German industrial conglomerate Siemens AG is betting that the United States will become a prime market for high-speed rail and renewable energy as the nation tries to lessen its dependence on fossil fuels. Part of the company's success in these areas will depend on what happens in Washington.

But government support alone won't fuel future growth in high-speed rail, says Daryl Dulaney, CEO of Siemens Industry Inc. "To make high-speed rail happen, it needs a number of constituents to support it," says Dulaney, who was appointed on Oct. 1, 2009, CEO of the division that oversees production, transportation and building technology solutions in the United States.

"Governments are one. Private investments are one. I wouldn't say it's one or the other. It certainly requires manufacturers, contractors, government, investors all working together to make this happen."

IndustryWeek spoke with Dulaney about Siemens' manufacturing future in the United States as part of IW's coverage of its annual list of the world's 1,000 largest publicly held manufacturers, which will appear in the publication's August issue. Siemens ranked No. 24 on last year's IW 1000 list and has moved into the top 20 for 2010. Here's what Dulaney had to say:

IW: What are the major R&D focus areas for Siemens' industrial arm right now?

DD: Certainly our investment in transportation relative to high-speed rail. This is a robust and active program for us directed specifically at the United States, so we're putting a lot of money in that. We have production in Sacramento, Calif., for our train business, and we're making investments for expansion there. We're also investing quite a bit in supporting the smart grid, and there are many emerging technologies inside that, which I think are going to have a big impact in time here in the U.S. Certainly energy efficiency and renewables are important for us. For example, in wind we've made further investments in our drives business to support wind, and we're focused on solar. As that becomes economically viable over time, that will continue to grow. In our automation business, we continue to invest in development there. There are a lot of manufacturers in different sectors that are starting to revive. Certainly automotive is an example where there has been some pent up demand, so we see that business picking up for us.

IW: Are there certain industrial areas where you've had to cut back or reallocate investment?

DD: Throughout the downturn I can say on a global basis for our industry we're proud we have not reduced spending in R&D at all. We believe strongly when markets downturn that's the time to gain share. And you don't do that without investment -- even in our businesses that are slowing. It kind of reminds me of when I was a young lad running cross country our coach would always advise us to pass people on the uphill because that's when the going gets tough and your competition slows. That's when you double your efforts, so we really haven't lost heart in any of our portfolio that might be slowing. I think everyone slowed during the downturn. I don't know any industry that escaped that. But that's the time to look to how you gain share and grow. Many companies have enjoyed, even in difficult times, increased productivity because it sharpened their eye to cost and being more efficient and they want to keep those gains.

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