Today, innovation in the rail industry primarily means innovation in digitalisation, because it enables us to satisfy the most urgent demands in mobility: maximum availability and throughput and better travel comfort.
Digitalisation is a megatrend that directly involves us. With around 17,500 software engineers, Siemens has long been a digital company, and Siemens Mobility has profited from this. Our engineers have been digital natives all along,and this will help us meet the expectations of today's customers as well.
Long before our IP-based communications architecture enabled reliable and highly available communication between secure interlocking components, we were the market leader with our ISDN-based signalling controls. We are also the first company in our industry, for example, to use predictive maintenance with data analytics. One example here is the Madrid - Barcelona high-speed service operated by Renfe. To guarantee the highest reliability, Renfe founded a joint venture with Siemens that uses advanced data analysis to monitor its trains. As a result, we achieve 99.98% availability.
Backed by our strengths in the rail industry, we are tackling the fierce competition by expanding our highly-profitable service business, further strengthening our market leadership in rail automation, and exploiting the growing demand for turnkey solutions.
Our new manufacturing facility in Turkey will improve our cost position and also help us to further develop an international supplier base to increase our competitiveness. This is a general trend in our industry. Gebze near Istanbul has been a Siemens location for our low and medium-voltage business since 2009. The location is close to a port and we have been working with local business partners in Turkey for many years. This step is necessary to secure promising growth opportunities in Turkey.
The market is demanding greater customer benefit through digital technologies, solutions for further improving the availability of vehicles and infrastructure, faster throughput in transport systems and greater passenger comfort and convenience. Siemens Mobility has outstanding approaches in all of these areas, such as predictive maintenance, flexible timetable and resource management, decentralised interlocking architecture and intelligent ticket and passenger information systems.
Competition
From our perspective, the merger of the two Chinese suppliers CNR and CSR has not fundamentally changed the competitive situation. Both Chinese suppliers are already operating in the international markets, and we are already encountering competitors from China in many regions of the world. However, it is essential that a level playing field remains for all competitors, especially with regard to government financing.
But having to compete with strong competitors is certainly nothing new for us. Siemens has been in the rail business for over 165 years and is at home around the globe. Competition is an everyday matter for us, and we are meeting it with innovative, efficient and reliable trains and service concepts.
Siemens is the world market leader in fully automated metro operation, and has booked new orders worth over €3bn over the last five years. Regional, long-distance and freight rail service will also be more automated in the future. We expect that around 40% of the rail operations for industry, mining and freight will be semi-automated within the next four years. Overall, the market for fully-automated operation will grow at an above-average rate in the coming years. This means, for example, that the urban transport market will grow 3% overall between 2014 and 2020. Within this market, the share of fully-automated operation is expected to increase from somewhat over 30% today to roughly 70%.
Siemens is therefore concentrating on using its competitive edge in all areas of rail automation to further expand its leading role in fully automated systems.
Research and development is another key focus and here the European railway industry still leads the field. But other regions, like China, are catching up and investing huge amounts of money in the railway sector. Therefore it is very important to foster and integrate European research activities that were previously highly fragmented.
With Shift2Rail, the European Commission, together with the European railway industry has established the first joint undertaking that focuses on holistic rail solutions and covers all areas of railway research activities under one roof. Shift2Rail will significantly help to increase the attractiveness of the railway sector, boost the competitiveness of the European railway industry and thus help secure high employment in the industry.
Shift2Rail is especially important for supporting rail research in Europe, but for this kind of programme to succeed, it is vital that participation in the railway industry is very broad and backed by strong commitment. That's why I decided that Siemens Mobility must be involved and I have supported the programme from the very beginning.
Today, nearly all small and big players in the European railway industry are participating or have applied to participate in Shift2Rail. This very positive and welcome response from industry underscores the importance of Shift2Rail within our industry and the commitment of the participants.
Clear targets have been set for Shift2Rail. The capacity of Europe's rail system will be doubled, reliability and punctuality of operations will be increased by 50%, and at the same time life-cycle costs will be reduced by 50%. Furthermore, the rail system needs to become more interoperable and its environmental impact - such as noise, vibration and emissions - has to be reduced. The results and feasibility of the Shift2Rail targets have to be shown and verified in so-called technology demonstrators.
The programme's targets are very ambitious, but if all participants and organisations involved work together closely and in a spirit of trust, I am convinced we can reach these targets and be a substantial step closer to the Single European Railway Area and be more competitive as a rail industry.
We believe that standardisation significantly supports our general business. That's why our experts are actively participating in railway standardisation efforts within the various standardisation organisations such as ISO/IEC on the international level and CEN/Cenelec on the European level.
There's no doubt that it is not in our interest nor the interest of other manufacturers if each authority defines individual sets of requirements for trains. We favour defining common rules in the form of European standards, and then sticking to them. Standardisation is the best way to achieve common rules in an international and European context and to establish them as the accepted guideline for rail technology.
In the railway business, the quality and number of standards are crucial. For us, the direction is clear: we are working to achieve a coherent set of standards for functional requirements, clear acceptance criteria, and accurately described testing procedures. And we certainly prefer having a limited set of high-quality standards rather than a high number of standards with limited quality. Overall, this will significantly support the path to further standardisation.
A priority for the industry in 2016 is the Fourth Railway Package, and this must become a reality. Our job is to complete the Single European Railway Area by quickly implementing the Technical Pillar of the Fourth Railway Package and by giving a leading role to the European Railway Agency (ERA).
We enthusiastically welcome the final agreement on the Technical Pillar reached last June. We hope that the Council agreement on a general approach will now bring forward the date of the final vote and adoption of the Technical Pillar. The new legislative framework will create a streamlined and efficient process for vehicle authorisation in Europe and enhance the role of ERA, making it a one-stop-shop for issuing vehicle authorisation and safety certification.
This framework will enable our industry to realise the benefits of more efficient procedures for vehicle authorisation and safety certification, both in terms of time and cost. And it will help create a more competitive and fair market for rail products.
