Who are Schneider Electric's competitors
Jean-Pascal Tricoire: Why we will be dependent on fossil energy sources for years to come
The engineer Jean-Pascal Tricoire (57) has been at the helm of the French industrial group Schneider Electric since 2006, which recently had sales of around 27 billion euros. The company is based in Rueil-Malmaison near Paris. Tricoire decided to control the group with its around 140,000 employees worldwide from Hong Kong in order to better serve the Asian market.
The French electrical engineering group is a global leader in the digital transformation of energy management and automation, and manufactures energy distribution systems, automation technology and drive technology. Schneider Electric supplies process and energy technology to hospitals, hotels, factories, data centers and commercial buildings in more than 100 countries around the world and is a leading provider of digital solutions that enable energy efficiency and sustainability.
Mr. Tricoire, due to the corona pandemic, the World Economic Forum in Davos will take place completely digitally this year. How is the pandemic and its consequences dominating the discussion at the top meeting between business and politics?
Of course, the corona pandemic is right at the top of the agenda. This crisis teaches us two central things. If we don't pay attention to how we treat our environment and our health, then a virus like Covid-19 can block us completely - globally. Second, this pandemic shows that we can only solve such crises together.
The crisis is fueling the discussion about the inequality between rich and poor. Corporate leaders such as Siemens boss Joe Kaeser are calling for an end to casino capitalism.
Responsible capitalism is not a new topic, there is consensus on that. The question is, how do we fight inequality? How do we stop global problems like climate change? This only works if we act together and if all parts of society are involved in development and growth. You see, Biontech, a German company with Turkish founders, has developed a vaccine for everyone together with the US company Pfizer. The pandemic shows that we can only solve global problems together. That is why the topic of sustainability is moving even more into focus this year in Davos than last year. Like the pandemic, climate change is affecting all nations. Larry Fink, head of asset manager Blackrock, one of our shareholders, has just re-emphasized that no other issue has a higher priority for his clients than climate change.
However, there is not much to be seen of the common ground when we think of the tensions between the USA and China, for example. What are your expectations of the new US President Joe Biden?
There have been two good pieces of news in the past few weeks. The new US administration wants to rejoin the international Paris climate agreement. And China has announced that it wants to become climate neutral by 2060.
China is one of the largest CO2 producers in the world. And yes, we will be dependent on fossil energy sources for many years to come. But it is a clear signal that the Chinese take sustainability and climate change very seriously. Europe too wants to be climate neutral by 2050. So something is really happening. And as I said, the financial sector takes the topic of sustainable management very seriously.
Many economies are currently struggling with the corona pandemic and its consequences. Schneider Electric is a global company with 140,000 employees in over 100 countries worldwide. How did the corona crisis hit you and how did you react to it?
We saw the problem coming very early because we control Schneider from Hong Kong. We prepared for the situation back in January of last year. Anyone living in Asia has experienced the SARS crisis. So wearing masks was nothing new to people in Asia. All use disinfectants. We shared these experiences with our other teams. We are very decentralized, our top managers are distributed in the respective markets around the world. The country teams are responsible for dealing with Corona. Because no country in the world reacted to Corona in the same way. If protective masks were in short supply in countries, we produced them ourselves. I don't believe in central structures. It was normal for us to work from home even before Corona. If you want, you can work at home two days a week at Schneider for a long time. All of them have the technology they need to work digitally from anywhere. The company works great with it. We have now benefited from this in the corona crisis, we didn't have to adapt to it like many other companies.
How has the corona crisis affected your business?
In 90 percent of the countries in which we operate, we have been classified as systemically important because our technologies are used in vital areas and infrastructures. For example, we supply energy management systems to most hospitals around the world. We are responsible for ensuring that the electricity flows in intensive care units. We also supply the necessary technical systems for data centers and networks so that they are supplied with energy. We are also one of the main suppliers of low and medium voltage power grids around the world. These secure the power supply.
So Schneider Electric has so far survived the corona crisis completely unscathed? Also in China, where factories had to shut down for weeks and a strict curfew was in effect?
Like any company, we had to adapt to the situation. Our multilocal organizational structure has helped us a lot, we produce locally and sell locally. This also applies to China. We have worked closely with our suppliers and partners to find alternative suppliers and relocate production where necessary.
Climate change is one of the big issues in Davos. Last year, its competitor Siemens showed how quickly a company can become the focus of climate protectors. Environmentalists shot themselves at Siemens because the company delivered a train signaling system to the Adani coal mine in Australia. Could something like this happen to Schneider Electric?
I do not comment on the situation of other companies. Our business is to provide our customers with solutions for electrification and energy so that they can use their resources as efficiently as possible.
That still doesn't answer our question. Does Schneider Electric deliver solutions or components to the coal industry?
We are the digital partner for our customers who offers them efficient and sustainable solutions. We serve customers in many segments. I have already mentioned data centers and buildings, mining and gas-fired power plants are also part of it. Why are we doing this Because we help all these customers with our solutions to become more efficient and produce less CO2.
Schneider Electric has grown in recent years mainly through acquisitions in the software sector. What is your strategy for the next few years?
In the past 13 years we have tripled our global business. Half of it through organic growth, the rest through acquisitions.
Last year they made four major acquisitions.
2020 was an exceptional year. We have acquired four software companies. Two of them in Germany. For 1.4 billion euros we have taken over the Stuttgart software group RIB, a specialist in construction software. Our British subsidiary Aveva has taken over the American software house Osisoft for five billion dollars. They are specialists in industrial software. All acquisitions fit perfectly into our digital portfolio in the field of automation and digitization.
In which areas are you planning further takeovers?
I don't want to comment on our plans for the future. But our current challenge is that all the employees of these acquired companies feel welcomed by Schneider and that we form a team together. It is important to us that we are anchored locally in the markets in which we operate.
How big is the competition from Amazon and other software giants from the USA and China for Schneider Electric now?
I believe that digitization gives space for partnerships. We started delivering internet applications to factories back in 1997. Digital development will now make a decisive leap with 5G technology. Schneider will benefit greatly from the introduction of this technology, if only because it gives us more options at hand. 5G multiplies the number of possible applications that we create for customers. We also think of digitization holistically: Digitization creates interfaces between people and mechanical processes and not just pure digitization. Our advantage is that we know the customer and their needs. In this way we can offer tailor-made solutions. This also sets us apart from the competitors you mentioned.
At the same time, Schneider Electric does not have its own cloud. Doesn't that make you dependent on providers like Amazon & Co?
It's true that we don't have our own cloud. But I don't see that as a problem. We have various partnerships and our customers are free to choose how these partnerships should be structured. We are open to all standards. We want to offer the customer the best solution. And ultimately, the customer determines with whom the solution will be implemented.
How important is Germany to you? Or is a market that does not manage the energy transition properly uninteresting?
You will laugh, but I deal with Germany almost every day in my work. But that's less because of the market and more because of our company name. You wouldn't believe how many people around the world assume that Schneider is a German company. Even when I point out that Schneider is French, many people often don't believe me. Sometimes I think maybe I should just say, yes, yes, we are German (laughs). But kidding aside. We see ourselves as a European company. I am convinced of the European idea and I welcome the fact that the same standards apply to companies from Europe. Germany is one of the largest economies with a lot of industry and many innovative medium-sized companies. We feel very integrated here with our more than 5500 employees.
More on the topic: Just now under pressure from Friedrich Merz, now on top again at the digital World Economic Forum: The Federal Minister of Economics is going through wild days. But he's on the offensive.
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