Barbara Humpton, President and CEO of Siemens USA, sits down with Gil Jenkins and Susan Nickey to discuss Siemens' pivotal role in advancing sustainability across industry, infrastructure, and transportation sectors. The conversation dives into Siemens' approach to decarbonization as an engine for growth and spotlights how innovation at the grid edge will be key to delivering a more sustainable future, guiding energy flows and balancing supply with the demands of buildings, industry, and private consumers. Additionally, Barbara discusses the encouraging trend of U.S. manufacturing expansion, advancements in EV charging infrastructure, and more. Finally, Babara shares insights into her leadership philosophy, discusses her passion for integrating work and personal life priorities, and explains why she started a podcast for Siemens, The Optimistic Outlook, back in 2021.
Barbara Humpton, President and CEO of Siemens USA, sits down with Gil Jenkins and Susan Nickey to discuss Siemens' pivotal role in advancing sustainability across industry, infrastructure, and transportation sectors. The conversation dives into Siemens' approach to decarbonization as an engine for growth and spotlights how innovation at the grid edge will be key to delivering a more sustainable future, guiding energy flows and balancing supply with the demands of buildings, industry, and private consumers. Additionally, Barbara discusses the encouraging trend of U.S. manufacturing expansion, advancements in EV charging infrastructure, and more. Finally, Babara shares insights into her leadership philosophy, discusses her passion for integrating work and personal life priorities, and explains why she started a podcast for Siemens, The Optimistic Outlook, back in 2021.
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Episode recorded June 12, 2024
Chad Reed: I'm Chad Reed.
Hillary Langer: I'm Hillary Langer.
Gil Jenkins: I'm Gil Jenkins.
Chad: This is Climate Positive.
Barbara Humpton: The really cool thing about the digital tools that we're bringing to the table today, the software that lets you design new products can also let you design for sustainability. 80% of an item's ultimate footprint is determined during the design phase. What we're working on is making sure that manufacturers understand that these digital tools are able to give them power to achieve not only their economic goals, but also their non-financial goals like sustainability. Superpower.
Gil: This week, we're honored to have the wise and wonderful Barbara Humpton join us on Climate Positive. Barbara is the CEO of Siemens USA, a powerhouse technology company supporting industry, infrastructure, and transportation. Everywhere you look – from grids to factories, buildings, and trains – Siemens technology serves a critical role in the backbone of economies.
In addition to her leadership role guiding Siemens' strategy and engagement in its largest market, Barbara hosts 'The Optimistic Outlook' podcast, which engages listeners with discussions on the future of essential fields such as energy, manufacturing, and transportation.
Our Chief Client Officer, Susan Nickey, was recently a guest on The Optimistic Outlook, so we thought it only fitting to ask Barbara to sit down with us for an invigorating conversation with on how Siemens views sustainability as an engine for growth, and to explore the many facets of what it means to innovate at the grid edge.
Gil Jenkins: Barbara, welcome to Climate Positive.
Barbara Humpton: Gil, it's great to be with you and Susan today.
Gil: We're really excited to have you on. I don't know if you'll remember this, Barbara, but we first met in 2019 at UN Climate Week. I was there with our then CEO, now chair, Jeff Eckel. You sort of saw each other across the room, and you came in with all this energy. I made a note of who you were, and I knew a little bit about Siemens, but I followed you since. I've just been so impressed with your communication style and warmth and expertise on climate. We've seen each other at Ceres events, and Susan taped your podcast that will be out by the time this podcast airs. Just terrific to have this hour with you and talk all that you're doing at Siemens USA. Thank you.
Barbara: What an honor, actually, to be with you. Yes, I remember that visit as well. it was before the world shut down for COVID.
Gil: That's right, it was '19.
Barbara: We ate a plant-based diet the whole day. We were totally into the sustainable development goals.
Gil: That's right.
Barbara: You guys have had such an early and profound impact on this whole space. By the way, thrilled to be on your podcast that's getting such rave reviews.
Gil: Thank you. Maybe to kick it off, as the CEO of Siemens USA, you are responsible for guiding the company's strategy, engaging in the largest market for the company, which is providing solutions across industry, infrastructure, and transportation. Tell us about Siemens' business in the US and how decarbonization, is a growing market for you all. I understand, 90% of your global revenue comes from a portfolio that enables sustainability impact. The floor is yours, Barbara.
Barbara: This is so much fun to talk about because Siemens is a company that's over 175 years old and has kept the spirit of a startup throughout, a startup that originally was focused on communications, connecting people through cables, the transatlantic cable for one. Siemens has always chosen to focus on technology that is core to the trends that are relevant in the moment.
In the case of this moment, I'll tell you that in 2010, the then managing board of Siemens studied what are the global mega trends that are going to persist through the year 2050? Then where do we need to apply our know-how? They identified five. Think about the impact of climate change, urbanization, the aging demographics of people all around the world, and the implications of that for healthcare and how we work. The ever more global, but now we say glocal, supply chain.
Gil: That's right. Really rolls off the tongue.
Barbara: Yes, doesn't it? Then the digitalization of everything. What they decided was, we've got know-how in electrification, automation, digitalization. Let's bring that know-how to the table to address these global mega trends. Now, I'll tell you, if you tie your business strategy to an inexorable force, like climate change, as you all know, you're going to grow. It's been fantastic, but maybe the most fundamental thing about us is that we're actually defining a new tech sector in this moment.
You've seen technology that's transformed our digital lives, from the way we shop to the way we get entertained. Those same tools now are being put to work in the backbone of the economy, where we live. Whether it's transportation, manufacturing, big buildings, the grid edge, that technology that combines the real and the digital is a new tech sector that's catching a lot of people's attention. Truly, it gives us the ability to tackle the big problems we're all facing. Can't wait to get into it a little bit more with you.
Gil: Yes, I want to get into all those things you just mentioned. Before we do, I hope you'll humor me with just a little bit of your own personal journey. You mentioned 2010, that moment when the company looked at all these mega trends. You joined the company in 2011, as I understand, as president and CEO of Siemens Government Technologies. Maybe starting from there, I read a great story that you gave in a speech about what drew you to Siemens at that time. It resonated with me because it involved, you were sort of in a library to then go look up-- well, I'll let you tell the story.
Barbara: Let me back it up even a little bit further, which is, it all started with the worst day of my career. Yes, I had been with IBM and Lockheed Martin, a core group that was addressing large-scale software development for very complex systems. The ground control segment of the global positioning system, the biometric upgrade for law enforcement, the FBI's identification systems. if there was a big, gnarly problem and they needed software developers, IBM, then Lockheed Martin, that was our world.
One day, I was invited into my boss's office and they said, "Hey, we've done this analysis. You're actually in one of the most challenging, difficult jobs in the company. We think it's a perfect training ground for a future CEO. We're going to ask you to step aside so that we can put one of our top talents in to learn from this fantastic role that you're in right now."
Okay. Yes. How do you like that? What do you do on the worst day of your career? I talked to my husband about where do we want to be in 10 years? Then I had a mentor who said, "There's this new tool called LinkedIn. Maybe you should put your profile up." I started to get invitations to come to different places. I actually went to Booz Allen Hamilton for a year. Loved it.
I got a phone call from a former Lockheed Martin boss who had come to Siemens. She said, "I'd really like to invite you to come and work with me." Judy Marks, she's now CEO at Otis Elevators. I went to the public library and I found the Siemens annual report.
Gil: I love it.
Barbara: I opened up this report and was like, where has this company been all my life? I didn't even know the name, right? I wasn't living in that world of the energy space, the infrastructure, et cetera. The more I read, the more excited I got. Yes, I'd been working on projects related to national security. If you think about it, what Siemens does assures global security. The chance to come in, my first role at Siemens was to help Siemens address the needs of the U.S. federal government. You might say, well, what does the government buy that Siemens sells? The answer is everything, right? I got to know the entire portfolio just through the process of connecting people in Siemens to potential stakeholders, eventual customers in the government. Whether it was the Department of Defense doing energy savings performance contracts at their sites.
Gil: We love those at HASI, as you know.
Barbara: That's where I first got to know you. When ultimately the time came where this job, the CEO of Siemens USA came open, the global CEO said to me, "You've gotten to know the entire business. How would you like to interview?" I was thrilled. Yes, long story short, I thought I was coming to Siemens for a nice little sort of five years before I retire and start board service or something like that, but I just can't get enough. This is the most exciting work I think I've ever had the chance to do. Right now it matters.
Gil: That's a great segue. Let's get into some of the things you alluded to, specific sectors and hot topics. The big talk in our world right now is the power grid challenge, which Siemens is heavily involved in trying to help address. To set up this question on what's the problem, how are we solving it? I want to read back something to you that you said not long ago, I think it was on earth day you wrote this, and then I'm going to ask you to respond and expand.
You wrote, "We are in a decade of action to meet climate objectives, and we've made progress. Recent analysis shows the US is on track to achieve a 40% reduction in emissions by 2030. We still need to scale clean energy sources faster; and now another challenge is presenting itself. Our grid will need to expand - not only to generate more renewables, but to produce more electricity for new factories supporting clean energy and for data centers backing the AI boom."
The question after that long wind up. How are you thinking about the power grid challenge today? What is Siemens doing so we can ameliorate this problem as we experience tremendous growth in digitalization?
Barbara: Yes. If I were going to encapsulate this into just one simple phrase, it's this, the American economy can only expand as fast as the power grid does. I think people are realizing this everywhere I go. The change that has caused the most disruption recently is clearly AI data centers. We were already on a trajectory to begin to use way more electricity than we have in the past. Susan and I have commented on the fact that we had relatively flat usage over the last few decades. Energy conservation measures were so effective that we could produce continually reoccurring, standard levels of electricity, and lo and behold, we could still grow our capabilities because conservation measures were so effective.
Man, we have overrun the capacity of conservation to meet the moment. With manufacturing coming back, with the things you've shared from my earlier comments, AI data centers today we know are consuming somewhere on the order of 5 to 10 times more power than their predecessor data centers. Now, put that together with the electrification of transportation, put that together with the electrification of certain industrial processes that can be electrified now. Oh, and by the way, new states ordering electric heat and power appliances, wow, it's a huge demand spike.
We're relying on partners like our Siemens Energy colleagues. You may know a couple of years ago, we spun off Siemens Energy. They do everything in the power production side, large utility scale and high voltage transmission. When you get to medium voltage, low voltage, and the software that can manage microgrids and the grid edge, that's where we have our contribution to make at Siemens AG. We've been doubling down on this.
Just this year, I think since Earth Day, we've announced grid scale X. We're offering grid software on a platform, the Siemens Xcelerator platform. What it's enabling our stakeholders to do, the utilities you and I are both working with, is it allows them to manage the assets they have, whether that's decentralized power generation, distributed energy production, as well as then storage assets, and then to the extent that people actually connect to their devices, the ability to manage demand as well.
With all that said, we think that where we have a lot to contribute is not only the electrical components that will go into this grid edge and help us make sure that we're using power efficiently, but also then in the distribution network and making sure that we get all of the resilience we need, that we use every electron that we're generating wisely. Honestly, it's this disruption that makes us get creative about solutions. I'm really excited about the fact that we've got this tremendous challenge ahead of us.
Susan: Barbara, on that note, there's a lot of headlines on, we need permitting reform, building new transmission lines, which as you know Siemens Energy is involved with. In the meantime, we have an urgent need today to open up the grid, to have more resiliency. Could you talk a bit more about the promise and really the opportunity of what grid edge and the software and the other technologies you're working on can deliver to help fill that gap?
Barbara: Yes. Thanks, Susan. Yes. We think about the way the grid evolved, and this is truly a system of systems. It was really designed originally with the one-way flow of electricity. Think large-scale power production and this power flowing across transmission lines, ultimately getting distributed to points of use. All of that worked pretty well. In fact, the whole deal was you overproduce. You overproduce, and then you just know that you're going to be able to meet the peak demand at any time.
Now we're living in a different world. You look at moments like the storms in Texas that disrupted power. You think about fires in California. What do utilities do in response to that? It turns out that grid software allows us to actually manage the flow across a network. My not-so-recent example is Blue Lake Rancheria. In northern California, there was Indian lands where the local leaders worked with Siemens to establish their own microgrid. What happened is operating within the PG&E realm, what they were doing is when there needed to be shutdowns, blackouts due to either weather conditions or, sadly, fires, Blue Lake Rancheria was able to island themselves. They, in essence, became sort of a power pack for the area.
Now you think about Texas and what's been going on there, and you wonder, hey, if greater connectivity with greater ability to deploy assets, truly software-driven, because there's no way that a human-in-the-loop can make the decisions fast enough to respond to the reality that's happening on the grid itself, you get things like what we now have recently just commissioned with ComEd, Bronzeville. I don't know if you've heard of the Bronzeville microgrid cluster, but Siemens was involved with ComEd and the Department of Energy getting the microgrid stood up so that this South Side Chicago community could actually make use of the distributed energy resources there. They've installed storage on site. They actually have enough excess energy being produced that they're able to provide some local EVs to allow for citizen support, either food delivery or transporting people to medical care.
Now think about it. Here's an area with vital support services like Chicago Fire and Emergency Response, now supported through the help of software to stay up no matter what. It's that kind of resilience by actually diversifying, by actually creating clusters. It's sort of counterintuitive to a lot of people that when you've got a system of systems, you actually have greater resilience than when you have one brittle architected system.
Gil: We were talking about AI just a minute ago through the lines of the more demand is creating from the data centers using 4X the GPU, the power. I heard you talk recently that I think in every conversation we're required to say the AI buzzword, and it's always through generative AI lens and Chat GPT. I think one of the things you said recently that there's another AI that is not well understood and not getting enough attention in your perspective, and you said this is called industrial AI. What does that mean for Siemens, either in this context of grid management or the next topic, which I'll give you a preview of, which is sort of manufacturing and what you're doing there?
Barbara: Yes. AI. Siemens actually has been doing first experiments and then embedded work with AI initially through the form of machine learning for 50 years. We know this has been a topic in computer programming, computer processing for quite some time. It's just now that we actually have the whole suite of technical capabilities that allow us to take that to the next level.
Now think about it. Two years ago, we weren't talking about generative AI to the extent we are today. The use of machine learning is especially powerful when we think about the electric grid. Why? Again, what's the limitation of humans in the loop? If we have to design all our systems such that it requires a human in the loop, we're going to be constrained by how quickly, what options we can use, how we can allow the system to operate.
Now, put the computer in to augment the power of the human, and now you get a whole realm of new possibilities. The ability of our computing capacity today to take in massive amounts of data, rapidly process, and then enable quick decisions. That's the power. When we bring that into, say, our grid controls, what that means is we're now able to have grids that learn.
We've seen everything from the ability to learn when to expect peaks and when not to learning as we respond to crisis moments. Our systems are getting stronger and better because of the exposure they're getting to massive amounts of data available to them. That's what's happening on the grid side. It's really exciting. I know that we deal in a highly regulated field, but I think even our regulators are getting more and more comfortable with the idea that there's a power there that if we apply judiciously, and again, I keep coming back to human-assisted artificial intelligence because we do still have to be very careful with what--
Gil: There are a few security implications here, right?
Barbara: Sure. Let me challenge you on that one because, in fact, it's been my own team that's gotten me thinking differently about, is there power or peril in these more connected, more software-enabled devices, and my team now has helped me see the virtue in this, by connecting we also get better real-time data about the status of our devices. We can tell when something has been misused, hijacked, brought down, et cetera. It gives us the possibility to then respond more rapidly in addition to giving us the ability to collect data and to be able to plan corrective steps and actions. Yes, power or peril, we're going on the promise of this technology in order to actually make us more effective with our infrastructure.
Susan: Sounds like with the technology that you've already developed with the data, with all the interconnectivity, you've got a great pilot, maybe more than a pilot, just a product here in Bronzeville. I spent over 30 years in Chicago. How do we just get this rolled out everywhere, Barbara?
Barbara: Don't you feel like we've got to find ways to get the word out, which is why I'm so delighted that you invited me onto the show. [laughs] We've got to get the word out that these technologies exist. One of the things I've been wondering about, Susan, is whether it's actually through investors like you that we have the ability to touch more stakeholders, right? If we can make sure that the people who are doing the investing and ensuring the capital flows to the most effective projects, if we as technologists can help share what's the art of the possible in technology, maybe we move the needle faster. Because quite frankly, where the money flows is where the progress gets made.
Susan: We'd love to collaborate and further that, and I would say money talks, but we're also neutral. If you've got the technology and we can work with the policy folks, they're always happy to hear the capital will flow and finance these. I know that you've also developed revenue models that come from demand response that also help create innovative new finance models for us to finance.
Barbara: That's right. Then one of those magic things I know you all love to hear is when there are technologies that can be built into solutions that yield a faster return on investment. Actually, Susan, I think AI is one of those. Now, remember in the old days of energy savings performance contracts where we just got started, the big deal was build in a lighting improvement project because lighting is one of those things that's easy.
Gil: Pays for itself really quick.
Barbara: It'll yield a flow, a savings flow that will allow you to finance a larger project in essence. I actually think that we're going to see the AI turning the light bulbs on, if you will, for this next phase for just the reasons we're talking about. If it gives people the ability to see and respond more quickly, then we're going to have much more efficient operations, and I think we're already seeing a faster return on investment in the projects where we've included some of these AI tools.
Susan: How important is storage now? We've talked about microgrids behind the meter in providing resiliency, but also enabling these new business solutions and also creating a new revenue stream to help pay for all this deployment.
Barbara: Yes, and I'll share with you all in the audience that I serve on the board of Fluence Energy. Years ago, AES and Siemens put our heads together to form a storage company. You really needed the know-how of the utility plus the technology capabilities of Siemens to make this go. The timing couldn't have been better because solar, its cost was coming down to such a point that it was becoming really popular to go implement. Wind was coming on in a really big way. I think that one of the key things about those intermittent sources of power is the need to make sure that you can respond at low production times when there's gaps, and storage gives us that ability.
Now we're seeing the rise of storage in all kinds of different forms. Fluence, of course, working at utility scale. Think about our vehicles now as small, deployable, tappable sources of storage. Once we get enough EVs on the grid, then we truly do have a new flexibility that we've never had before. So we're just very much on the front end of what I believe is going to be a trend there. What storage does for us, you think about the kinds of challenges certain states have to deal with.
California talks about their zero-day events where how long would we need to provide power in case of an outage? Once upon a time, people talked in terms of minutes or hours. Now we're talking in terms of days.
Gil: Days, yes.
Barbara: I've heard up to a month, try to be ready to provide 30 days worth of power. That's a daunting task. How are you going to do that? Battery storage will get you so far, but then you need all kinds of other forms of energy storage. We're hearing from innovators, of course, water could be one, compressed air could be one. Now I'm seeing things, did I see the latest news that there's a nuclear reactor that it's using sodium as its coolant, but salt is a perfect energy storage medium as well.
I really think what's happened is with the recognition that storage could be a game changer, innovators everywhere are coming out, with all kinds of ideas. I think the Department of Energy is doing a great job of vetting those, but so are private investors like Breakthrough Energy, sort of fostering that startup world where innovators are bringing new solutions to the table and then getting things ready so that investors like you can deploy, really, to meet the unique needs of your customers.
Gil: Storage, I think with max projections is going to double this year. It's amazing the growth and the new chemistries and applications. I always am reminded, it's maybe a bit dated now, but the analogy, storage, it's like bacon, it goes well with everything. It's so true, right?
Barbara: It goes well with everything. Here's one that blew my mind when I first heard it. What about rust? You go, what? Wait, did you say rust? Yes. Iron oxide. Maybe you guys are, maybe this is a-
Gil: That's not in our portfolio yet, but sounds cool.
Barbara: - little niche in the market that you haven't seen yet, but think about this. One of the big challenges right now is where do you get process energy for the industries that require high temperature? It's one of the biggest arguments that people trot out when they're trying to say, "Hey, we can't get off of fossil fuels." Innovators have gone to work on this. Turns out that if you burn rust, you release no carbon, and it burns at temperatures that are appropriate for industrial processes. You can take rust through something like 11 cycles of burning. In other words, burn it, collect it, burn it, collect it 11 times before you have to, in essence, put it back into some kind of circular process. What do you do? You put it back into steelmaking. Now, eventually, you get more iron, you get rust. On you go.
Gil: Circular.
Barbara: Think about that. It's portable. It's non-toxic. It's not a weapon. What's wrong with rust? I think we're all examining, you have to look at the full equation. What does it cost to transport? How abundant is it? Et cetera, et cetera. I love the way, especially in this American ecosystem, the way people in our economy react is, "Oh, there's a problem. I've got an idea." Entrepreneurs come right to the front.
Gil: Climate Positive is produced by HASI, a leading climate investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. To learn more please visit HASI.com
Gil: I'm going to turn to manufacturing, which we sort of touched on a little bit. I'm sure you would agree that we've seen a notable resurgence of American industry and manufacturing build-out over the past few years. Clearly, this can be, some of this certainly can be attributed to the passage of the CHIPS and Science Act, which Susan was just telling me that the last time you had lunch was like the day after that passed. One more bill, the Bipartisan Infrastructure Law, and of course, the Inflation Reduction Act, and the many robust climate provisions. Really fueling this in-shoring and build-out of advanced manufacturing in this country.
I'm going to ask this as a two-parter, Siemens itself expanding its US manufacturing footprint in recent years. You've done a breaking new ground on an East Coast rail hub, integrating a new EV charging manufacturing facility, initiated a new production line of solar inverters, and then also a new high-tech manufacturing plant in Fort Worth for critical electrical equipment. I hope I haven't missed anything, so how is Siemens participating and how are you thinking about this manufacturing boom, as I understand it? Your own story. Then I am going to follow up with how are you helping your customers who are also expanding their own US-based manufacturing in recent years, given some of the tailwinds we have?
Barbara: Yes, this is an exciting time. Siemens, yes, we do manufacture. We're not just a software company. Think about what's been happening. There's not only government investment. Susan and I get to have a front row seat to all this that's going on in Washington, where the government in this legislation has-- what they've really been doing is sending signals to the market that says, these are national priorities. we want to have domestic semiconductor production. We want to bring manufacturing back to the United States. We want to so much that we're going to enable this kind of funding. Some of it, of course, is grants. Some of it, like through the Inflation Reduction Act, is tax treatment. In other words, if you, the private sector, invest, then here are the tax benefits of doing these things. These are strong signals from the federal government that help the private sector understand where it's going to be fruitful to make our own investments.
Gosh, I think the latest stats I've seen say that for every dollar of US investment that's planned, there's already $6 of private sector investment already moving. We know much of this legislation is intended to operate over longer periods, 5, 10 years. We're just at the front end of this. Already you can see the movement. In our own stories, in the Siemens story, there's a renaissance of rail happening. We're about to introduce high-speed rail into the United States. That means we got to go manufacture rail cars. A couple years ago, we were talking to our rail colleagues and they said, "My heavens, our Sacramento plant is full with orders through 2030. We can't accept new orders and expect them to be delivered until the next decade." Boom, that was the signal. We've got to open up more manufacturing, hence Lexington, North Carolina. We're thrilled to be investing there.
Likewise, AI data centers. Where are you going to get all the electrical switch gear? We're to the point now where the hyperscalers, these huge tech companies are coming to us and saying, what would it take for me to be able to buy a whole factory's worth of gear from you? We got to go expand. We've been doing that. In expanding our own operations, we're applying our own technologies to help make sure that those new expansions are lower carbon intensity, higher level of digitalization. Oh, and by the way, where are you going to get the workers? Right? Between where's the power going to come from, where are the people going to come from? The answer in both cases is technology's going to help us.
In the case of power, great conversation about that. In the case of people, turns out these same tools of AI are actually making our highly technical technology more accessible to people. Automation of manufacturing makes it possible for us to hire the scarce talent that's available to us, but make sure every person is able to perform to a much higher level than might've been possible two decades ago.
By the way, watch this space, because the more automation comes into our manufacturing environment, the less labor arbitrage we're going to be seeing in those decisions companies make about where to put their manufacturing. We all know, manufacturing fled the US because of the high cost of labor. Everybody was chasing, where can I squeeze another nickel out of the labor costs? You name it, manufacturing has truly moved around the world constantly in search of low cost labor. What if with automation, the cost of labor isn't the factor? What if the driving factors in the equation are access to power, access to talent, because you do need that, basically protection for your intellectual property, but most important of all, a reduction of supply chain risk. This is what we're getting to with glocalization. The idea of go manufacture where the action is.
So that gets me to what we're doing for others in the field of manufacturing. The really cool thing about the digital tools that we're bringing to the table today, you think about the software that lets you design new products can also let you design for sustainability. You can design for reuse or recyclability. 80% of an item's ultimate footprint is determined during the design phase. Once you've made the decisions about what materials going to use and what form this thing is going to take, et cetera, you're kind of set. What we're working on is making sure that manufacturers understand that these digital tools are able to give them power to achieve not only their economic goals, but also their non-financial goals like sustainability. Superpower.
Gil: Intel was one, right? I'd love for you to talk, you mentioned chips.
Barbara: Semiconductors. We have a portfolio of offerings of software and hardware designed to help semiconductor manufacturers. In fact, all aspects of semiconductor production, many in the supply chain leading up to an Intel design ultimately at the end of the day. We're part of Intel's recommitment to the United States, but we are with several others as well. That's not the only industry.
Battery manufacturing is a fascinating one and a really funny story about battery manufacturers. People are coming to the US, they're starting up their operations. One of the things that I'm really pushing is the digitalization. We can transform American industry with digital tools, one of them being the digital twin. Just like on the grid, you could create a computer model of this thing that you're building and then you can kick the tires. You simulate, you can experiment with it and decide what do I actually want to build in the real world?
What I said to a battery manufacturer at one point a year ago was, "Hey, I know you're bringing a new line to the US, have you thought about using a digital twin to model it before you actually build?" He said, "Oh, I'm doing better than that. I'm actually building a scaled down physical production line." I looked at him and said, "Well, okay, but I really advise use of the digital twin." Anyway, he knew exactly what he was doing. He was off and running. Six months later, I saw him again and he said, "Barb, I think I know what you meant by the digital twin now." He said, "I designed my little mock-up factory with no overflow areas." I don't know what you know about battery production, but it's a chemical process. He said--
Gil: Yes, they need a little space.
Barbara: When any part of the line broke down, he had a mess on his hands. It's a good illustration, I think, of why not? Why not build your digital twin first? Then what we're doing is working with manufacturers everywhere on the power of the digital twin to model the product they plan to build, the production line, and then even how that article is going to operate. So that then when it's in the real world and they're collecting data and getting feedback about its performance, they can bring all that data back into the digital environment and run a rapid improvement cycle.
This is going to be transformative for a couple of reasons. One is if you can design it anywhere but build it everywhere, you really solve a lot of supply chain issues. I think within the next couple of decades, we're going to see manufacturing, yes, localization is the key, but I'm going to call it distributed manufacturing just the way you've seen the distribution of power production, distributed energy resources, right? We'll have distributed manufacturing resources as well. That's going to ignite a market sector and maybe even an economic sector, which will bring us back to local prosperity. It can work for us. It can work for people all around the world. I'm really bullish on how the technology we're bringing to the table will help bring that to reality.
Gil: From your lips. More of that, please. Let's learn from our missteps in the future.
Barbara: Can you provide me the power for that?
Gil: Yes, you got it.
Barbara: Because in our switchgear production line down in Fort Worth, the local serving utility, they're working hard. Texas has been so successful at attracting business and manufacturers in particular. It's hard to keep up with the pace. We've got a new electric-driven paint line that we'd like to put up there. Where's the power going to come from? I need developers. I need all kinds of projects going on to help make sure that these new facilities we're putting in actually are powered with clean electricity.
Susan: Our future is powered by electrons, and they're clean electrons.
Barbara: That's right.
Gil: Maybe one more question on manufacturing. You oversee and represent the interests of foreign direct manufacturing. What's the name of that?
Barbara: It's Secretary Raimondo's Investment Advisory Council. What it focuses on is making the US the most attractive destination for foreign investment. It was a huge honor to be asked to chair the Investment Advisory Council. This council has been running in multiple forms for a long time. We run in two-year terms. In this instantiation, we made a conscious decision to work with the Department of Commerce on a rolling set of recommendations. Many of the terms of this Investment Advisory Council have been spent studying and then producing a report at the end.
What we opted to do was look at the reports that had been generated by prior terms, really highlight the things that we thought would have the greatest impact on the perspective of foreign investors to make the US the favored destination for those investments. Then the Department of Commerce, on a quarterly basis, was responding to the recommendations we were making and putting things in place and really driving progress. I felt great about the amount of work we did and the results we're seeing.
Now, if you were to glance at the SelectUSA website, SelectUSA is an organization within the department purely focused on this question. They run a conference, one that's coming up in June, where they actually entertain delegations from all over the world. They convene governors and stakeholders from across the country with this matchmaking approach, with the idea being that if we can attract foreign investors, we can help strengthen the US economy. Likewise, we also understand the power of global trade when it comes to security and resilience.
The bottom line is these last two years have been the biggest years of foreign direct investment in the US. By the way, it's not because of the Investment Advisory Council. It's because of the moment we're in and this recognition that, yes, here in the US, we have relative energy security. We have relative health. We've got access to well-trained employees. We've got access to the most powerful customers in the world. Why wouldn't you want to establish your operations right here in the USA?
Now, layer on top of that the fact that the US government themselves was investing in key technologies to really start to drive the economic engine for a future more resilient and also cleaner economy. Investments in alternative forms of energy production, investment in battery, investments in electric vehicles, all of that has been happening. The world took notice, including Siemens.
Gil: Siemens is committed to developing the national EV charging network through a variety of lenses, as I understand it. As we sit here today in June, how are you thinking about broader electrified transportation as a market? Where are you at Siemens seeing opportunities and optimism?
Barbara: Yes, listen, first of all, we're all in on this. We know that the future is more electric and more connected. That's the world we play in. We're in for the long haul. We've made a commitment to build a million EV chargers here in the United States. We're well on our way to doing that. We see demand in the automotive sector sort of spiking up and down. There's a little bit of choppiness to it. Rest assured, this is taking hold. Frankly, people who get to drive electric don't want to go back.
We're getting to the point where you can get more and more forms of electric transportation. Meaning, here in our work at Siemens, we wanted to electrify our fleet. The key question five years ago was, can we get an electric sort of utility van? When Amazon said they were going to electrify a fleet, it was obvious if Amazon can do it, we can do it too. We're on the same trajectory as others, and our know-how contributes to building, and this is what's going to be a game changer too, is building out the network of EV charging.
Now, again, the big question is, who's going to do all this work? One of the things we did through the Siemens Foundation is actually create a program called EVeryone Charging Forward, EV, EVeryone Charging Forward. Imagine putting together a program for, in essence, apprentices to learn how to manufacture or maintain, service electric charging fleets.
What we've done is we've worked with Michigan and North Carolina to identify local NGOs, local foundations who are working in workforce development, providing the wraparound services, and then getting people connected to, for instance, the International Brotherhood of Electrical Workers so that IBEW can be a major partner in helping to educate the EV charging workforce that we're going to need. As you asked me how Siemens looks at all this, we try to look at these things holistically. Where can our know-how actually accelerate progress? In the case of EVs, it's, yes, not only in producing them, but also teaching others how to do these things themselves.
Susan: Thank you, Barbara, for your leadership in workforce development and making sure that we do get workers trained in these new opportunities and partnering with other stakeholders, like you said, that will help fund us and make the private-public partnership model really excel workers getting into this exciting economy.
Barbara: Yes, this is, it's truly an opportunity. I actually think it's going to be an opportunity for new small businesses as well. I look for lots of economic development in this grid edge sector.
Susan: When we were having lunch and the CHIPS Act had just passed, and I remember you saying, "Oh, this is the most important piece of policy we've enacted," and the IRA was going on the B[unintelligible 00:47:29], I personally didn't appreciate all the consequences and strategic importance of that. From your national security background, Siemens global security background, would you want to share a little bit more your insights into how important that is for security? Also the industrialization and what it brings across for all the stakeholders, this was so important.
Barbara: When COVID hit, I think the world got a bit of a silicon shock, right? Because what we suddenly realized is, again, because of the old chasing the last nickel out of the production process, we created a supply chain with a single point of failure where, I don't know, something 90% of all of the chips in the world flow through one company or one country for sure. We recognized that supply chain bottleneck had to be solved.
Now, we also know that the US was the birthplace of digitalization, of the creation of the semiconductor and all that that unleashed. It just seemed important that in order to maintain a leadership role in technology, in order to maintain access to all the things we would need to make, to play, to live, to communicate, we need a secure supply of semiconductors. Vitally important that America would invest in domestic production and diversify that supply chain.
Gil: Now let's turn to our hot seat — let's have a little fun as we close up. The first set of questions, I'll ask you to fill in the blank. The historical figure I most admire is--
Barbara: Rebecca Pennock Lukens, presumably the first female industrial CEO in the US. In the 1830s, she ran Lukens Steel and managed to take it places no one thought possible.
Susan: If I had to boil my leadership philosophy into one word, it would be--
Barbara: Optimism.
Gil: The best piece of advice a mentor ever told me is--
Barbara: Do every job as if it's the last job you'll ever have.
Gil: That's a good mentor.
Barbara: [laughs]
Gil: Here's some open-ended ones. I love that in your bio and on your socials, you're a very openly proud grandmother. I was close to my grandparents from a young age and thankfully well into adulthood, so I know how special of a relationship is for both. A few quick questions through your lens as a grandma. One, do you talk to your grandkids about sustainability and decarbonization tech? Are they into it? I don't know how old they are.
Barbara: Oh, the oldest is eight years old, the youngest is one. I'll say in my own way, I am. They know that their grandma works for the coolest company in the world.
Gil: What piece of advice did your grandmother give you that you find yourself giving to your grandkids?
Barbara: Oh, I had an amazing, memorable occasion with my grandmother. I was sitting beside my sister and my mom was sitting beside her sister. We were all sort of looking at something in the center of the table. My grandmother said, "Don't you want to be pretty like your sister?" What I learned from my grandmother, which I hope to pass along to my grandkids, is that you can have a wacky sense of humor.
Gil: Let's go from grandparents to parents. I read that both of your parents were math professors. When you're having dinner, do you just do quizzes? What's that like? Then you were a math major. What is that like when both parents are math professors?
Barbara: First of all, can I just say, if you study math, it teaches you how to solve life's problems, right? Everybody, study math. It's a great way to train your brain. It's funny because as a kid, I don't think I appreciated it. I thought it was normal that everybody's parents brought home film strips about partial differential equations.
Gil: No, that's not normal.
Barbara: I'll tell you, in my dad's latter years, we were traveling a little bit together. It's so much fun being an adult child. When we would arrive at a place early and had a little time on our hands while we waited for a concert to start, say, we would actually work on brain teasers together. It got to the point where my employees knew of this and they would share brain teasers with me. My dad was constantly delighted with, "Oh, what has your team come up with now? Can they stump us?" Really fun.
Susan: Going back to optimism, I read the transcript from your recent commencement speech at George Mason University. You really conveyed great messages to that graduating class. Could you elaborate more too for our audience what optimism means and how that can be such a driver for leadership and success?
Barbara: Yes, a lot of people think of optimism as rose-colored glasses. Oh, yes, she's an optimist. She sees the glass as half full, that kind of thing. That's not the definition. The definition of optimism is that, yes, you recognize reality. You get to ground truth. Then you just have this deep-seated confidence that you've got what it takes to overcome whatever challenge you're facing. You've got the tools that you need to move forward. Optimists are solution-oriented and optimists don't waste time worrying about things that are out of their control. My definition of optimism has a lot to do with just getting stuff done.
Gil: Good segue to the final, or second to final question. You are the host and the creator of the Siemens podcast, The Optimistic Outlook, which we'll put in the show notes. Download today, give it five stars. Terrific podcast. Interestingly, I think we both started our podcasts in the pandemic months. There must've been something in the world then that said, let's start a podcast if you're in the energy and infrastructure space. You gave the definition of optimism, which just comes through in all your interviews with your guests. Sitting here today, tell us about the podcast. What is keeping you optimistic to continue doing it three, four years later now? Podcaster to podcaster. How's it going?
Barbara: Podcaster to podcaster. I'll tell you, hey, let me ask you this. Is the world any less crazy than it was during the pandemic? No. Here's the thing. People everywhere want to know, what can I do? How can I get involved in a positive way? When we originally started The Optimistic Outlook podcast, it was almost in response to this. It was the idea of let's share with people the things that are possible. Let's look at these huge challenges we have and then say, what can we do to get to work? Then we've had this opportunity to pull in expert after expert.
Susan, thrilled to have conversations with you about what does our future look like? It turns out we've got experts who are working to build a future that is exciting and inspiring. Man, sharing that with an audience, I'm inspired to keep at it. What I'm having fun with right now is we are resurfacing some older episodes, but you bring it up to date, you recognize this is evergreen material. We're not going to solve these problems in a year, maybe not three years. Let's keep reminding ourselves of the core principles that are going to make us successful in building the resilient future that we all want to create.
Gil: When we started our podcast and we were thinking of our initial dream guests and folks in the industry that we admired, you've been on our list since the very early days. It's cool for us to finally have you on our podcast and for you to have Susan on as well. A little bit of kismet there. Final question that we ask all our guests, fill in the blank. To me, climate positive means--
Barbara: Doing even more than being neutral. We know that we have to be responsible in our own operations. The question is, can we do more first to help restore what's been broken so far, but then to create that climate future that we all want to live in?
Gil: Thank you so much, Barbara, for coming on our show and for all you're doing. Onward and upward, let's get all this work done and tackle these thorny problems together.
Barbara: Gil, it's been a real privilege. Susan, thank you so much for the invitation.
Gil: If you enjoyed this week’s episode, please leave us a leave a rating and review on Apple and Spotify. This really helps us reach more listeners.
You can also let us know what you thought via Twitter @ClimatePosiPod or email us at climatepositive@hasi.com
I'm Gil Jenkins.
And this is Climate Positive.