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It's Official: Siemens Axing 16,750 Jobs by Mark Halper • Sign up to receive ME Daily News Alerts • POSTED on Tuesday, July 08, 2008 12:15:33 PM |
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Siemens’ layoff picture came into focus today as the German industrial giant announced it is eliminating 16,750 mostly white-collar jobs. The 4% reduction effectively confirms last week’s speculative reports that Siemens would eliminate 17,000 of its 430,000 jobs.
“The speed at which business is changing worldwide has increased considerably, and we’re orienting Siemens accordingly,” President and CEO Peter Löscher said in a prepared statement. “Against the backdrop of a slowing economy, we have to become more efficient.”
That statement echoed remarks Löscher made two weeks ago, when he warned of cuts to help stay competitive in difficult financial times. Siemens’ profits plunged 67% in its second quarter. The €72.4 billion company is scheduled to report third-quarter financial results at the end of this month.
The job cuts will come from across countries and business sectors. On a country basis, Germany will bear the largest share, losing about 5,250 jobs, close to one-third of the total reduction. The biggest cuts will come from Siemens’ four largest sites: Erlangen, Munich, Nuremberg, and Berlin. The rest of Europe will lose 5,150 jobs, and outside of Europe, Siemens is eliminating 6,350 jobs.
The largest of Siemens’ three business divisions, the 210,000-employee Industry Sector, will take the largest hit, losing 6,350 positions. Siemens did not break down the cuts among the Industry sector’s subdivisions, except to say that 2,500 will come from the Mobility division, which focuses on trains and transit, and another 330 will come from the Electronic Assembly Systems Business Unit, which makes pick-and-place machines.
The company could add jobs in some boom regions like Russia, China, and the Middle East that are buying trains, infrastructure, and automation equipment to support high revenue business like oil and gas, according to a spokesman.
Last week, the company announced that Joergen-Ole Haslestad, who heads the Industry Solutions unit within the Industry Sector, will leave in September to become CEO of Yara International, a global chemicals company in his native Norway.
Siemens’ next largest business unit, the Energy Sector, which sells power plants and power equipment, will lose 3,950 jobs. The Healthcare sector, which makes imaging and other medical equipment, will lose 2,800 jobs.
Of the remaining cuts, 800 will come from “headquarters and others,” 1,800 from administration centers that Siemens called “clusters,” and 1,050 from the Siemens IT Solutions and Services group, a cross-sector operation.
Siemens attributed about 75% of the job cuts to its ongoing reduction of SG&A (selling, general, and administrative), in which it is shedding €1.2 billion of costs by 2010. About 4,150 job cuts will come from restructuring that is separate from the SG&A plan. Most of the SG&A cuts will come from middle management and administration. The 4,150 restructuring cuts will cover a mix of white- and blue-collar jobs, according to the spokesman.
Siemens Chief Personnel Officer Siegfried Russwurm said in a statement, “We want to begin negotiations with the employee representatives quickly in order to make the cuts in a way that will be as socially responsible as possible.”
Newswire AFP has reported that union representatives said they might stage strikes to protest the layoffs.
The layoffs will start once Siemens completes union negotiations — primarily in Germany — which will take anywhere from “a few weeks to a few months,” the spokesman said. At that point, Siemens will announce the specific numbers for layoffs in certain countries, including the United States, he said. It will implement the layoffs through 2010.
The expense reduction and layoffs are part of a streamlining initiative that Löscher started when he took charge of Siemens a year ago and began reorganizing the company’s many divisions into the Industry, Energy, and Healthcare sectors.
Siemens also said today that it plans to sell its Segment Industrie Montage Services (SIMS) business, a move that would shed another 1,200 employees at 35 German locations. The sale would mark the latest in a series of divestitures. Last month, Siemens sold its machine-to-machine wireless business to a consortium called the Joint Operations for Mobile Applications. Löscher said last month that Siemens will continue with more divestitures.
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