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MORE THAN €740 MILLION FOR RESEARCH AND DEVELOPMENT

ThyssenKrupp increased its research and development spending to €743 million in 2005/2006. €241 million was spent on basic research and development projects – including capitalized development costs –, significantly more than a year earlier. Customer-related development projects accounted for €230 million and technical quality assurance for €272 million. Roughly a third of the spending on basic R&D was carried out outside Germany.

Research and development spending in million €
* including outside R&D funds and public funding
			2001/2002		2002/2003		2003/2004		2004/2005		2005/2006
Basic research and development			191		183		191		186		241
Customer-related development*			156		156		182		266		230
Technical quality assurance			294		290		275		281		272
Total			641		629		648		733		743

The Group's 85 international development centers employ over 3,300 people. Most of our scientists and engineers are specialized in materials, production, process and electrical engineering. We work closely with universities and research institutes in Europe, Asia and the USA to solve research and development tasks jointly. Our researchers and developers cooperate particularly intensively with the Group's partner universities in Aachen, Berlin, Bochum, Dortmund, Dresden, Hamburg-Harburg and with Tongji University in Shanghai. In October 2006 the Technical University Bergakademie Freiberg was added to this list. As well as many contacts at working level, a regular exchange of knowledge and staff takes place with all partner universities.

We have created a competency network in the Group to better utilize the Group's materials expertise. Almost 900 materials-related themes are already integrated in the network. Specialized contacts are available for further issues.

OUTSTANDING INNOVATION PROJECTS

In all segments of the Group development teams have created new products and processes which will contribute to ThyssenKrupp's market success in the coming years. We carried out over 2,000 projects with external university and research partners in the reporting period, mainly focused on innovations in the areas of materials and surface technology.

SteeI innovations for the highest demands

In the field of materials our experts came up with many forward-looking product developments in the reporting period. Tribond is the name of a new three-layer steel composite material which researchers from the Steel segment developed in close collaboration with a customer. It combines the properties of different steel grades, is very hard and resistant to wear, and is nevertheless easy to form. These properties are important for example in the engineering sector and in car manufacture. The new material won 3rd prize in the 2006 ThyssenKrupp Innovation Contest.

As part of a European research project the Dortmunder OberflächenCentrum DOC® developed new steel-based solar thermal collectors to utilize the heat of the sun. They can be used to heat up service water or heat buildings. In the future collectors like these could be fitted on houses in the form of facade elements.

A unique new pilot facility at Steel manufactures tubes incorporating varying cross sections and secondary design elements. The tubes are very close to final part shape and will allow auto manufacturers to eliminate complete production steps.

A precision control system for laser welding lines developed by us won an innovation award for laser technology. The control system makes it possible to position the laser welding head more precisely and allows higher speeds during welding. The innovation is used in the production of engineered blanks, a variant of tailored blanks featuring non-linear welds. Made up of individual sheets of different strength, thickness and finish, these blanks are processed into body and chassis parts in the stamping shops of automotive OEMs and can be tailored exactly to the actual stresses in the finished part.

High-performance stainless steels and nickel alloys

One focus of innovation in the Stainless segment is the development of new surface finishes offering enhanced appearance and functionality. One such finish is Nirosta GritLine, which is comparable with the already established Rolled-On finish marketed by ThyssenKrupp Mexinox. It is an embossed finish which resembles popular polished finishes. The unbroken surface offers aggressive media less opportunity for attack and allows the use of less expensive base materials in many cases.

Outstanding among the new stainless steel finishes is the transparent coating SilverIce® UV. It makes stainless steel surfaces less sensitive to fingerprints, more resistant to scratches and easier to clean. It can be used to protect trim panels which have to meet high quality requirements. The product has already established itself successfully on the market. SilverIce® UV won 2nd prize in the 2006 ThyssenKrupp Innovation Contest.

Our new and improved nickel alloys are intended for the fast-growing aerospace and energy sectors. These high-performance materials are particularly resistant to corrosion and heat and are used for example for rotating parts in aircraft engines and land-based turbines. Material development work looks into the behavior of such superalloys in steam power plants operating at temperatures of 700ºC, much higher than conventional thermal power plants.

In response to continuing high prices for raw materials, especially nickel, new materials have been developed which offer comparable corrosion resistance and strength with lower nickel contents. Despite dispensing with nickel, one of these stainless steel grades is more suitable for chemical process equipment than previously used materials.

LIZA makes car manufacture faster

The materials competencies and automobile expertise of ThyssenKrupp come together in the liza Lightweight Design and Innovation Center in Bochum, run since its establishment in 2005 by the Automotive and Steel segments. Among other things liza is the consortium leader of a European project aimed at developing the 5-day car – building a car in only five days from order to delivery. One key technology in this EU-funded project is a new, highly flexible modular body concept.

Automotive won joint 2nd prize in the 2006 ThyssenKrupp Innovation Contest for a technically simple, low-cost steering column system based on electronically controlled components. In a crash the steering system adapts individually to loads and offers the driver maximum protection irrespective of seat position and weight. This cost-optimized solution based on magnetorheological elastomers can be used in virtually all cars. Iron particles are embedded in elastically deformable polymers and controlled by magnetic fields so that they build up friction instantaneously and in this way absorb crash forces.

Further advances in fuel cells

Our marine engineers are driving fuel cell technology forward and have made key improvements to the methanol reformer system, in which hydrogen is recovered from methanol. They are also looking into the use of fiber composites in fin stabilizers, which reduce rolling of a ship in heavy seas. Advances have also been made in fin shape and design. The first prototypes will be tested at the end of 2006.

The Technologies segment won a US innovation award for the development and successful large-scale implementation of a new extractive distillation plant for recovering pure aromatics. The plant, which separates a mixture into its components through the addition of a solvent, offers customers the advantage of significantly lower capital and operating costs. The development of new and improved equipment for optimized oil sands mining also pursued the aim of greater cost efficiency.

New global elevator

"Synergy" will be the name of the Elevator segment's first global machine room-less elevator. Thanks to standardized components, elevators can be planned quickly, produced at low cost and adapted easily to local requirements. The Synergy is ideal for residential buildings as well as for office properties. It has compact shaft dimensions; in Germany for example the system will also be available with reduced overhead and pit depths. Compared with hydraulic elevators its energy use is also low.

We have delivered the first machines of the newly developed type sf1000 to the 492 meter Shanghai World Financial Center. In September 2006 our technicians began building four double-deck elevators. Each designed to carry 2 x 2,000 kg, the elevators can travel at up to ten meters per second (approx. 36 km/h). They are scheduled to go into operation in early 2008. Another new development is an electronic speed governor. It offers the same reliability as its mechanical predecessor but requires less space, is quieter in operation and is more suitable for high speeds. An electronic sensor detects whether a car is traveling faster than its maximum speed. If so, safety devices are activated which brake the car and bring it to a halt.

Innovative supply chain management

For a major aircraft manufacturer in the USA the Services segment developed an "Integrated Supply Chain Services for Industrial Materials" program which came joint 3rd in the 2006 ThyssenKrupp Innovation Contest. It includes the development, installation and operation of a global customer-specific service center program. We have taken on the customer's complete supply chain management for aluminum and titanium materials including warehousing, processing, quality assurance and added-value logistics services. These services can also be used for customers in other sectors to manage material procurement, logistics and processing.

INNOVATION CONTEST: ONE IN FOUR ENTRANTS FROM OUTSIDE GERMANY

The seventh ThyssenKrupp Innovation Contest took place in the reporting period. The contest is held annually to recognize development projects which combine a high degree of innovation with market potential and customer value. So far, a total of 279 development teams have taken part with their ideas. Roughly a quarter of them came from Group companies outside Germany. New and improved industrial products accounted for 53% of all entries, improvements in services for 27%, and innovative production technologies for 20%. The high number of entries underlines the innovative strength of ThyssenKrupp. The winner of the 2006 Innovation Contest was the Marine Systems business unit, which was awarded 1st prize for its air-independent submarine propulsion systems.