At Phoenix Contact’s annual press conference in November, Ulrich Leidecker, Chief Operation Officer, spoke about the company’s economic development, which will be better than could be expected at the beginning of the pandemic.
From today’s perspective, Phoenix Contact will close the financial year 2020 with a moderate sales decline of -4 to -5 percent. Excluding currency impacts, the rate will be around -3 to -4 percent. That is a very good figure for this industry. From a global perspective, we are experiencing an uneven level. The Americas are in the double-digit minus range, while Asia has been developing very positively since September with an increase in incoming orders. China is showing a sales growth of over ten percent, and the growth curve in the USA is also slowly rising again.
We continued to make significant investments even in 2020, the year of the coronavirus. A total of around 150 million euros will be invested in new structures and innovations. In Nanjing, China, a building complex at a second location near the airport is nearing completion. About ten kilometers away, a new production building with its own logistics facilities of around 34,000 m² of floor space has been built in Mozhou, Nanjing’s newly developed industrial area. A housing complex for employees was also built. Together with a company restaurant, this adds an additional 7,750 m². Phoenix Contact has also invested in Russia and is now part of Europe’s largest technology park in Skolkovo, with 2.6 million m² of space. Here, industrial companies, research laboratories, start-ups, and a university offer a unique high-tech combination.
At the Blomberg site, the logistics unit was expanded while operations continued. Nine additional shelving aisles now offer 64,000 new storage spaces. The additional workstations will increase order picking performance by up to 40 percent. The investment amounts to 15 million euros.
With an investment of 6 million euros, the new logistics building in Herrenberg was completed in the first quarter of 2020. At 2,900 m², the new facilities provide an automated small parts warehouse (AKL) and a pallet rack warehouse. The relocation of the warehouse allows production to be expanded into the space previously occupied by logistics. Phoenix Contact E-Mobility has also further expanded its production capacities. In Germany, a new production area of 5000 m² is being occupied. In addition, a new production plant with an area of 15,000 m² is being built in Poland. Corporate spending on research and development is more than seven percent and has continued to increase slightly compared to 2019. The number of employees worldwide will be around 17,500 in 2020, unchanged from 2019.
Empowering an All Electric Society
The described activities in all company divisions all serve the goal of making Phoenix Contact an essential partner in a challenging future. We tie our future as a company to the global prospect of sustainable energy production. Climate change, reducing the levels of CO2, the growing world population, and a predicted doubling of the world’s energy demands by 2050 ‒ to meet these challenges, doing without and refraining from things are not enough. New technological approaches are needed. We believe that the world is indeed facing an energy revolution that will usher in the end of the fossil fuel age: A society whose entire energy demands are covered by electricity generated from renewable sources, a completely CO2-free energy supply. This vision has the potential of eliminating the unavailability of energy as one of the world’s most important barriers to economic development, without destroying our natural resources in this endeavor. For years, we have been supporting our customers in areas such as energy efficiency or furthering renewable power generation systems by expanding them and connecting them to the grid. In factory automation and infrastructure, we help with the electrification, networking, and automation of essential structural and production-related elements. We need to expand these efforts greatly in the coming years if the vision of a world powered by a renewable energy supply is to become reality. Additional important aspects will arise, though:
One of the decisive factors will be what is known as sector coupling. We must ensure that the network combines all the energy-generating, consuming, and storing sectors of industry and business as well as of private households and municipal areas. Surplus energy must be stored. This means through conventional means or, in the future, through more “Power-to-X” applications in which hydrogen is produced and stored by means of electrical energy through water electrolysis, which can be converted back into heat or electrical energy by fuel cells or traditional generators when energy requirements increase. In the same way, the hydrogen could be further processed into “green fuels” to serve as regenerative fuel for aircraft. Networked solutions help to bring surplus energy generated at one location to the places where it is currently needed. And this is exactly where we see our contribution as a company. With our solutions, we can contribute to solving major global and social problems and, at the same time, participate in economic development.
Mechanical products such as terminal blocks form the basis for the electrification of industries – the starting point of Phoenix Contact’s corporate development. Thanks to digital item descriptions, these terminal blocks can be efficiently integrated into planning and engineering tools. This is one of the basic prerequisites for the digitization and automation of systems. This is how terminal blocks also make the industries smart.
New communication technologies such as 5G, SPE, and TSN form the basis for the intelligent networking of industries. Using these technologies is the only way to ensure that data points in various sectors can be networked securely, simply, and quickly. We develop all these technologies further and apply them.
Phoenix Contact’s vertical market management aims at developing applications and using them to benefit an All Electric Society. It also benefits factory automation, where the long formulated demand for Industry 4.0 has been described in principle, but is far from being used in daily industrial operations. In the vast infrastructure segment, ranging from smart buildings to smart cities and all forms of smart traffic, there is still a long way to go. This is especially true for sector coupling, which describes how forms of energy can be exchanged efficiently and combined among the individual sectors. Examples range from simple ones, such as combining solar power and electric storage or electrically powered vehicles, up to power-to-gas offshore platforms that convert wind power into hydrogen on site and distribute the energy via pipeline or store it as liquefied gas. This brings us to a rapidly changing world of process technology. In addition to efficiency and modularization issues in the chemicals and pharmaceuticals sector, the oil & gas sector will certainly see the most significant changes. The major oil companies have long understood this and are resolutely moving to alternative strategies for producing and distributing energy. There is also a high demand for electrification, networking, and automation for completely new applications in this sector. This also applies to the energy sector, of course. A changing energy production also needs new structures and processes for distributing and storing energy. Today’s networks are designed so that energy is generated at comparatively few points (power stations), fed into the transport network at high and extra-high voltage, converted to medium voltage, and then distributed further in the distribution grid. After the energy is further converted to low voltage, the actual consumers are supplied by secondary substations. But what if more and more consumers also become producers? What if more and more wind parks and solar parks feed in at the medium-voltage level, where until now energy was “just” distributed? In short, the demands for expanding the energy network will be great and Phoenix Contact will lend support with an ever-growing range of services and applications as a solution partner.
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