Siemens to cut 17,000 jobs worldwide
E-Mail Article
Printer-Friendly
3-Column Format
Translate
Share Article
Text Size
PARIS: Siemens, the German engineering and electronics company, plans to cut 17,200 mostly white-collar jobs as it seeks to reduce its cost base, a person close to the company said Sunday.
The payroll cuts, which will include 6,400 jobs in Germany, represent one of the boldest moves yet by the new chief executive, Peter Löscher, to bring costs under control at the company as part of a restructuring. It also reflects the belief among top Siemens executives that the company must move quickly to streamline its operations before a slowing global economy takes away its room to maneuver.
The person close to the company asked not to be identified because the plans will not be officially announced until the Siemens workers' council meets with management on July 7 for discussions on the layoffs. Löscher has given the plans to workers and managers to prepare for the talks.
Siemens, based in Munich, was founded more than 160 years ago. It employs about 400,000 people globally. Under the restructuring, Siemens has rearranged its vast array of businesses into three main divisions: industry, energy and health care. Löscher also put the leaders of the three sectors on the central managing board.
It has also reduced to 20, from 70, the number of national companies that oversee its business overseas. All told, those moves have sharply reduced the number of mid- and upper-level white-collar employees Siemens needs, setting the stage for the layoffs, the person close to the company said. Over the years, Siemens's cost base has swollen to double the size of its competitors in several areas, the person said. Siemens expects the work force reductions to save it €1.2 billion, or $1.9 billion, by 2010.
Today in Business with Reuters
Speaking Tuesday in London, Löscher said that Siemens's goal was to be either No.1 or No.2 in all of its business areas, and that the overhaul was bearing fruit. "With our new setup, clear responsibilities worldwide and more efficient processes, we've laid the basis for reaching our goal," he said. "Leveraging our innovative technologies will enable us to grow twice as fast as global GDP and, at the same time, achieve a high level of profitability."
Löscher, an Austrian, took over as chief executive in May 2007 after a bribery scandal claimed his predecessor, Klaus Kleinfeld. His reign has not been without missteps. In February, Löscher said Siemens was on track to meet its earnings targets for the year. Just a month later, he said delays and canceled orders would knock about €900 million off its first-quarter profit. Siemens in April reported profit of €412 million in the first three months of 2008, down more than 67 percent from a year earlier, on revenue of €18 billion, up 1 percent.
The company's shares have lost nearly a third of their value over the past 12 months.
Siemens very much wants to put the scandal behind it. Currently, Reinhard Siekaczek, a former executive of Siemens's fixed-line Information & Communication Networks business, is on trial in Munich, charged with breach of trust, the first criminal trial in the scandal.
The company has said that it identified suspicious payments totaling €1.3 billion that might have been used as bribes to win contracts overseas. The payments are being investigated in Europe, the United States and China, with the authorities piecing together secret bank accounts in preparation for fines and prosecutions.
The person close to the company said the scandal had nothing to do with the rationale for the job cuts, but that the sense of crisis had created an awareness that major steps were needed to get the company back on sound footing.
Both Kleinfeld and the board chairman, Heinrich von Pierer, were forced to step down as a result of the scandal. Neither was accused of wrongdoing.
The job cuts follow Siemens's announcement in February that it would cut 6,800 jobs in Siemens Enterprise Communications, a maker of corporate phone networks, as it seeks a buyer for the business.
Latest News
