Heinrich von Pierer: Electric chairman

Meet the German chairman of Siemens who lights up London

"This is the same furniture I got when I became chief executive of Siemens in 1992." Heinrich von Pierer knocks on a wooden table that was made in Erlangen, his home town in Bavaria. His Munich office is unfussy and exudes efficiency - as might be expected from one of Germany's most influential business leaders.

Von Pierer, 65, is now the chairman of the €57bn (£40bn) industrial giant Siemens, as well as chief economic adviser to Chancellor Angela Merkel and a member of the boards of Volkswagen, Deutsche Bank and ThyssenKrupp, Germany's largest steel producer. His schedule is a packed one.

Yet the man himself is nothing like his stern surroundings and exalted position might suggest. For example, he tells how Patricia Hewitt, then the British Government's minister for e-commerce, was once able to "corner" him. "She was tough. She really impressed me. She told everyone to leave the room and then she cornered me, asking: 'What do you really want?' "

It was after this meeting that Siemens won the IT contract for National Savings & Investments, the government-backed body responsible, among other things, for premium bonds. The UK is a big market for Siemens: it has built power plants and wind farms here, is our biggest provider of medical technology, does back-office work for Barclays and the BBC, sponsored the 2012 Olympic Games bid, maintains Heathrow Express trains, and even illuminates the streets of London through its light-bulb business, Osram.

"We are very happy," says Von Pierer. "Our contracts in the UK bring in around €4bn in revenues. With 21,000 people, we are one of the biggest employers."

It's not just the profits he likes about the UK. Von Pierer and his wife, Annette, regularly holiday in Devon and he admits to loving English food and old-fashioned guest houses, though this committed member of the conservative CSU party does hate driving on the left.

Von Pierer has spent all but four years of his career at the company, founded 159 years ago by Werner von Siemens, an electrical engineer, and craftsman Johann Halske. Together, they linked Berlin and Frankfurt with Europe's first long-distance telegraph system, before going on to complete a 6,600-mile line from London to Calcutta.

Other firsts followed: the first electrical power-transmission system, the first electrified railway, the first X-ray tube and one of the first elevators. As the 20th century wore on, the company expanded into light bulbs, nuclear power generation and semiconducters, among others.

But by the time Von Pierer became the chief executive in 1992, global conditions had deteriorated. "The prices of turbines collapsed in turbo speed," he says of the competitive threat from Eastern Europe after the fall of the Berlin Wall. The economic rise of Asia, meanwhile, caused a dramatic drop in consumer electronics prices. A semi-conductor factory in Tyneside, opened by the Queen in 1997, never started production. Von Pierer had to spin off the business in 1999, to create Infinion.

He steered Siemens through the turbulence - no mean feat in a country with some of the toughest labour laws in Europe, including a fiercely protected 35-hour week. "In some companies we reintroduced the 40-hour week," he says. "We had to ask our employees to work an extra five hours or more a week for the same money."

The global conglomerate was also trimmed, with 50 businesses either closed or sold. Its computer arm was spun off into a joint venture with Fujitsu of Japan.

His refusal, during the tech boom, to focus on the trendy industries was not always popular: "Consultants told me to sell our cash cow, Osram, as well as the struggling units Medical Solutions and Power Generation, and put all our money into one basket - communications."

Von Pierer resisted, and Osram, Medical Solutions and Power Generation now deliver 10 per cent profit margins - twice as much as the company average of 5 per cent. In total, he doubled group turnover during his 12 years as chief executive.

Not every new trend has been dismissed, however. For Siemens, China is a massive market in which it has 30,000 employees, 50 joint venture partners and €3.5bn in revenues.

It is also big in the US, after a 1998 deal with Westinghouse to buy the nuclear group's fossil- fuels business. Not long afterwards, the Californian power crisis hit, forcing the state to order new power plants from Siemens, each with a price tag in the millions.

Von Siemens wrote in 1868: "The money we made would burn like glowing iron in my hands if we did not pass on the share of the profit our loyal workers deserve." Von Pierer has tried to live up to this, and claims to make a point of promoting outstanding employees. True to his word, he appointed Klaus Kleinfeld - who had made the US the most profitable Siemens territory - as chief executive last year.

Von Pierer concedes that the chief executive's job has changed since he himself took on the role: "The pressure on Mr Kleinfeld is much higher." As if to underline the point, critics accuse the company of being too big, too slow and too much like a conglomerate, despite the slimming of the past decade.

How his protégé fares is not Von Pierer's sole interest, however, and much of his energy is devoted to advising Ms Merkel. "She is a trained natural scientist; she knows a lot. You don't have to explain much to her."

The love-in works both ways. The Chancellor describes Von Pierer as "an excellent expert" with "a tremendous amount of practical experience and many international contacts".

The Siemens chairman is also passionate about his country. During the World Cup, he showed up at games in the German strip with black, red and gold painted on his face. Ever the optimist, he hopes the tournament will help kickstart the stagnant German economy.

But putting Siemens to the back of one's mind is a hard task for anyone, let alone the chairman. The company operates in 190 countries and will soon extend its reach even further, with a UK subsidiary providing technology for the next Mars probe. UK citizens cannot even be born or die without its help: the Government has awarded it a contract to digitalise birth, marriage and death certificates.

For the next generation of Siemens leaders, it's a legacy to die for.

BIOGRAPHY

BORN 26 January 1941.

EDUCATION Studied law and economics at the University of Erlangen-Nuremberg, Germany.

CAREER

1965: academic at the University of Erlangen-Nuremberg.

1969: joins the legal department of Siemens.

1977: various sales and marketing roles at the Siemens-owed Kraftwerk Union (KWU).

1988: head of business administration at Siemens Power Generation, the renamed KWU.

1989: becomes president of Power Generation and joins the Siemens managing board.

1990: joins the Siemens corporate executive committee.

1991: deputy chairman.

1992: group president and chief executive.

2005: chairman of the supervisory board.