Tags: Siemens | Germany | France | jobs

Siemens to Remove 11,600 Positions as Company Reduces Costs

Friday, 30 May 2014 09:51 AM

Siemens AG’s chief executive officer said Europe’s largest engineering company will eliminate at least 11,600 positions as it cuts about 1 billion euros ($1.34 billion) in costs.

The positions include 7,600 that will go as the company streamlines and creates a new divisional structure, plus 4,000 people working in surplus positions for regional clusters of countries, CEO Joe Kaeser told analysts and investors in a webcast conference from New York. Some of the employees will be assigned other roles, he said. The planned cuts represent about 3 percent of Siemens’ workforce.

“A certain amount of people do stuff for coordinating things, analyzing things,” the executive said. “About 20 percent of those we believe can be put to work elsewhere, but not there. They can be taken out of the system because the work goes away.”

Kaeser’s plan to cut jobs at Munich-based Siemens may anger German unions after he promised the French government this month that he would guarantee jobs there for three years if the company buys the energy assets of Alstom SA. U.S. rival General Electric Co. offered $17 billion for the maker of France’s power grid and promised the government it will create 1,000 jobs in the country.

More Acquisitions

Siemens, which plans to make a counterbid by June 16, has proposed swapping its trainmaking business for Alstom’s energy assets to create two leading European companies in rail and energy. German union representatives at Siemens this month said such a deal would only be acceptable if the two companies guarantee no job cuts at the units.

Alstom has “a good installed base in gas and in steam turbines,” Kaeser said.

The CEO said he’s keen to find more deals like the agreement this month to buy most of Rolls-Royce Inc.’s energy assets for $1.3 billion. He said that he sees no good reason to buy a robot-maker, prompting shares in KUKA AG to decline yesterday as much as 3.4 percent.

Siemens today rose 0.5 percent to 98.24 euros at 10:24 a.m. in Frankfurt, paring the decline this year to 1.1 percent and valuing the company at about 86 billion euros.

The company is negotiating with labor representatives to determine the final number of job reductions. It hasn’t given a timeframe for when these talks might be concluded.

Missed Targets

Kaeser, who was previously chief financial officer at Siemens, started a strategy review soon after becoming CEO in August as he sought to rebuild investor confidence following missed profit targets under predecessor Peter Loescher. The resulting plan, revealed this month, will establish nine divisions to replace a previous structure around four sectors.

At the time, Kaeser also said the 167-year-old company would focus on electrification, automation and digitalization, and its healthcare operations would be managed separately.

The new setup will cut about 1 billion euros from costs by the end of 2016, Siemens estimates.

“We do not intend to sell the health-care business but we are flexible in being prepared for anything that comes along,” Kaeser said. He added that Siemens has invested too much in acquisitions in healthcare diagnostics, which include the 2007 takeover of Dade Behring Holdings Inc. for $7 billion.

Siemens is already cutting 15,000 jobs, of which 5,000 are in Germany, as part of a program started by Loescher to save 6.3 billion euros by the end of this fiscal year.

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Siemens AG's chief executive officer said Europe's largest engineering company will eliminate at least 11,600 positions as it cuts about 1 billion euros ($1.34 billion) in costs.
Siemens, Germany, France, jobs
Friday, 30 May 2014 09:51 AM
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