Phoenix Contact sent an executive report meant for the SPS show in Nuremberg. I have not heard much from that company for several years. That’s a shame. The company has been active, investing, growing, and pushing technology forward. I’ve summarized the high points from an extensive letter detailing achievements of 2021.
In addition to the situation surrounding the pandemic, the biggest challenges we faced in 2021 were on the material supply side. It started with one of the coldest winters in Texas history. The location experienced system downtimes and significant production outages for key components in plastic manufacturing. Storerooms gradually ran empty along the downstream production chains, resulting in significant malfunctions and additional expenses on the purchasing side in large segments of our industry, in particular in the first six months of the year.
Despite the tense situation on the raw materials markets and challenges related to the pandemic, it currently appears that Phoenix Contact will conclude the 2021 fiscal year with revenue growth of approx. 25 percent, and total revenues of € 2.95 billion. Growth in all of our key regions (Germany, Europe, the Americas and Asia) has been unusually uniform, and is over 20 percent everywhere. The same applies to the business units. This growth is also reflected in the significant growth of our workforce of almost 20,000 employees worldwide. In light of the overall very difficult circumstances, this is an outstanding result.
Phoenix Contact continued to invest and expand during the pandemic totaling around 180 million euros. It said the investment could have been higher except for delivery bottlenecks for machines and plants. These investments focused on further developing the location in Blomberg and China and on expanding production capacities of Phoenix Contact E-Mobility in Poland. 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. In addition to investing in systems and buildings, over 10 percent of the total investment was in intangible assets. This percentage will increase in 2022 by more than 25 percent, a disproportionate investment compared to this year. This is a trend that we expect to continue seeing in coming years, as a consequence of increasing digitization.
Sustainability: A challenge and driver of growth
While politicians bicker and posture, companies lead the way toward sustainable growth. “The aspect of sustainability is a top priority in the investments in our new Building 60. However, sustainability is becoming an ever more important focus not only when constructing new buildings, but in many other activities as well, since climate change is one of the most urgent challenges of our time. We have already achieved many milestones on our journey towards sustainable business practices, focusing on our ecological footprint throughout our entire supply chain, as well as the impacts on social factors.”
We continue to work on achieving the goal we have set for ourselves, of global CO2 neutrality throughout the entire company. Currently, we are addressing Scope 1 and Scope 2 within the power supply. Scope 1 deals with our emissions at our locations directly within the company. Scope 2 mainly includes the electricity that we purchase. We are already CO2 neutral in Germany as of the beginning of the year 2021 for Scope 1 and Scope 2, and we have been neutral for both in Europe since July. It should be noted that, in addition to converting to green power by purchasing electricity made from renewable energy, as well as implementing energy-saving measures, we are also investing in global climate protection projects, such as in wind turbine generators in India or in Turkey. In the long-term, we will compensate for these volumes by further increasing our energy efficiency and expanding our own renewable energies.
Sustainability as the engine of the economy
From the standpoint of automation technology, however, the goal of sustainability also represents a tremendous economic opportunity. Extraordinarily high investments will be required in order to provide more people access to more sustainable well-being. All areas of our lives must be electrified, networked, and automated if we want to achieve full electric mobility in all sectors. From regenerative power generation to different stages of energy storage, we need major changes in transportation networks and distribution grids, even down to intelligent secondary substations. Once we have achieved this energy supply, however, we also need to make much better use of energy efficiency potentials and intelligent controllable consumers, such as intelligent home chargers, air heating pumps, or decentralized storage devices. Factories must be digitized, sectors must be linked, and energy must be converted and stored if sustainability is the goal. And electrical and automation technology will be used in all of these areas. We are facing an era that offers an extraordinary potential for growth to our entire industry. Phoenix Contact has begun aligning its entire product and service range towards this goal, with its perspective of an “All Electric Society.” In the dimensions of “electrification, networking, and automation,” we want to provide our customers with specific technologies that facilitate or simplify solutions for an “All Electric Society.” In the electrification area, we offer new products under “Power” such as the intelligent CHARX power supply for high system availability, or the new and modular overvoltage and surge protection device CAPAROC under “Protect.” We deliver each of these products with a clear goal of meeting the grid requirements of the future today. In light of future DC (or direct current) grids, we are already developing network technologies under the point “Electrification” to serve all needs of the market and of customers in this area as well. In the “Networking” area, the first industrial Single Pair Ethernet Switches and associated IP20 and IP6X plugs stand for the next generation of network communication in factory and process automation. These are flanked by special services in the network security area, which delivers not only independent security devices such as our MGuard series, but also benefits all network-based devices as a technological platform.
Future Automation Technology
Through my work with the Germany-based analyst firm IoT Analytics, I’ve been introduced to the German passion for a newer PLC technology. I read this as a reaction to Siemens’ PLC technology. A number of companies have been pushing what they call “PC-based” PLCs. Phoenix Contact is one of them, and I could count Beckhoff Automation, B+R (now ABB), and Wago among the crowd. American companies seem not so impacted by the movement overall. I’ve seen pockets of alternative control technologies over here. What the future holds is up in the air. I think it is possible that the growth of Internet of Things installations could spur growth for the PC-based technology perhaps with Siemens (Europe) and Rockwell Automation (US) still dominant in machine control. We’ll see how it plays. Here is more from Phoenix Contact’s point of view.
Openness and replacing proprietary systems are the keys to success. Phoenix Contact has already been demonstrating the value of openness consistently since 2016 with the PLCnext Technology Ecosystem.
Classic partnerships replaced by communities
Partnerships morphing into ecosystems and communities pop up everywhere. Phoenix Contact contributes to the trend. “Openness also means a new way of thinking about partnerships and collaboration. In order to best utilize available potentials within the industry and drive innovations forward, new opportunities must be created to exchange knowledge and trade in existing software solutions. There are many partnerships with a generally exclusive character in the industry. The idea of bringing together as many experts as possible from the fields of IT and automation in a global network of relationships, thereby providing access to expertise from throughout the entire industry, is a new one. The PLCnext Technology Ecosystem turns exclusivity into openness.”
Phoenix Contact has been promoting networking among international experts in the industry since 2017 with our own website to serve as a central platform of exchange for the PLCnext Community. (www.plcnext-community.net http://www.plcnext-community.net). Phoenix Contact revised and further optimized the platform for the Community in November 2021. It offers better functions for digital networking and information. In addition to exchanging ideas and information via established platforms such as GitHub, Instagram, Facebook, YouTube, and LinkedIn, the PLCnext Community can also network here. This allows users, potential users, and software providers to become part of the global network of relationships between experts in the IT and automation fields in many different ways.
The hardware portfolio of the PLCnext Technology Ecosystem also continues to grow. Controllers are available in various performance classes within the PLCnext Control family – from devices optimized for edge use cases to modules for additional controller functions. PLCnext Extension Modules can be used to expand a PLCnext Control controller to the left. This makes it possible, for instance, to add further Ethernet interfaces or extend the system with Interbus or Profibus. Applications that require functional safety can also be retrofitted with an extension module.
Phoenix Contact Smart Business continues to develop its product portfolio, and will be offering new services in e-mobility and energy management starting in 2022. In the coming year, it will begin by offering a solution for billing charging processes for company electric vehicles in the private sector. The service is developed so that any home charger is taken into consideration, even home power generation with a photovoltaic system. By doing so, this service offers a universal, complete solution to companies and employees that can be used to significantly increase the attractiveness of electric mobility within the company. In addition, companies can achieve significant cost savings compared to charging an electric company car from the public grid, thereby significantly reducing fleet emissions.
Additional news and detail can be found at the Phoenix Contact website.