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First Person: Making Facilities “Fit” for the Digital Future

Area Development’s staff editor, Lisa Bastian, interviewed Stephanie Dorsey, CEO of Siemens Real Estate in the Americas, about the changing real estate needs of today’s innovative and growth companies.

Q1 2024
What is “Industry 4.0” and what challenges does it present for the industrial real estate market?

Dorsey: “Industry 4.0” refers to the fourth industrial revolution. It is characterized by the integration of smart technologies, advanced automation, data exchange, and the Internet of Things (IoT) in various industries. It represents a paradigm shift in manufacturing and production processes, leading to more interconnected, intelligent and efficient systems. In the context of Siemens Smart Infrastructure and Siemens MindSphere, which has evolved into Insights Hub, these technologies play a crucial role in making buildings and locations “fit” for the digital real estate future.

Specifically, Siemens Smart Infrastructure focuses on creating intelligent, efficient buildings through the integration of digital technologies, while Siemens Insights Hub is an industrial IoT platform enabling the collection and analysis of data from various sources. It delivers business value with industrial IoT data by implementing reliable asset monitoring, enhancing manufacturing performance and efficiency, and enabling quality prediction, etc. This helps customers make improved operational and business decisions with data-driven insights to back them up.

There are many challenges for the industrial real estate market in the era of Industry 4.0. For example, it involves the implementation of advanced technologies such as smart building solutions and IoT platforms. Industrial real estate must adapt to support these technologies, requiring upgrades in infrastructure and facility design. This technology will unlock the data needed to drive corporate sustainability goals, create cost efficiency, and help make employees more productive.

There will be an increased demand for connectivity. Fortunately, Siemens technologies emphasize connectivity and communication between devices for efficient operation. This allows industrial properties to have robust, reliable connectivity infrastructure supporting data generated by the smart technologies of today, and tomorrow.

Another challenge is that due to the dynamic nature of Industry 4.0 technologies, industrial real estate must be designed with flexibility in mind. Siemens Smart Infrastructure solutions, for example, can contribute to adaptable layouts and scalable spaces that accommodate changes in technology and equipment over time.

Stephanie Dorsey serves as the CEO of Siemens Real Estate, Americas. She is responsible for overseeing the corporation’s extensive portfolio of locations as well as Siemens construction projects across the region.
Today’s industrial properties also need to incorporate energy-efficient practices and green technologies to align with environmental goals. This may involve retrofitting existing facilities or designing new ones with sustainability in mind. Our Siemens Smart Infrastructure places a focus on sustainability to help customers meet these goals.

Of course, increased connectivity in Industry 4.0 introduces cybersecurity risks. That’s why Siemens technologies, including Insights Hub, often include security features. However, industrial real estate operations must implement their own robust measures to protect sensitive data and ensure the uninterrupted operation of smart manufacturing processes.

Implementing Industry 4.0 technologies (including Siemens solutions) involves significant upfront costs for equipment, infrastructure, and technology integration. Industrial real estate developers and owners may face challenges in balancing these costs while remaining competitive in the market.

“Industry 4.0” represents a paradigm shift in manufacturing and production processes, leading to more interconnected, intelligent and efficient systems. SRE embraces “business performance transformation” for its property portfolio. Can you explain that?

Dorsey: As we think about the critical elements of any successful business, it is the ability to foresee changes in market dynamics — and consumer preferences and behaviors — that ensure new expectations are addressed in a positive manner.

Reflecting upon the past several years of the pandemic, Siemens Real Estate was able to quickly assess the impacts on our business model. For example, we pivoted in a timely manner to address the rapid changes in our employee preferences, including their need for a hybrid work model, enhanced health and well-being workplace programs, and using technology more to enhance productivity.

As we embraced these changes, we began to refine our real estate model’s guiding principles. We approached all locations with an upfront assumption of reducing square footage, embraced a flight to “green and quality” office buildings, launched a Siemens DEI certification program, and ensured all our office spaces contained state-of-the-art technology.

The effects of the pandemic have resulted in lasting paradigm shifts in terms of how the world views and values the workplace. Siemens Real Estate continues to stay ahead of the curve by ensuring we are building an agile, dynamic model founded upon the core Siemens business strategy that is relevant to changing market factors and employee preferences.

How is SRE meeting the diverse space/operational needs of today’s businesses in a post-pandemic environment?

Dorsey: Siemens Real Estate adapted to the changing demands for flexible workspaces. We implemented flexible office layouts, modular workspaces, and hybrid work models that accommodate both in-office and remote work.

Today’s industrial properties also need to incorporate energy-efficient practices and green technologies to align with environmental goals. The “Siemens Office New Normal Concept” is the basis for the worldwide introduction of new working worlds at Siemens in a post-pandemic environment. The concept sets benchmarks, defines global standards, and takes local characteristics into account. It stands for innovation and continuity while further developing our previous Siemens Office Standard. Proven elements such as mobile working and activity-based, self-determined working options are significantly expanded. Siemens Office New Normal thus stands for more flexibility, mobility, and self-determination. It also describes a new ecosystem of different potential workplaces, supported by intelligent technology. The right working environment makes all the difference when improving the rate of corporate success and employee satisfaction, as well as attracting the best talent.

Additionally, our various sustainability initiatives are aligned with similar values shared by many other organizations. These initiatives decrease environmental footprints by reducing emissions and resource use; increasing transparency through certification, monitoring, and full disclosure; ensuring the healthiest workplaces; and future-proofing our facilities by reducing risks and encouraging innovation.

SRE set a “net zero carbon footprint” global goal by 2030 to ensure the amount of greenhouse gases emitted by buildings is balanced by the amount they can somehow remove. How is that “sustainable” real estate target achieved? Will it drive up client costs?

Dorsey: Siemens has taken a strong stance in our position and commitment to carbon neutrality by 2030. As such, Siemens Real Estate has been tasked with leading the effort, across the company, in achieving a net zero carbon footprint by this date.

While many companies have made this global commitment, very few of them actually have a roadmap to achieve their goal. What makes me excited about Siemens is that we actually have a defined roadmap. It identifies our key locations and presents detailed assessment plans of what investments and improvements are required to achieve zero carbon emissions at each of them.

We have carefully partnered with our business leadership to align both the facilities/building-related improvements along with the production-related improvements to ensure we are appropriately addressing both aspects of emissions. This approach allows us to manage resources efficiently and effectively, in terms of both people and dollars, to make sure the combined goal can be achieved. Many of our projects include conversions of equipment from gas to electrical (i.e. HVAC units, paint lines). That involves embracing a priority focus on understanding the energy resiliency within our current capacity, and then proactively approaching utility companies when we identify a potential future need for enhanced power capacity.

It is the ability to foresee changes in market dynamics — and consumer preferences and behaviors — that ensure new expectations are addressed in a positive manner. As we think through the overall roadmap for all companies to eventually achieve a net zero carbon footprint, I believe the greatest area of concern is finding out if the utilities and the infrastructure are prepared for this change. I am fortunate to be part of a company that is not only thinking about these concerns but is also proactively becoming part of the solution.

Tell us about your decentralized location model.

Dorsey: Siemens embraced a decentralized footprint strategy well before it was considered the “new way of working.” This has led us to having a widespread presence across many markets, specifically in the United States. We are currently exploring how best to create a relevant, impactful approach to building upon our strong brand and culture in this type of decentralized location model for our employees, customers, and communities.

One approach being considered is to identify what markets are best suited for what we’re calling “Siemens Experience Centers.” The idea is for these locations to be places to feature key Siemens products and technologies for employees as well as for customers.

We are evaluating several factors to drive this type of decision-making, including employee concentration within a market, proximity to key customers and/suppliers, strong talent pools (especially those focused on engineering and technology), sustainable and resource-sufficient markets, and markets where strong public/private partnerships are appropriate.

While we do not envision creating more than a few of these types of Experience Centers, the idea is to think of the future and then position our real estate strategy to enable and support the bigger Siemens business strategy. We are in the early planning stages and excited to see where this thinking could potentially lead.

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