Siemens Deepens Revamp as Wind-Energy Drought Forces Job Cuts
Siemens AG (SIE) intensified a push to lower costs and announced 500 job cuts at the business making mechanical drives, saying that continued slack demand for wind- energy components necessitates a streamlined organization.
Siemens will implement the cuts by 2016 and will bundle some production sites that previously operated separately, the Munich-based company said today in a statement. The job cuts will occur at six German factories making industrial gear boxes and clutches, and Siemens said it’s seeking the reductions via measures such as attrition, early retirement and fluctuations.
“The reason for the changes is the lasting weakness in demand for wind mills, which should be compensated by demand for drives from other industries in the long term,” Siemens said in a statement today.
The cuts add to thousands of reductions that Siemens has announced so far this year at businesses ranging from medical technology to transformers and lighting. Chief Executive Peter Loescher has cut his profit target once this year and said last month that the lower goal will also be a stretch as demand dwindles from China and Europe grapples with the debt crisis.
Loescher said on July 26 that he will focus on additional cost reductions by slashing procurement expenses, improving product design and project execution under a program that he will make public after a management meeting in October.
Siemens bolstered the industrial drive business in 2005, with the purchase of Flender Holding GmbH from Citigroup Inc. (C) for 1.2 billion euros ($1.5 billion). Siemens is among the world’s largest maker of windmills to generate electricity, and is in the process of building wind parks off the German coast as the country seeks to generate more power from renewable sources.
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