APC 2001 Annual Report Download - page 4

“More than ever, electricity is
the energy of the future and a source
of immense potential for our Company.”
Opportunities provided by the convergence
of electricity, automation and communication
technologies represent a third area of enormous
potential. We hold a commanding position
in web automation technology, offering transparent
access to information, and we fully intend
to widen our lead.
During 2001, we entered into new partnerships
with other manufacturers. Our joint subsidiary
with Toshiba, Schneider Toshiba Inverter (STI),
opened plants in France and Japan. Easyplug, our
joint venture with Thomson multimedia, launched
its first consumer applications for the Internet,
interactive television and home automation
in the United States. And we also created a joint
venture with France Telecom called Senside.
Our Schneider Electric Ventures fund provides yet
another path to technologies of the future, as does
innovation. We stepped up our commitment
in this area in 2001, devoting 5.2% of sales to R&D,
which is higher than the industry average.
Efforts to control inventories and investments at all
levels of the Company drove a very strong increase
in free cash flow in 2001. We also took disciplined
measures to improve productivity and implemented
rightsizing programs that reduced our workforce by
7.5%, or 6,000 jobs, half of them in North America.
The decline in indirect production costs, which
began in 1998, continued during the year. In all,
the Schneider 2000+ program generated savings
of 373 million over three years, exceeding the target
of 305 million. We will continue to pursue these
actions in 2002.
Chairman’s Message
Dear Fellow Shareholder,
For Schneider Electric, 2001 was a difficult year
in many ways. To start, business slowed significantly
in the United States and then in most of Europe.
The September 11 attacks accelerated the downturn.
Next, the European competition authorities refused
our proposed merger with Legrand. We regret
and contest this decision and have filed an appeal
in the European courts. We are now looking
at all the options for divesting our interest in Legrand
by the end of 2002 with a focus on serving the best
interests of our shareholders and our two companies.
However, these events did not compromise our
growth strategy. During the year, we pursued our
policy of acquisitions and partnerships to strengthen
and expand our product lineup and speed our
development in high-potential markets.
These markets of the future include regions like
Central and Eastern Europe and Greater China.
Thanks to our excellent position in China, we
enjoyed substantial business growth, with sales up
more than 20%. We also opened two new plants,
for a total of eleven.
The future also lies in a new way of working with
our customers and in improving their industrial
performance. Leveraging the power of the Internet
and other resources, we have expanded our
customer support and training services. In addition,
we have forged partnerships with customers such
as Mannesmann Dematic and ACE Airwell, bringing
the number of Global Strategic Accounts to 87.