FRANKFURT(Reuters) – German industrial conglomerate Siemens AG plans to cutaround 4 percent of its workforce worldwide as part of an overhaul andas a result of the global economic downturn, Siemens said on Tuesday.
Siemens wants to cut 16,750 jobs globally, of which 12,600 aremainly in administration, to help Europe’s biggest engineering groupreach a savings target of 1.2 billion euros ($1.9 billion) by 2010 andboost profit margin levels, Siemens said.
Chief Executive Peter Loescher, who has extensively restructuredSiemens since taking charge a year ago, said Siemens needed to becomefaster 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 IGMetall 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 administrativecosts by 1.2 billion euros or about 10 percent within two years, partlyby shrinking the number of separate legal entities that make up theconglomerate, which employs about 400,000 people.
The rationalization comes as Siemens struggles to put an end to aworldwide investigation into a corruption and bribery scandal and as ithopes to regain investor confidence after a profit warning in Marchthat 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 1.2percent fall in Germany’s blue-chip DAX index.
Siemens shares have fallen almost 35 percent so far this year. Bycomparison, U.S. rival General Electric has lost 27.4 percent and Dutchcompetitor Philips has lost 28.8 percent, according to Reuters data.
Siemens trades at around 7.2 times estimated 2008 earnings, while GEand Philips are valued at around 12 and 14 times, respectively,according to Reuters estimates.
Loescher has promised to slim down the lumbering giant, which makesa wide range of products from light bulbs and high-speed trains tomedical equipment and turbines, so it can catch up with more profitablerivals and improve its technology.
So far, he has regrouped the company’s units into three maindivisions aligned with global growth trends: infrastructure andindustry, 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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