Siemens Plans Thousands of Job Cuts Over Two DivisionsBy
Both Power and Gas and Process Industries businesses affected
Retrenchment program could be biggest since at least 2015
Siemens AG is starting what could be its largest round of job cuts in at least two years and may close several sites as part of a reorganization plan, people familiar with the matter said.
The retrenchments will fall in the German company’s power-and-gas division and the process industries-and-drives unit, said the people, who asked not to be identified as the plans haven’t been announced. There could be thousands of positions cut in the power and gas business, which makes turbines, while redundancies in process industries will be substantial, one person said. The shares were 0.5 percent lower as of 3:16 p.m. in Frankfurt.
The announcement, which will probably come in early November, could be the largest reorganization since Chief Executive Officer Joe Kaeser initiated 4,500 job cuts in May 2015. Since Kaeser was appointed CEO in 2013, over 15,000 retrenchments have been announced.
Power and gas, Siemens’ largest division, has about 48,700 employees and accounts for 20 percent of revenue. The business, once one of the company’s biggest drivers for earnings on big contracts like a power plant in Egypt, has slumped recently due to a lack of major follow-up orders. Process industries and drives, which accounted for just over 10 percent of sales, also supplies other company units.
Siemens is “continually thinking about the right strategic setup for our businesses,” spokesman Philipp Encz said in an emailed statement Thursday. “This may include consolidating individual activities if market conditions make this necessary.”
Bloomberg News first reported significant job reductions were planned for the power-and-gas division in August, and that a historical Berlin site would be particularly affected. Manager Magazin reported on Thursday that 11 of 23 power-and-gas sites could be shut or sold off, including one in the east German city of Erfurt.
During his tenure, Kaeser has increasingly whittled down the company from a sprawling portfolio that once sold hearing aids and light bulbs, to focus on a few core industrial divisions. Siemens recently divested a 17 percent stake in former lightbulb unit Osram, and is planning an initial public offering of its healthcare business in the first half. Its wind turbine operations, which were merged with Spanish company Gamesa, has seen its shares slide after issuing a profit warning last week. Siemens mobility division is being merged with that of Alstom SA, the companies announced in September.
The moves leave Siemens with five divisions out of nine, including one financial division, that are not being spun off, publicly listed or merged.
The cuts are likely to receive widespread opposition from Germany’s powerful labor groups and workers’ representatives. It’s “unbearable” that thousands of employees are being unsettled by rumors, Hagen Reimer, an IG Metall spokesman, said in emailed comments.
“If Siemens is to actually plan massive cuts in locations and employment, IG Metall will not accept this without resistance, but will work with the works councils and workforces to provide counter-defense,” he said.