Supply Chain Reaction

Siemens AG Monday closed its $3.5 billion acquisition of UGS Corp. and while the price may sound steep, longer term, Siemens snagged a great deal.

The acquisition moves Germany-based Siemens -- primarily a physical product company that works in information and communications, automation and control, power, transportation, medical and lighting markets -- into process markets with product lifecycle management (PLM) from Texas-based UGS.

Don’t be mistaken here. $3.5 billion isn’t pocket change, but PLM is quickly becoming a very valuable link in the electronics supply chain. As more and more environmental regulations come about, organization of company electronic supply chains will be what separates those companies that survive from those companies that perish, and PLM fits the bill. (For background on PLM and compliance, see "More PLM Vendors Ready to Manage Compliance.")

As EU RoHS enforcement is proving, it’s not just enough to have a certification document. Smart companies, those companies that want to continue to roll with the onset of environmental regulations -- EU RoHS leading to China RoHS, WEEE, REACH, EuP, and so on -- will need to manage the entire life of products, from drawing board to junk yard, and organization and proof of product information will be key. Few companies can do that well on their own and that puts processes like PLM in high demand. That demand will grow as environmental restrictions continue to emerge.

As for the merger deal, it sees UGS Corp. become UGS PLM Software within the Siemens Automation and Drives Group. UGS takes with it its 4.4 million licensed seats and 47,000 customers, including high-tech customers like Microsoft, Intel and Samsung.

For Siemens’ full statement, including some executive changes to UGS PLM Software, click here. Share your thoughts on the deal by posting a comment.