“Our companies contribute directly to the prosperity of the world markets”

Michael Ziesemer, President of ZVEI, on globalisation and Industry 4.0.

Integrating value added processes beyond industry and national borders creates value networks on a global scale – Michael Ziesemer

Trump, Brexit and more: How does the electrical industry look at current challenges in the foreign economy?

It’s true, the past few months have been characterized by drastic political events which could keep us busy even into next year. The Trump election, Brexit vote, failed constitutional referendum in Italy and the attempted coup in Turkey are just some of the numerous reasons for uncertainty. In 2016, electrical exports to the USA – our second largest buyer – still amounted to 16 billion Euros, while exports to Great Britain came to ten billion, to Italy almost eight and to Turkey some three billion Euros. Overall, this is a fifth of our total industry export. However, our export portfolio today is significantly more diverse than in the past, thus reducing the dependence on separate countries. On the whole, the ZVEI expects growth in both production and export for the year 2017.

Our export portfolio today is significantly more diverse than in the past, thus reducing the dependence on separate countries

Concerning Germany’s trade surplus: Hasn’t internationalization of the electrical industry already generated local added value for some time now? And this in many local markets?

At this point we should distinguish between foreign trade and direct investments abroad. The electrical industry is positioned extremely well in both fields. Our direct investments add up to an existence of almost 46 billion Euros – and a fifth are direct investments from German industry. In addition to the 804,000 employees in our German branch, there are also some 704,000 employees in locations abroad. With the added value, our companies contribute directly to the prosperity of the respective countries.

However, one must consider export surpluses discriminatingly. The commercial statistic constantly illustrates gross sizes which are blown up by the intense payment in advance trade. Incidentally, from all big industrial branches, the electrical industry with its 16 billion Euros has the lowest the surplus by far.

We should distinguish between foreign trade and direct investments abroad

Reindustrialization and modernization of the infrastructure as an objective – Are there German companies which aren’t yet in a good start position in the USA?

Actually, our export portfolio fits in part very well with the economic agenda in the USA. The areas relevant for a modern industry, namely automation, energy technology and ICT technology account for more than 40 percent of our deliveries to the USA. However, one should not forget that the subduing effects of new protectionist measures could prevent the potentially expansive effects of higher public expenditure or lower taxes in the USA.

What type of effect does Industry 4.0 have on the international delivery chains of the electrical industry? What are the requirements for sensitive cooperation in the field of data production?

Globalization and internationalization are prerequisites for the digital transformation and for Industry 4.0. Integrating value added processes beyond industry and national borders creates value networks on a global scale. For the electrical industry, this development means both chance and challenge. The strengthening of international delivery chains has always been an important factor for our sector. In addition to the legal and socio-political setting, this factor is increasingly becoming a criterion for the competitive ability of all companies. This is especially true when it comes to the handling of personal and non-personal data. We need an honest social dialogue which can create the necessary trust.

It’s not just in politics that we are currently seeing different speeds within Europe, but also in regards to the digitisation of the industry

How does the EU’s initiative “Digitising European Industry” reflect the network of European industrial production?

It’s not just in politics that we are currently seeing different speeds within Europe, but also in regards to the digitisation of the industry. While some member states are concentrating on digitisation, other countries – especially in the eastern and southern parts of the union – are falling behind. This gap between the creation of value and industrial production cannot exist in a growth-oriented European domestic market. The ZVEI is therefore supporting the EU commission’s “Digitising European Industry” strategy. The newly created “European platform of national initiatives” is thus an important step in the right direction.

However, other solutions in the areas of standardisation, data economy and cyber security are still to be found. As a key association for the industrial digitisation, this is why the ZVEI is actively taking part in these Europe-political debates.

Cyber security, standardisation, possession of industry data – Isn’t this all still a long way off, especially internationally?

We are currently facing the next learning curve when it comes to cyber security. We previously concentrated on “security by design”. However, this is not enough. The development and manufacturing of a product heavily influence the level of security. Positions of responsibility, processes, budgets as well as security services are thus becoming much more important for security.

The next international challenge is upon us: medium-sized companies must be able to request global and standard security from their suppliers. However, this requires further categories, metrics and standards currently not available. Industry initiatives like the IEC 64443 must be quickly finalized and supported through policy. We cannot afford to lose our way when it comes to data possession. In many places it is not about the legal definition of technical data possession – this is frequently discussed among experts, and is not particularly relevant to KMU. Rather it is the data usage rights that are to be clarified by contract between manufacturers and operators. Existing contract law is largely sufficient for this.

The next international challenge is upon us: Medium-sized companies must be able to request global and standard security from their suppliers. We cannot afford to lose our way when it comes to data possession

The interview with Michael Ziesemer was published the Global Business Magazine of Hannover Messe 2017.