Engines and Systems

Annual Report 20 15

ConAtt ae gnlatns ce

3 Foreword 17 Classification requirements Setting the bar high: in dialogue with 4 A decade of success classification societies 20 Public relations work 6 Economic situation National Maritime Conference

22 International network 8 Key activities China Management Meeting 8 Business Economic situation survey 24 Annex Commitee structure 11 National lobbying Board Retrofitting construction equipment Members in Baden-Württemberg Contacts Imprint, picture credits 14 International lobbying Revision of emissions directive for mobile machinery

201A5 nnual Report Engines and Systems VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 3

Foreword

Dear members

In our industry, 2015 has largely been overshadowed But this is no reason for pessimism. Our industry by the VW manipulation scandal and the subse - is extremely innovative thanks to its above- quent discussion about diesel technology. From average expenditure on R&D. This is reflected in today's perspective at least, we all know that the overarching trends towards gas engines, ever- “diesel” is not only indispensable for large engines – increasing efficiency and increasingly effective for mobile machinery, too, the dependence on this concepts for exhaust gas aftertreatment. technology will not change any time soon. However, Needless to say, our innovativeness is also reflect - the discussion over the past few months has indicat - ed in a number of “alternative” drive concepts ed that the internal combustion engine has increas - such as those presented by VDMA in 2015 in the ingly come under attack in the public eye, despite brochure “With internal combustion engines into the fact that diesel engines have become progres - the sively cleaner over the years. In the last two decades, future”. And, in areas where the legislative author - for the majority of mobile machinery in the ities are threatening to take the wind from our European Union and the USA, nitrogen oxide and sails, lobbying by VDMA is often very successful – particle emissions have been reduced by more than whether it concerns the retrofitting of construc - 95%. Despite these huge efforts, the image of a tion equipment in Baden-Württemberg or, at least "clean diesel" is still a long way off. Rather reluctant - in part, the requirements on mobile machinery ly, both politicians and the media have conceded stipulated by Stage V. The dialogue on the specifi - that the technology is essential for achieving, for cations for stationary engines defined by the example, Germany's climate targets. Technical Instructions on Air Quality Control (TA Luft) in the fourth quarter of 2015 was also In view of the efforts that you have all put into your very encouraging. companies over the past few years to ensure compliance with the strict legal requirements, this The fact that this difficult political environment questioning of our core business may be frustrating. is accompanied by extremely volatile and, unfor - We should, however, be aware that the discussions tunately, predominantly weak markets is far more currently underway for the on-road sector will shape alarming. We want and are able to solve techno - the political process for setting limit values for logical problems, but a lack of demand can hardly mobile machinery in the future. The Stage V discus - be counteracted from a technical point of view. sion has still not been definitively concluded – It is therefore all the more important that we and yet we already have to focus on Stage VI. The convince the politicians not to overshoot the requirements for stationary engines will be intensi - mark. To ensure this, VDMA stepped up to increase fied in 2016 and the amount of time remaining the competitive strength of its members. Thanks in which global shipping is still permitted without to your support, we succeeded once again and particle filters, while regional initiatives put forth are committed to doing the same in 2016. individual solutions, remains to be seen.

Christian Hatz Peter Müller-Baum Chairman of the Executive Board Managing Director VDMA Engines and Systems VDMA Engines and Systems 4 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

A decade of success

Dr Ralph-Michael Schmidt, Managing Director at L’Orange GmbH, Vice Chairman of VDMA Engines and Systems and Chairman of the Supplier Steering Committee

Founding General Assembly in 2005

“Production for the future!” was the title of The idea took off. A stable network was brought to VDMA's first summit meeting of the German life, which operates close to the markets and can mechanical engineering industry in October in focus intensively on representing the interests of Berlin, ten years ago. A couple of days after this its members. This network has become more and summit meeting, on November 4, 2005, a mile - more powerful every year. Combined market analy - stone was reached, which would in turn shape the ses help us gain an extensive overview of the future of the supplier industry – the new VDMA development of engine manufacturing. By imple - Engines and Systems Association was founded. menting a specific media strategy, the association During the founding General Assembly held at was able to significantly improve the public percep - MTU in Friedrichshafen, engine manufacturers and tion of its members. Supply companies are now suppliers decided on a common path. Now, after considered an integral element of the high-tech ten years of association work, it is time to ask: industry. In this case, it is safe to say: mission Have the objectives set at the time been achieved? accomplished. Are we producing for the future?

Until this moment, VDMA’s work was focused on Key topics the Power Systems Association, and engine manu - facturers in particular. The aim of founding the The collective knowledge of the association mem - new association was to represent the interests of bers means that it is quick and easy to come up the entire value-added chain from engines, to sup - with topics. This could be the strict legislation on plier components, all the way through to complete emissions, overarching EU directives or the require - systems. The focus here was on the application ments of classification societies. In addition to fields of mobile machinery, energy production these topics, standardisation within the engine and ship building. A joint association to represent industry and the fight against product piracy have interests at an economic and technical level also strongly shaped the past decade. was deemed to be a suitable instrument for all concerned. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 5

bers from the engine and supply industries in From the point of view of suppliers, if the past equal proportions. The fair consideration of the ten years of successful association work were supply industry has caused quite a stir. When the summarised, the outcome would be consistently association was founded, there were 22 represen - positive as the association has carried out all key tatives from supply companies. Ten years later, activities and implemented corresponding meas - the association’s members list includes around ures. Yet this success is far from self-evident, due 50 suppliers. This significant increase in interest to the fact that company structures of association in the association itself, in the work of the associa - members sometimes differ considerably. Within tion and in the potential for codetermination the association, engine manufacturers – who tend shows that “Engines and Systems” has been on to be companies with an international presence – the right track for the past ten years. encounter medium-sized businesses, which make up a significant proportion of the supply industry. This is a contrast that needs to be harmonised New objectives and is precisely what the association has achieved. You could even say it has become a Naturally, the association must continue to recipe for pursue the specific intentions of its members and success. Through their membership of Engines cannot just rest on its past successes. Its objec - and Systems, smaller companies in particular are tives are constantly being redefined – whether successfully gaining access to important, higher- this is due to economic developments or technical level issues for the first time. As the innovative achievements. This idea also embraces the slogan strength of industrial engine manufacturers relies “Production for the future!”, which is topical more heavily on supplier components, the inclusion of than ever today and will arguably never go out of smaller companies in the wider issues is essential. fashion. This is another objective that the association has achieved. The harmonisation has led to a win-win Nobody can reliably predict the future but, thanks situation, from which all association members to the work of the association, international have benefited and continue to benefit. developments can be monitored and appropriate measures adopted. These are tasks that can only The rules and regulations of the association also succeed with team work and joint projects – comply with this principle of equality, stipulating tasks that are meant for the VDMA Engines and that the Management Board must include mem - Systems Association! 6 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Economic situation

It is anticipated that the original sales expecta - The low oil price is having a negative impact on tion for industrial engines and components in engine sales – at least in the short and medium 2015 will not be met. Based on the poor underly - term. At the current price level, investments in ing data from around the world – in particular the development of oil and gas fields are not the weakening of the Chinese economy and the profitable and have been heavily curtailed. persistently low price of oil – we have scaled back Engines for powering pumps and compressors the sales forecast for 2015 in comparison with at boring sites and pipelines, and engines for autumn 2014 from -3 to -10%. offshore platform supply vessels are not selling in the numbers originally expected. In addition, The effects of the aforementioned factors on low fuel costs in all applications are causing a business in internal combustion engines for slump with regard to the motivation to invest industrial applications are many and varied. in modern, more efficient engines. Weaker growth in China has a direct influence on construction activity on site, energy requirements The timing and extent of the current develop - and the flow of goods and therefore also affects ments could hardly have been predicted and important areas that use the engines including are provoking another unexpected decline in construction equipment, power generation plants sales for manufacturers of industrial engines. and the shipping industry. Global overcapacities are still having an adverse effect on the shipping and shipbuilding industries.

Engines and Systems incoming orders and sales in Germany Price-adjusted indices, based on 2010 sales = 100

–– Incoming orders –– Sales 150 140 130 120 110 100 90 80 70 60 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

–– Moving 12-month average –– Original indices Source: VDMA VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 7

Outlook However, in 2016, we do anticipate another slight decline in sales and there will continue to be a We still rate the long-term prospects of internal particular lack of momentum in the large engines combustion engines for industrial applications sector. A sustained recovery in the shipbuilding as good. The growing world population is accom - industry is currently not foreseeable, with the panied by an increased demand for energy, industry continuing to see a temporary revival transport services, food, living space and infra - in demand for certain types of vessels. The major structure. Internal combustion engines are market of large engines for power generation required to power the equipment needed to will also only be finding its feet this year, so we extract oil and gas, generate heat and electricity are expecting a slight decline in sales for large in efficient combined heat and power plants and engines overall. For engines used in mobile work power agricultural and construction machinery, machines, we are expecting similar sales for ships and trains. VDMA's engine manufacturers 2016 as for the previous year with the potential are ideally equipped to meet the stricter require - for slight increases in the short term. Due to the ments with regard to efficiency and emission dominance of the large engine sector, our overall performance. forecast for 2016 is -2%. 8 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Business

As well as technical trends and legal require - Reports on figures for incoming orders and ments, an evaluation of the current economic ales sent to VDMA by members are processed, situation of our industry and major customer evaluated and annotated by Engines and groups, expectations for future developments Systems and then sent out to members once and the influence of external factors on the a month in the Business Newsletter. The news- engines business are an important basis for letter is rounded off with more information business decisions. VDMA therefore provides a from the central departments of VDMA. number of services to help managers at our member companies paint a thorough picture of The Market Forecast working group focuses the economic developments. Thanks to internal on future market developments with the parti - statistics, forecasts, surveys and our network of cipation of large engine manufacturers and industry experts and colleagues, participating their suppliers. In this way, the different market companies also gain a better overview of and perspectives of both groups complement one deeper insight into economic interrelationships. another and create a better combined picture. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 9

2015 in focus Implementation of quarterly economic situation survey

indicator for incoming orders A graph is plotted over time, in the mechanical engineering which generally passes through industry. the quadrants in a clockwise V DM direction. Another presentation A- Um The key underlying issues are format results from calculating fra ge kept simple in the survey. the Business Climate Index as How would you evaluate your a mean value of positive and current economic situation negative reports. In preparation for the 2015 (good, satisfactory, poor)? And meeting of the Management how will the situation look in In the February session of the Board in Bannewitz, it was six months (better, the same, General Assembly, the Mana - agreed that the economic worse)? The results are trans - gement Board recommended discussion of the Board should ferred to a coordinate system, that the economic situation be based on empirically where the axes represent cur - survey was carried out on a collected data. The system of rent situation and expectations regular basis. Our members the survey is based on the and the quadrants represent agreed on a quarterly survey Business Climate Index of the boom, downturn, recession date and also suggested that ifo Institute. The ifo index is and upturn in an economic the questions are broken down excellent at providing an early cycle. into important customer indus -

VDMA Engines and Systems Business-cycle clock, I – IV/2015 e l b e a r r o u o

m 30,0 v a

f upturn boom

s 20,0 h

t Engine / Engine plant n

o manufacturers

m 10,0

6

t x

e 0,0 n -50,0 -40,0 -30,0 -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 e h t

r 10,0 o f

s

n All o i

t 20,0 a t c e p

x 30,0 E Suppliers e l b

40,0

a r e r u recession downturn o o v m a 50,0 f n

u poor Currend business situation good

Source: VDMA 10 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Our aim must be to encourage more companies to participate regularly as the informative value of this type of instrument increases with the number of participants.

Currently, the detailed results are still available to all members at management level. In the future, however, it is intended that only the participants will tries and regional markets in surveys were carried out in receive the complete set of order to gain a better view of 2015, with the participation graphs and, outside this circle, the segments. of 30 companies. The current only selected information will mood will be surveyed again at be published in the Business Participants hope that the the beginning of 2016, in the Newsletter. results will provide them with run-up to the meeting of the early indications about Management Board and the changes of mood within the General Assembly. The results industry as an early indicator and the process will be dis - of actual development. Four cussed during these meetings.

VDMA Engines and Systems: Business-climate indices for engine applications

40,0 mobile machinery 30,0 power generation vessels 20,0 rail 10,0

0,0 I/2015 II/2015 III/2015 IV/2015 -10,0

-20,0

-30,0

-40,0

Source: VDMA VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 11

National lobbying

Legislation on emissions and the associated limit environment and human health, technical values are not only a key focus of our activities – and economic requirements must remain the they are also a priority for the research and devel - focus of the decision makers. For this purpose, opment departments of our member companies. we are constantly exchanging ideas with engine A survey of engine manufacturers in autumn manufacturers and suppliers in our association, 2013 showed that, at the time, 6% of sales was with colleagues and their member companies invested in research and development. This is from customer associations such as Power 50% higher than the average for the mechanical Systems, Construction Equipment and Agricul - engineering industry. Over half was spent on tural Machinery and with partner associations complying with legal regulations on emissions. in the shipping and rail transport industries. The aim is to pool member interests and represent In light of this, VDMA must represent the inter - them in discourse with federal and state govern - ests of the industry in respect of the German ments, ministries and downstream authorities legislative authorities with regard to national and agencies. legislative initiatives. The main goals of our activities are to determine industry-standard limit values and launch dates and to bring about global harmonisation. If ecological progress is to be made for the good of the 12 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

2015 in focus Retrofitting construction equipment in Baden-Württemberg

by particulate matter. This ing the risk of corresponding intervention in machinery infringement proceedings – meant that the use of new it was foreseeable that things machines (with filters), or at would not end with this one least old retrofitted machines, regulation. While federal city would be enforced in five states such as Berlin and urban low-emission zones in Bremen did initially comply Baden-Württemberg to with DPF specifications for In 2013, the Ministry of demonstrate to the EU that public construction sites, Trans port and Infrastructure “everything possible” had been similar specifications for other in Baden-Württemberg done to comply with the territorial states were foresee - approached VDMA to get the European Ambient Air Quality able. We therefore wanted industry's opinion on a hitherto Directive. to come up with an acceptable new legislative initiative. The solution for this precedent. Ministry in Stuttgart planned What appeared at first glance to introduce requirements to be a marginal regulation Since then, together with the to retrofit construction equip - due to its regional nature Association for Construction ment with diesel particulate caught VDMA’s eye. As these Equipment and Building filters (DPF) in urban low-emis - specifications are not observed Material Machines and with sion zones particularly affected in many German cities – pos - the support of many member VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 13

companies, we have both machinery with Stage IIIB as we would otherwise see the attended and organised a num - and IV engines from 2017. use of old retrofitted Stage II ber of discussions with experts, However, the talks initiated as and IIIA machines instead of spoken with political decision a result did make an impact – machines with cutting-edge, makers, clarified technical the current legal wording, more efficient and overall background information and which entered into force in cleaner engines. addressed our worries. December 2015, does not make any mention to such a Our efforts were worth it – all This is why it came as a shock requirement being placed the more, as Bavaria will prob - when we saw that the first on the latest generation of ably be the first state to adopt draft law stipulated a require - machines. In our opinion, this the law from its neighbour. ment to retrofit even modern also benefits the environment

“By acting in good time, we were able to secure a number of reasonable requirements

for retrofitting in Baden-Württemberg. This will also signal to other states that a patchwork of different legal requirements can be avoided in this way.”

Dr-Ing. Heiner Bülte, Head of Thermodynamics and Emissions, Deutz AG 14 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

International lobbying

If interests need representing in the Commission, Continued close cooperation regarding emis - Council and Parliament in Brussels, this task is sion legislation is as much a matter of course mainly undertaken by EUROMOT, the European for EUROMOT as it is for Engines and Systems – Association of Internal Combustion Engine and we will only be able to represent our Manufacturers. In conjunction with our members interests successfully together. and employees, EUROMOT develops strategies and positions regarding European legislation on Along with the support of the VDMA European exhaust emissions for internal combustion Office in Brussels, Engines and Systems lobbies engines and applies them during legislative German MPs and other key individuals in the processes. Re-established as an association European Parliament for mutual industrial according to Belgian law in Brussels in 2015, the positions. We support international activities industrial association is now even closer to the through various channels of the VDMA net - source of European emission legislation. Thanks work, holding talks with German delegates on to its participation in the International Maritime international decision-making and advisory Organisation (IMO), EUROMOT can also represent committees, formulating requirements within the interests of the shipping industry with regard the framework of the National Maritime to environmental legislation at an international Conference and using the other possibilities level. open to us, for example, to hold discussions within international standardisation commit - tees or associations that influence opinion leaders across the globe such as SEA Europe or CIMAC. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 15

2015 in focus Unity on the European level in a revision of the emissions directive for mobile machinery

engines required for economic • The uniquely strict limit reasons is therefore not values for inland waterway possible. vessels across the world should be harmonised with In addition to this critical the US limit values. point in the proposal by the • Furthermore, VDMA has Commission, we also see a campaigned extensively for need for action in relation to the transition periods to be In 2015, the revision of the EU the following four key points: extended by six months to emission legislation for mobile ease the strain on small machinery dominated our • It is now a matter of urgency machine manufacturers in activities in this key application that the scheduled imple - particular. area of industrial engines. mentation of the Admittedly, the proposal pub - Commission proposal for 1 The legislation process was lished by the EU Commission in January 2016 goes ahead so settled in 2015 by the co- September 2014 did consider that reliable framework con - decision process between the aspects that had been ditions can be created for the European Council and brought to the forefront by the industry early on and so Parliament. Both institutions manufacturers of engines and that the ambitious schedule submitted their positions on mobile machinery to a large for the directive to come the Commission proposal. extent. Nevertheless, the into force can be achieved. Over 270 amendments were Commission also introduced a • Regulations for replacement submitted by the European limit value for particle numbers engines were not included Parliament and an overall for the first time, thereby con - in the Commission proposal position agreed upon. In the tradicting efforts to achieve – they must be taken from run-up, we attended talks global harmonisation of limit existing regulations. with the instrumental MEPs values. A reduction in variety in Brussels and at the responsi - in terms of the development ble German ministries in Bonn and production of industrial and Berlin. 16 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

“The new regulation on emissions for mobile machinery plainly shows the complexity of our

involvement in European legislative processes. Intense discussions and negotiations were

held in local constituencies and the parliaments in Berlin and Brussels, with national ministries, the European

Commission and industrial partner associations.”

Klaus Pöpsel, Director Regulatory Affairs, Rolls-Royce Power Systems AG

We also promoted our posi - adjustment of the limit values tions at a state level in order to in Europe to the limit values in In the fourth quarter of 2015, introduce our criticisms of the the USA have not been heeded the trialogue negotiations EU Commission proposal to up to now, even though the began, in which the Council and the German voting procedure problem was recognised by the the Parliament prepare the final for European legislative Environment Committee of draft of the directive, overseen processes. the European Parliament. The by the Commission. The posi - unaltered, strict limit values tions of the three institutions Our arguments were heard at of the Commission proposal therefore form the framework least in part. The regulations could therefore lead to engine of the negotiations. Unfor tu na - for replacement engines were development and certification tely, the fact that this process included in the main text, becoming unprofitable for the is still in progress at the time although an agreement on the European niche market. During of writing indicates that the details has yet to be made. A an expert discussion in the time schedule would not be six-month extension of the German Federal Parliament, met. With every day of delay, transition periods to allow for both the coalition representa - the time legally available to machines to be produced and tives and the responsible prepare for the future emission for machines and engines to be ministries demonstrated an levels melts away. As a result, placed on the market was also understanding of our argu - our activities in the new year granted by both the Council ments and the German posi - already have a key focus: We and the Parliament. tion in Brussels came very will continue to urge for the close to the proposals made negotiations to be concluded Regarding the engines for by the industry. To what extent as soon as possible and contin - inland waterway vessels, how - this will be considered on the ue to address the key points ever, our demands for an political scene in Brussels, of our position in 2016, too. however, cannot be predicted. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 17

Classification requirements

In shipbuilding, classification societies use their 1. In the Classification Requirements working group, own rules and regulations as the basis for assess - VDMA members can inform themselves of the ing whether the ship and its technical equip - technical regulations and form industrial positions ment, such as the engines and their components, in this regard. The working group regularly invites are suitably safe. This inspection is crucial for representatives from classification societies to determining the insurance premiums for the ship discuss changes to rules and solve any problems and is therefore a matter of extreme interest to together. We can also make specific suggestions the owner. Classification societies are also often regarding changes to harmonised IACS rules or for responsible for assessing compliance with various the harmonisation of existing regulations to the international laws on behalf of the respective IACS (International Association of Classification flag state, such as the regulations specified by Societies) via CIMAC. the International Maritime Organisation (IMO) for maritime safety and the protection of the 2. Strategies for how industry-standard processes can marine environment. be designed are being developed in a discussion group between the management boards of engine The regulations of the classification societies are manufacturers and their suppliers as well as not always feasible and, under certain circum - senior management from the major classification stances, no longer correspond with the current societies. The primary aim is quality-based classifi - state of the art. The same applies for some of the cation in combination with feasible processes underlying processes. In order to arrive at mutual and optimised costs. This includes, for example, solutions that meet industrial requirements in the recognition of the manufacturer's own quality this regard, we foster dialogue with the most systems by the classification societies. important classification societies on different levels. An important tool for the day-to-day work of the experts at our member companies is DORIS. This database, compiled by us, includes the technical rules and regulations of 19 classification societies and can be used by our members for research. 18 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

2015 in focus Setting the bar high: in dialogue with classification societies

seemed advantageous, promis - turn communication back into ing the mutual recognition of a positive, for one by viewing certificates and therefore the the talks in question on a avoidance of time consuming strategic level. In this way we and expensive multiple certifi - were also able to get the cations. In practice, however, classification societies involved the theoretical benefits are in a concept developed by almost impracticable due to a the VDMA Classification At VDMA, there is a long tradi - European law for international Requirements working group tion of holding high-level talks trade, which allows every flag for easier component certifica - between industry representa - state to have its own regula - tion. This must now be imple - tives and representatives from tions and pursue its own inter - mented in practice. In 2015, the most important classifi - ests. The most tangible result we took our high-level talks cation societies. These often of the regulation was the from a national to a European prove to be a great success, huge expenditure on the part level, when, at SEA Europe – as displayed by the introduction of the European recognised the European umbrella organi - of alternative certification organisations, which is dispro - sation for ship and maritime models many years ago. A lot portionate to the minimal equipment associations – we has happened since then and benefits it has brought to the initiated informal dialogue not always to the benefit of industry. Another unsatisfac - between representatives from the industry. tory result is the noticeable European companies, ship - cooling of dialogue between yards, and the three biggest At first glance, the introduction the classification societies and classification societies Bureau of the EU Class Regulation the industry. In previous years, Veritas, DNV-GL and Lloyd’s by the European Union in 2009 we have often been able to Register. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 19

The aim was to discuss the developments, which cannot • Avoidance of multiple certi - long-term prospects of classifi - be adjusted to the state of the fications for material testing cation in Europe. And, in many art fast enough. of components ways, we had already achieved • Avoidance of multiple audit - a lot with the first event. All of We will have to wait patiently ing of suppliers the organisations invited were to see what impact this has, • Harmonisation of technical represented at a high level, as with initiatives like this the product requirements and the atmosphere of the talks effects often only become procedures was exceptionally positive and apparent after some time – but • Integration of existing quali - the approaches to mutual activ - past experiences have left us ty management processes to ities that were discussed feeling positive. These high- make product certifications exceeded the expectations of level talks are a logical exten - easier the participants. An example of sion of our other activities on a concrete result is the idea for the issue of complex classifica - We will continue to focus on the industry to develop propos - tion, all of which are geared these objectives in 2016, too. als for risk-based regulations towards our objectives. With to facilitate a move away from these objectives we hope to small-scale, descriptive rules generate benefits for all of the for technically complex product companies concerned:

“At VDMA, the engine industry has been engaging in high-level, cooperative dialogue

with classification societies in Germany for years. For us, transferring this concept to Europe is a significant step towards strengthening this cooperation.”

Dr. Christian Poensgen, Senior Vice President Engineering, MAN Diesel & Turbo SE 20 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Public relations work

Public relations work at VDMA Engines and and trends. Specific events and forums are Systems has a wide range of target groups. also organised to facilitate exchange between We aim to keep the employees of our member customers, politicians and management. companies on various levels in the loop with regard to technical, regulatory and economic Dialogue with politicians has gained increasing issues and to also keep experts in customer importance. For example, in 2014, a successful sectors, political decision-makers and interested parliamentary evening on the use of LNG in the members of the wider public informed. shipping industry was held together with the associations for ship owners and shipbuilders. In order to achieve this, VDMA operates through In summer 2015, we were able to support various channels. The general public, political the Federal Government’s Coordinator for the decision-makers and federal and state govern - Maritime Industry and Parliamentary State ment authorities are made aware of the range Secretary, Uwe Beckmeyer, in planning his visit of application areas, the capabilities and the envi - to businesses in the maritime supply industry. ronmental compatibility of industrial engines in During the visit, two engine manufacturers in reports published in technical magazines, in our Southern Germany were able to demonstrate own brochures and on the Internet. Customers their capabilities and also used the opportunity use VDMA media to find the right manufacturer to point out the current problems areas to the and obtain information on trends in the engine state secretary. industry. VDMA News, the website and the newsletter on technical and economic issues all keep members up-to-date about current news VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 21

2015 in focus Ninth National Maritime Conference

Govern ment, state govern - form of independent forums as ments, the maritime industry, preparation for the main event. unions, environmental groups VDMA Engines and Systems and members of parliament. was included in the industry Around 1000 participants forum "climate and environ - made their way to the coast mental protection in sea including German Chancellor traffic" and our colleagues Dr Angela Merkel, Vice from VDMA Power Systems The National Maritime Confe - Chancellor and Minister for and Marine Equipment and rence takes place in a different Economic Affairs and Energy Systems were involved in location every two years. The Sigmar Gabriel, and Minister forums focused on shipbuild - host for the conference on of Transport Alexander ing and offshore wind energy. 19 and 20 October 2015 was Dobrindt. The recommenda - Bremerhaven. Under the tions for action gleaned from After an intensive preparation leadership of the Ministry for the conference are incorporat - period involving the Ministry of Economic Affairs and with the ed into the work programme Transport and member compa - participation of the Ministries of the Federal Government. nies, our issues were addressed for Transport, Environment as part of the environmental and Defence, the conference In the run-up to the National forum, where Robert Brendel aims to facilitate exchanges Maritime Conference 2015, from MAN Diesel & Turbo between the Federal workshops were held in the made a key note speech and Dr Christoph Teetz from Rolls- Royce Power Systems repre - sented the interests of the industry on the podium. Our key positions were incorporat - ed into the forum’s final report and, from there, made it onto the Federal Government’s Maritime Agenda 2025. The key aspects of the agenda were presented during the confer - ence. This includes our call for reliable statutory framework conditions, the desire for the rapid establishment of a LNG infrastructure and the designa - tion of more – and in particular European – sea areas as Emission Control Areas. 22 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

International network

Our industry is largely export-focused. 77% of our Thanks to its close cooperation with EUROMOT, German members' products go abroad, while the VDMA can put forth the positions of its average for the mechanical engineering industry German members to the European Association is 69%. This is not to mention the products that of Internal Combustion Engine Manufacturers, are manufactured by our members abroad as well thereby using a further channel for reaching as the engines that are designed by our members international legislators alongside our own and manufactured under license in Asia. connections.

We support our members abroad through servic - The VDMA coordinates and performs standardi - es provided by the foreign trade department in sation activities for engines on behalf of the Frankfurt and representatives in Brazil, China, German Institute for Standardisation (DIN – India, Japan and Russia. Among these countries, Deutsches Institut für Normung) at a European the most important for the engine industry is and international level, too. Through their China and with our China Management Meetings, involvement in international standardisation we foster an exchange of experiences between committees, our members can play a role in the managers on site. We also have close connec - defining standards and technical conditions for tions with the international association CIMAC, market access. as the German National CIMAC Committee (DNCK – Deutschen Nationalen CIMAC Komitee) We also meet the needs of companies in rela - is headquartered at VDMA Engines and Systems. tion to the increasing internationalisation of Our members are also non-contributory DNCK our industry by providing English-language members and can therefore participate in CIMAC information such as our newsletter and the working groups and attend the Congress at a first publication of our Annual Report in reduced price. English. VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 23

2015 in focus China Management Meeting in Suzhou

for industrial engines. In addi - Chinese Emission Control Areas tion to these main issues, get - in busy coastal areas and the ting to know each other and trend towards LNG-powered networking were also on the ship engines. VDMA Engines agenda. The variety of topics and Systems contributed touched on during the breaks current information about ranged from staff retention the economic and legal devel - and dealing with the authori - opments from a German The third China Management ties to driving tests for foreign perspective. Meeting for engine manufac - nationals in China. turers and suppliers of com - Dong Vi Pham introduced the ponents has been held in Two guest speakers were services in China offered by China. The China Management invited to talk about the main VDMA. She presented the Meetings are an annual topics. Corinne Abele from range of services and events information platform for the Germany Trade and Invest on offer to VDMA members management of Chinese talked about the current eco - in China including HR services, representatives and sub - nomic situation in China and market and market access sidiaries of VDMA members. highlighted the main points information, support with by using information about visa issues and translations, At the invitation of L’Orange energy supply and China’s seminars and the Mechanical Fuel Injection Trading, 15 par - efforts to increase efficiency Engineering Summit. ticipants took part in Suzhou within the industry. Dr Ping in December 2015. The main Tao, an expert in emission focus of the meeting was to reduction technologies at the provide information and Shanghai Marine Diesel exchanges on the business Research Institute (SMDERI) trends in our industry, econom - reported on the future emis - ic development in China and sion limits for inland waterway Chinese emission legislation vessels, the introduction of 24 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Annex

Committee structure

Management Board Working groups

The Management Board determines the strategic Experts from the companies come together in direction of the association. In addition, it consti - the working groups. Here, information is tutes the central body for exchanging experi - exchanged at an operational level, special issues ences at management level. The Management are discussed and industrial positions are formed. Board is selected by the General Assembly and includes members from the engine and supply industries in equal proportions. Extended network within VDMA

Members and employees of Engines and Systems Steering committee have connections with numerous other organisa - tions within VDMA. We have particularly strong Engine manufacturers and suppliers meet links with Forum Mobile Maschinen, CIMAC, the in independent groups at management level. Research Association for Internal Combustion These are known as steering committees, Engines (FVV – Forschungsvereinigung Verbren - through which the activities of the working nungskraftmaschinen) and the Marine Equip - groups are controlled. Here, it is also possible ment and Systems working group – over 220 sup - to discuss issues in the same group or initiate ply companies belong to this working group and specific projects. many of them are also VDMA members.

VDMA Engines and Systems: committee structure

General Assembly

Board Classification Board

Steering Committee Engines Steering Committee Suppliers Forum Mobile Machinery

WG Modernization WG Classification Existing Machines

WG Exhaust Emission Legisl. FVV Industrial Engines

WG EU Directives CIMAC

WG Standardization VDMA Marine Equipment and Systems

WG Communication

WG Market Forecast

VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 25

Board of Engine and Systems

Christian Hatz Dr. Andreas M. Lippert Chairman GE Jenbacher GmbH & Co OG MOTORENFABRIK HATZ GmbH & Co. KG Mark Martin (until 30 September 2015) Dr. Ralph-Michael Schmidt Schmiedag GmbH Vice Chairman and Chairman of the Supplier Steering Committee Wilhelm Müller (until 31 October 2015) L’Orange GmbH Caterpillar Energy Solutions GmbH

Reiner Rößner Hendrik Pöpping Vice Chairman MAN Diesel & Turbo SE MAN Truck & Bus AG Peter Schippers Dirk Balthasar Hug Engineering AG MAN Diesel & Turbo SE Dr. Frank Starke Christian Bleiel Caterpillar Motoren GmbH & Co. KG VOLKSWAGEN AG Stefan Starke Dr. Ulrich Dohle Boll & Kirch Filterbau GmbH MTU Friedrichshafen GmbH Helmut Weißbeck Joachim Fischer Robert Bosch GmbH MAHLE Industriemotoren-Komponenten GmbH Dr. Martin Wernli Wolfgang Hartmann Winterthur Gas & Diesel Ltd. KS Kolbenschmidt GmbH

Axel Kettmann ABB Turbo Systems AG

Dr. Ulrich Kramer Kompressorenbau Bannewitz GmbH

Dr. Helmut Leube DEUTZ AG

As at: January 2016 26 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Members of Engines and Systems

• ABB Automation Products GmbH, Ladenburg • INTERKAT Katalysatoren GmbH, Königswinter • ABB Turbo Systems AG, Baden, CH • Jenbacher Deutschland GmbH, Frankenthal • AVL Schrick GmbH, Remscheid • M. JÜRGENSEN GmbH & Co. KG, Sörup • Boll & Kirch Filterbau GmbH, Kerpen • Kompressorenbau Bannewitz GmbH (KBB), • Robert Bosch GmbH, Stuttgart Bannewitz • Bosch KWK Systeme GmbH, Lollar • KS Kolbenschmidt GmbH, Neckarsulm • Bosch Rexroth AG, Lohr am Main • LICOS Trucktec GmbH, Markdorf • Caterpillar Energy Solutions GmbH, • Liebherr Machines Bulle SA, Bulle, CH Mannheim • Liebherr-Component Technologies AG, Bulle, CH • Caterpillar Motoren GmbH & Co. KG, Kiel • Liebherr-International Deutschland GmbH, • Clariant Produkte (Deutschland) GmbH, Biberach Bruckmühl • L’Orange GmbH, Stuttgart • CNH Deutschland GmbH, Heilbronn • MacGregor Hatlapa GmbH & Co. KG, Uetersen • COMUNA-metall Vorrichtungs- und • MAHLE Industrial Thermal Systems GmbH Maschinenbau GmbH, Herford & Co. KG, Stuttgart • Continental Emitec GmbH, Lohmar • MAHLE Industriefiltration GmbH, Öhringen • CPK Automotive GmbH & Co. KG, Münster • MAHLE Industriemotoren-Komponenten GmbH, • Daimler AG, Stuttgart Markgröningen • DEUTZ AG, Köln • MAHLE Industry GmbH, Stuttgart • EAW Energieanlagenbau GmbH, Westenfeld • MAN SE, München • Exomission Umwelttechnik GmbH, Troisdorf • MAN Diesel & Turbo SE, Augsburg • Farymann Diesel Engines GmbH, • MAN Truck & Bus AG, München Lampertheim • MANN + HUMMEL GMBH, Speyer • Federal-Mogul Friedberg GmbH, Friedberg • MTU Friedrichshafen GmbH, Friedrichshafen • GE Jenbacher GmbH & Co OG, Jenbach, A • MTU Onsite Energy GmbH, Augsburg • Geislinger GmbH, Hallwang, A • MTU Reman Technologies GmbH, Magdeburg • Gröditzer Kurbelwelle Wildau GmbH, Wildau • MWB Motorenwerke Bremerhaven AG, • MOTORENFABRIK HATZ GmbH & Co. KG, Bremerhaven Ruhstorf • NIDEC GPM GmbH, Auengrund-Merbelsrod • Heinzmann GmbH & Co. KG, Schönau • Dipl.-Ing. Herwarth Reich GmbH, Bochum • Heraeus Precious Metals GmbH & Co. KG, • REINTJES GmbH, Hameln Hanau • RENK Aktiengesellschaft, Augsburg • HJS Emission Technology GmbH & Co. KG, • Rickmeier GmbH, Balve Menden • Rolls-Royce Power Systems AG, Friedrichshafen • HOERBIGER VENTILWERKE GmbH & Co. KG, • SCHALLER AUTOMATION Industrielle Wien, A Automationstechnik GmbH & Co. KG, Blieskastel • Hug Engineering GmbH, Magdeburg • Schmiedag GmbH, Hagen • Hug Engineering AG, Elsau, CH • Schnell Motoren AG, Amtzell VDMA ENGINES AND SYSTEMS – ANNUAL REPORT 27

• Eugen Seitz AG, Wetzikon, CH • SenerTec GmbH, Schweinfurt • SICK AG, Waldkirch • Siloxa Engineering AG, Essen • Steinbach AG, Detmold • Thermamax Hochtemperaturdämmungen GmbH, Mannheim • TWINTEC AG, Königswinter • TWINTEC Technologie GmbH, Königswinter • Umicore AG und Co. KG, Hanau • VOLKSWAGEN AG, Wolfsburg • VULKAN Kupplungs- u. Getriebebau, B. Hackforth GmbH & Co. KG, Herne • Wärtsilä Deutschland GmbH, Hamburg • Wildauer Schmiedewerke GmbH & Co. KG, Wildau • Winterthur Gas & Diesel Ltd., Winterthur, CH • Woodward Aken GmbH, Aken • Zeppelin Baumaschinen GmbH, Garching • Zeppelin Power Systems GmbH & Co. KG, Hamburg • ZF Friedrichshafen AG, Friedrichshafen

Stand: Januar 2016 28 VDMA ENGINES AND SYSTEMS – ANNUAL REPORT

Engines and Systems Contacts

Name Field of work Phone Peter Müller-Baum Managing Director +49 69 6603-1353

Christina Andrikos Assistance +49 69 6603-1608

Dr. Tobias Ehrhard Technology and legislation +49 69 6603-1152

Marianne Ruppenhofer Assistance +49 69 6603-1378

Jens Slama Business and communication +49 69 6603-1212

Dr. Alexander Widmann Technology and legislation +49 69 6603-1749 Publisher

VDMA Engines and Systems

Lyoner Str. 18 60528 Frankfurt am Main Germany Phone +49 69 6603-1378 Fax +49 69 6603-2378 E-Mail [email protected] Internet mus.vdma.org

Editor Peter Müller-Baum, Managing Director © VDMA

Design and layout DesignStudio

Picture credits

Cover MTU Friedrichshafen GmbH Page 13 Hug Engineering AG Page 2 MTU Friedrichshafen GmbH Page 14 Fotolia Sergii Figumyi Page 4 VDMA e .V. Page 15 Fotolia saw100 Page 5 L’Orange GmbH Köln-Düsseldorfer Deutsche Rheinschiffahrt AG MOTORENFABRIK HATZ GmbH & Co. KG AGCO GmbH ABB Turbo Systems AG Page 16 MTU Friedrichshafen GmbH Heinzmann GmbH & Co. KG Page 17 MTU Friedrichshafen GmbH Page 7 Winterthur Gas & Diesel Ltd. Page 18 Fotolia roostler MAN Diesel & Turbo SE DNV GL SE DEUTZ AG Page 19 L’Orange GmbH MAN Truck & Bus AG Page 20 Rolls-Royce Power Systems AG Page 8 Fotolia Marco2811 Page 21 Bundesministerium für Wirtschaft und Energie Fotolia Calin Tatu Page 22 CIMAC Page 9 Fotolia RRF Page 23 L’Orange GmbH Page 10 Fotolia bierwirm Page 28 VDMA e .V. Page 11 Fotolia JFL Photography Page 12 HJS Emission Technology GmbH & Co. KG Fotolia simonwhitehurst VDMA Engines and Systems

Lyoner Str. 18 60528 Frankfurt am Main

Contact Jens Slama Phone +49 69 6603-1212 Fax +49 69 6603-2212 E-Mail [email protected] o i d u t S n g i s e mus.vdma.org D