Siemens to Cut 16,750 JobsBy Reuters - | Posted 2008-07-08 Print
Siemens wants to cut 16,750 jobs globally to help Europe's biggest engineering group reach a savings target of 1.2 billion euros ($1.9 billion) by 2010 and boost profit margin levels, Siemens said.
FRANKFURT (Reuters) - German industrial conglomerate Siemens AG plans to cut around 4 percent of its workforce worldwide as part of an overhaul and as a result of the global economic downturn, Siemens said on Tuesday.
Siemens wants to cut 16,750 jobs globally, of which 12,600 are mainly in administration, to help Europe's biggest engineering group reach a savings target of 1.2 billion euros ($1.9 billion) by 2010 and boost profit margin levels, Siemens said.
Chief Executive Peter Loescher, who has extensively restructured Siemens since taking charge a year ago, said Siemens needed to become faster and more efficient to catch up with the competition.
"This takes on special urgency when one considers the economic downturn," he added.
Negotiations with labor representatives about the planned job reductions will begin quickly, Loescher said.
Engineering trade union IG Metall condemned the plans and did not rule out taking measures in protest.
"Siemens is looking good economically, the order books are full ... That makes the planned job cuts neither comprehensible nor acceptable, and they are excessive in extent," said Werner Neugebauer, head of IG Metall in Siemens home state of Bavaria.
Labor representatives planned to resist but would first wait for the outcome of negotiations with management.
Siemens has said it wants to cut selling, general and administrative costs by 1.2 billion euros or about 10 percent within two years, partly by shrinking the number of separate legal entities that make up the conglomerate, which employs about 400,000 people.
The rationalization comes as Siemens struggles to put an end to a worldwide investigation into a corruption and bribery scandal and as it hopes to regain investor confidence after a profit warning in March that sent its shares tumbling.
Shares in Siemens were down 0.78 percent at 69.77 euros by 1319 GMT, up from a low of 68.53 euros earlier in the day, outperforming a 1.2 percent fall in Germany's blue-chip DAX index.
Siemens shares have fallen almost 35 percent so far this year. By comparison, U.S. rival General Electric has lost 27.4 percent and Dutch competitor Philips has lost 28.8 percent, according to Reuters data.
Siemens trades at around 7.2 times estimated 2008 earnings, while GE and Philips are valued at around 12 and 14 times, respectively, according to Reuters estimates.
Loescher has promised to slim down the lumbering giant, which makes a wide range of products from light bulbs and high-speed trains to medical equipment and turbines, so it can catch up with more profitable rivals and improve its technology.
So far, he has regrouped the company's units into three main divisions aligned with global growth trends: infrastructure and industry, energy, and medical technology.
He has also scaled down the management board to eight from 11 posts.
Loescher said on Tuesday Siemens would cut 6,350 jobs at its industry unit, 3,950 at energy, and 2,800 at healthcare.
(Editing by Will Waterman)
© Thomson Reuters 2008 All rights reserved
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