Siemens 2008 Annual Report Download - page 149

Management’s discussion and analysis 53
Climate change embraces many trends, including but not limited to increasing the efciency of power genera-
tion from fossil fuels; generating energy from renewable sources such as wind; increasing the efciency and
performance of the electrical grid; increasing the energy efciency of transportation and industrial processes;
reducing the energy needs of buildings; and reducing emissions from all of the above. This trend is important
because we generate approximately one quarter of our revenues from solutions related to environmental and
climate protection, spanning all the trends just mentioned.
Globalization in the Siemens context refers to the increasing percentage of the global economy that involves
multinational operations both within individual organizations and among disparate organizations. An example
of the former is standardized manufacturing in multiple countries by a single company. An example of the lat-
ter is the integration required to manufacture products designed in one country from components made in
a number of other countries. Globalization is important to Siemens because we operate in approximately 190
countries with common solutions, technologies, logistics, information systems, and business processes across
all regions. This global network enables us to help simplify the process of globalizing almost any business for
our customers.
Market development
A major driver of global growth in GDP is growth in gross xed investment. Gross xed investment is important
because most of our businesses provide customers with xed assets including infrastructure, industrial systems
and equipment. GDP growth is driven also by expansion in consumer and close-to-consumer industries. In 2008
gross xed investment grew an estimated 3.5% compared to 5.5% in 2007. Slower growth was due primarily
to mature industrial nations. Growth in gross xed investment was negative in the U.S., declining an estimated
3% in 2008, and growth in Western Europe slowed to an estimated 2% compared to 5% in 2007. In contrast,
growth in emerging and developing countries is projected to expand 12% in 2008 due to pent-up demand for
infrastructure and industrial systems.
Most of the major market segments that are important to our Industry Sector follow the global pattern described
above. The machinery and equipment market is estimated to contract 7% in the U.S. and grow slowly in Western
Europe in 2008, while remaining above 10% in such emerging markets as China and India. The construction
markets we serve in the U.S. and Western Europe are also expected to see slower growth in gross xed invest-
ment compared to 2007. Within the global market for the Industry Sector’s electronics and electrical engineer-
ing solutions, contraction in the U.S. is projected to largely offset 2% growth in Western Europe. While the elec-
tronics and electrical engineering market is growing more rapidly in emerging economies, the fast growth of
prior years is expected to slow in some nations, such as a decline from 16% to 8% in China and from 30% to 15%
in India. The major exception to the global pattern for the Industry Sector was the metals and mining market,
where gross xed investment is expected to grow 6% in 2008.
The overall energy solution market, which we participate in with our Energy Sector, is projected to achieve
global growth of 17% in 2008 despite supply constraints in a number of segments. The overall development,
including fast growth and supply constraints, included both fossil power generation and renewable energy.
The power transmission and distribution segments shared in the growth, in part due to the need for higher-
efciency long-distance solutions for off-shore wind farms. The oil and gas production market is expected to
expand 7% in 2008.