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Siemens Closes Acquisition of UGS Sign Up to receive Daily News Alerts in your E-mail Inbox
Posted on Monday, May 07, 2007 4:10:00 PM |
Automation giant Siemens AG officially closed its $3.5 billion acquisition of product lifecycle management (PLM) leader UGS Corp. today, announcing that UGS will continue business as usual as a global division of the Siemens Automation and Drives (A&D) group, with several key Siemens executives taking newly created management positions.
Tilo Brandis, who hails from Siemens' Electronics Assembly Systems (EA) division and who has been serving as chief integration officer on the acquisition since its announcement in January, was appointed president of the UGS PLM Software unit, reporting to Tony Affuso, who remains chairman and CEO. Peter Bichara, most recently vice president of mergers and acquisitions for Siemens A&D, assumes the title of UGS executive vice president and chief financial officer. Both executives are relocating to UGS PLM Software headquarters in Plano, TX, and all existing UGS executives will remain with the company.
"Being part of Siemens requires that UGS understands Siemens and that Siemens understands UGS," Brandis explained in an interview with Managing Automation. "UGS by itself is a big company, and Siemens is even bigger. We've added myself and Peter to ensure that the integration is smooth ... and that we tie the companies together where they link up nicely."
While Affuso will remain focused on strategy and future direction, Brandis will pick up the operational reins, focusing on integrating the companies along product, organizational, and cultural lines. He said not to expect any layoffs as a result of the acquisition, but rather that the combined company would look to add people to take advantage of what it sees as a giant market opportunity.
The opportunity, as both companies view it, is to leverage the virtual design world of UGS's PLM and CAD software as an extension of Siemens' physical world of industrial automation products, which encompass everything from the hardware controls and sensors used in production equipment to the manufacturing execution systems (MES), process control systems, and industrial communications deployed in production facilities. UGS had already been heading in that direction, as has its major competitor Dassault Systemes Inc. UGS in 2005 acquired Tecnomatix, a maker of software used to digitally build and simulate manufacturing lines. Dassault offers the Delmia digital manufacturing software as part of its PLM suite.
While products like Delmia and Tecnomatix edge the design and production worlds closer, Brandis says the integration still isn't seamless, leaving manufacturers to deal with data inconsistencies that can lead to quality problems and time-to-market issues.
"Today, there's a sequence of processes — someone comes in and designs a product; someone else plans the factory layout; then someone else comes in and programs the PLCs [programmable logic controls] and maybe later optimizes the factory for the product," he said. "Those are typically sequential steps with no interfaces in between. Think about how much productivity is lost in that process. We think by bringing those areas together and by making them a parallel process, we can shorten the time of the whole process dramatically and ensure that data stays consistent."
Brandis declined to specify how the companies' products would be merged to provide that level of integration. He said the company would divulge more specifics and provide a roadmap for delivery at its analyst meeting on June 19 in New York.
Observers remained bullish on the merger, saying the impact of an industry giant leading the push to integrate the design and automation worlds is critical for manufacturers.
"This step has to happen," said Ed Miller, CEO of CIMdata Inc., a market research firm focused on CAD and PLM. "This is the delivery of computer-integrated manufacturing as we talked about it 30 years ago. And this will create competitive pressure on other PLM and automation vendors to make that work better as well."
UGS announced the closing of the merger on the heels of a strong first quarter. Preliminary numbers indicate revenue growth of 11% year over year, with 16% growth in software licenses, officials said.
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