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Siemens Slashing 16,750 Global Jobs In Economic Move

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The Associated Press

Published: July 9, 2008

FRANKFURT, Germany - FRANKFURT, Germany - Industrial conglomerate Siemens AG said Tuesday that it will cut 16,750 jobs, or 4.2 percent of its global work force, to streamline operations and slice nearly $2 billion in costs in the face of a slowing economy.

The Munich-based maker of products ranging from light bulbs and medical equipment to high-speed trains and power turbines said the cuts would include 12,600 administrative jobs as well as another 4,150 positions involving restructuring projects at its various units. The company has a worldwide work force of about 400,000 people.

Siemens said it will consolidate its businesses from 1,800 separate legal entities to fewer than 1,000 and take its 70 regional companies and transform them into 20 regional clusters.

Siemens said the cuts were being made in an effort to reduce total costs by 1.2 billion euros ($1.8 billion) by 2010.

"The speed at which business is changing worldwide has increased considerably, and we're orienting Siemens accordingly," said chief executive Peter Loescher in a statement announcing the cuts, which had first been raised in June.

"Against the backdrop of a slowing economy, we have to become more efficient," he said.

Shares of Siemens were up Tuesday 1.3 percent to $110.37 in Frankfurt trading.

Siemens said it was considering offering employees transfers to other companies and early retirement packages in a bid to avoid forced layoffs and dismissals.

Loescher said Siemens was conferring with unions and labor representatives on the matter and that it wanted to make the changes rapidly.

"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," Chief Financial Officer Siegfried Russwurm said. "Only as a last resort will we terminate employment contracts for operation reasons."

Werner Neugebauer, the regional director for the IG Metall union in Bavaria, where Siemens is based, criticized the plan, saying Siemens' order book was full and it was financially sound.

"The planned job cuts are incomprehensible nor acceptable for these reasons, and in this extent, completely exaggerated," Neugebauer said in a statement.

The company said it would also reduce costs by cutting back expenditures for information technology and consultants, and the recent streamlining of its management and divisions.

For example, the management board has been reduced from 11 members to eight and the company's previous eight divisions have been reduced to three: energy, industry and health care.

Alexander Koch, an economist with UniCredit in Munich, said European consumer demand in general was slowing and that, in turn, may lead to more job losses by industrial companies.

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