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)
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