser, President and CEO of Siemens AG)

The version 2.0 of Siemensstadt will, among others, be the home for activities in areas such as distributed energy systems and energy management, electric vehicle technology, Industry 4.0, machine learning, networked assets, IoT, artificial intelligence, data analytics, blockchain (distributed ledger technology), and additive manufacturing. What you need to know.

In a previous post, on the acquisition of Berlin-based IIoT company relayr by HSB Group, we already briefly touched upon the leading role of Berlin as the Industrial IoT leader and the investments of Siemens in the city with its Siemensstadt 2.0.

With Siemens City 2.0 the company has agreed to invest €600 million for a gradual transformation of Siemens City as the end of 2018 approaches.

The signing of the Siemensstadt 2.0 future pact. From left-to-right: First row: Michael Müller, mayor of Berlin; Cedrik Neike, Member of the Managing Board of Siemens AG, Region Asia/Australia, Energy Management Division; Second row: Ramona Pop, Senator for Economy, Energy and Enterprises; Joe Kaeser, President and CEO of Siemens AG and Frank Bewig, District Councilor for Building, Planning and Health. Picture source - copyright Siemens
The signing of the Siemensstadt 2.0 future pact. From left-to-right: First row: Michael Müller, mayor of Berlin; Cedrik Neike, Member of the Managing Board of Siemens AG, Region Asia/Australia, Energy Management Division; Second row: Ramona Pop, Senator for Economy, Energy and Enterprises; Joe Kaeser, President and CEO of Siemens AG and Frank Bewig, District Councilor for Building, Planning and Health. Picture source – copyright Siemens

Siemensstadt 2.0: a future pact to close a busy 2018 where Siemens’ digital factory and enterprise was omnipresent

It’s been a very busy 2018 for Siemens, the global industrial giant, born in the country where the Industry 4.0 framework was conceived. Obviously, Siemens has become a global industry leader since many years now, but it remains closely linked to Germany.

On a global level Siemens is also having better times than its competitor GE as it went through quite some restructuring for these days of digital transformation across all industries where software and data become ever more important.

In its Q4 earnings report Siemens stated that its higher order intake in nearly all industrial business was led by, among others, double-digit increases at Digital Factory

In 2018 Siemens was all over the place and had its PR department and influencer relationship marketing people putting in extra hours. If you use social media or attended an industry event, you probably know what we mean. There was no escaping Siemens this year.

At Hannover Messe 2018 Siemens’ approach focused a whole lot on its ‘digital factory division’ with Industrie 4.0, Industrial IoT platform MindSphere and the full digital factory and digital enterprise portfolio and concepts at display under the motto “Digital Enterprise – Implement now!”.

Siemens was off for a year of events, partnerships and other actions and announcements whereby ‘digital enterprise’ and ‘digital factory’ were never far away. The integration of IT and OT was a key driver in it all.

How much money and effort went into it remains a guess but it seems to have paid off, obviously in combination with other efforts and the mentioned restructuring: in Siemens’ Q4 earnings report we read there has been a “higher order intake on a comparable basis in nearly all industrial businesses led by substantial growth at Mobility and double-digit increases at Digital Factory and Siemens Healthineers”.

Siemens City 2.0: a win for Berlin as Germany tries to close the digital gap

On the last day of October 2018 Siemens announced it would invest the whopping €600 million in Siemensstadt 2.0. Siemensstadt, as you might know, is a locality of Berlin with a very long history, obviously tied with Siemens’ history.

The investment obviously is a big win for Berlin – and for Germany whereby quite some politics, lobbying and negotiating was needed.

You might have read that in the Summer of 2018 German chancellor Angela Merkel met with a new council of experts to advise her government on digitalization and, as voiced recently by several people in her administration, wants to close the digital technology gap between Germany and some other economies in fast-changing times, which is a different – yet related – story.

Back to Siemens City 2.0. Berlin mayor Michael Müller (until recently also President of the Bundesrat) and the employees of the municipal administration of the city of Berlin put in some additional hours as well to be sure the €600 million investment in Siemensstadt 2.0 would take place (instead of a much lower investment of €60 million).

The decision was obviously related with the proposal by the city of Berlin but there was also the historical value of the location to consider, with political decisions regarding the preservation of the corporate buildings in Siemensstadt.

Siemens had already agreed to invest €60 million in a small campus, together with TU Berlin (Technischen Universität), the renowned Fraunhofer Society and the German Federal Institute for Materials Research and Testing (a.k.a. BAM or Bundesanstalt für Materialforschung und -prüfung).

As you can tell from the various players, the campus will focus on the development of new materials, 3D printing and new production techniques, to name a few. In fact, as part of the Siemensstadt agreement, a second memorandum of understanding was signed for this industrial and scientific campus with the City of Berlin and the mentioned stakeholders. And it’s this memorandum of understanding that should lead to the first concrete measure.

This will happen around the Siemens Dynamowerk (originally Dynamowerke) in Siemensstadt, which was one of the factories that Werner von Siemens, who discovered the dynamo-electric principle over 150 years ago, had built. End 2017 it was announced the factory would close and, so now, it has a new destination in the Siemensstadt 2.0 project.

How the Siemensstadt 2.0 investment was a race against time and a close call

Yet, Siemens wanted to invest more in a larger innovation campus with R&D facilities, offices and apartments in Siemensstadt, where the €600 million comes in. Moreover, the campus offered space for other buildings, firms and schools. This would also have an impact on public transportation, including the reopening of the Siemensbahn local media reported just days before the ‘deal’ and announcement was made.

Just like Siemensstadt, the Siemensbahn S-Bahn line was built by Siemens & Halske (one of the predecessors of Siemens as we know it today). It was finished at the end of the 1920s but wasn’t used anymore since a few decades.

So, as we now know, the full Siemensstadt 2.0 investment was done. Only the facades and roofs of the historical buildings must remain original and Berlin won the €600 million contract as well. Another option for CEO Joe Kaeser was to invest the lesser amount and move to Asia for the rest as one of the sources of this post reported end October in the article “Berlin will mehr Siemens für die Siemensstadt“.

So, all in all it was a pretty close call but now it’s even more likely that Berlin will be and remain the global capital of Industry 4.0 and IIoT as Tom Casaer of Belgian IoT company AllThingsTalk told us in a – soon to be published – interview.

In Siemens’ official press release regarding Siemens City 2.0 we read that with the largest single investment the company has ever made with its choice for Siemens City 2.0 it “makes a strong commitment for shaping the future of Germany as a location for industry”.

Siemensstadt 2.0 will be about manufacturing, researching, learning, and residential living with, among others, room for start-up incubators, R&D centers, scientific institutes, obviously Siemens itself and the ecosystems of the companies and institutions moving there. Art and architecture obviously also will be important in the whole project.

The development will happen in stages and there is a focus on a mix of social, business, innovation and urbanization.

According to Siemens specifically, activities in fields of application such as distributed energy systems and energy management, electric vehicle technology, Industrie 4.0, machine learning, networked assets, IoT, artificial intelligence, data analytics, blockchain, and additive manufacturing are to be based in Siemensstadt.

Mayor Michael Müller comments: “We were able to submit a very good offer to Siemens earlier than the company expected. This was a huge achievement. I’m particularly pleased that Siemens’ agreement was received on the last day of my presidency of the German Bundestag, where the development of the working world in the age of digitalization was one of my key focuses”.

There is more information in the press release and all the links in it, as well as in the many videos and content created and share pretty much everywhere at the occasion of the investment.

Now Germany needs to close that digital gap since between innovation, research and solutions on one hand and organizations adopting/leveraging/buying them on the other there is of course a big difference.

All pictures belong to their respective mentioned owners.