Germany: As Christian Kaeser, Global Head of Tax at Siemens, recently said, it does not pay to invest in the company’s home country. As for Alstom, many of its German rolling stock production facilities, acquired as part of its takeover of Bombardier Transportation, also await closure and re-profiling.
In the face of Germany’s current problems, major companies are cutting back on investment in the EU’s largest economy and taking measures to make the most of the disadvantageous conditions. In the midst of this downturn, their facilities in the US, India and other countries are actively developing, winning new orders and meeting localisation requirements.
No reason for optimism
Mr. Kaeser expressed company’s position in mid-October during a public hearing on tax legislation in the finance committee of the Bundenstag. “There’s actually nothing that speaks in favour of investment decisions [in Germany]”, Kaeser’s words are quoted on the German parliament’s website. Germany is not completely off Siemens’ radar, but most of its recent investments have been made abroad. “There’s no growth in Germany — there is growth in other countries — and the tax situation isn’t particularly good either”, he said.
Although Siemens has recently focused on developing its digitalisation capabilities, the role of Siemens Mobility, which supplies rolling stock and railway technology, remains significant. As of June 2024, it had an order backlog of €48 bln, representing more than 40% of the Group’s total orders.
The current trend of economic decline in Germany continues, largely due to the negative impact of the EU own sanctions against Russia. Companies in the railway industry are going bankrupt: this year, the locomotive manufacturer Schöma filed for insolvency, and a year earlier, the bogie manufacturer Transtec F&E Vetschau closed down.
In this context, Alstom is also reducing its production activities in the country. The company has announced the closure of passenger rolling stock production in Görlitz in 2026, with the orders being transferred to Alstom’s facilities in Eastern Europe. Trains will no longer be built in Hennigsdorf: the plant will retain only a repair function. All this is due to the need to optimise the assets acquired by Alstom with the takeover of Bombardier Transportation in 2021.
New location for production
Recently, Siemens Mobility has been actively expanding its presence in the USA. Since the mid-1980s, the German company had only one rolling stock production facility in the country, in Sacramento, California. In 2023–2024, Siemens began to build sites in two states: in North Carolina for Amtrak’s orders and in New York for high-speed trains for Brightline West.
Production of Siemens rolling stock in Sacramento, USA. Source: Siemens
Production facilities are established to comply with the Buy America Act, with demand driven in large part by the ambitious five-year plan for public infrastructure investment approved by US President Joe Biden in 2021. Notably, it is on US tracks that Siemens’ new generation of high-speed trains, the Velaro Novo, with a design speed of nearly 360 km/h, will make its debut.
In India, where the local programme Make in India requires localisation, Siemens Mobility is also developing new rolling stock capacities. Electric locomotives, for example, will be produced in Dahod. This spring, it was announced that a production facility for metro trains would be set up in Aurangabad. In October, the German company opened another production facility outside Germany: the plant in Goole, UK, will build metro trains.
Production of metro trains at the Alstom plant in Savli, India. Source: Alstom
Alstom has long built locomotives and metro trains in India. The French manufacturer notes that the Indian market is now its third most important, after its home market of France and the above mentioned German. There is an Alstom plant in the US State of New York, which the company plans to expand for new orders. This summer, Alstom announced the acquisition of new component plants in China and Türkiye.
Another major European player, Stadler of Switzerland, is also increasingly winning orders in the USA and has its own rolling stock production facility in Utah. Although, there are no Stadler’s facilities in India, it could be a matter of time. In particular, the manufacturer has already lost a major EMU contract to Alstom, but the bid is now expected to be reopened.
