Siemens plans big job cuts as economy slows (Roundup)

Business News

Jul 8, 2008, 13:38 GMT

Munich - German electronics giant Siemens AG stepped up its restructuring drive Tuesday announcing plans to slash 16,750 jobs worldwide in the face of a slowing global economy. The announcement by Siemens chief Peter Loescher that the Munich- based group proposed cutting about 4 per cent of its total global workforce of around 400,000 also comes as the company struggles to lay aside a far-reaching corruption scandal. 'The speed at which business is changing worldwide has increased considerably, and we're orienting Siemens accordingly,' Loescher said setting out the job cuts. 'Against the backdrop of a slowing economy, we have to become more efficient,' said Loescher who has launched a push to overhaul Siemens since taking over as the company's chief about 12 month ago. The allegations of corruption, which have rocked the more than 160-year-old company, have already led to several resignations among top management, including former chief executive Klaus Kleinfeld. Loescher's drive to trim the workforce is aimed at shoring up Siemens' profitability through a 1.2-billion-euro (1.9-billion- dollar) cut in overheads over the next two years in the face of rising transport and energy costs. The restructuring comes against a backdrop of growing economic uncertainty amid concerns about spiralling energy and commodity prices and the fallout from the US mortgage market crisis. Unions have warned of strike action in the face of a reduction of 5,250 in the domestic 136,000 workforce. 'This is unacceptable for a company with earnings running into the billions and overflowing order books,' a union leader Wolfgang Niclas told Deutsche Presse-Agentur (dpa). A further 5,150 jobs are to be axed from Siemens' operations across Europe, with another 6,350 jobs being cut from the company's non-Europe business around the world. Talks with unions over the cuts would begin as soon as possible, said Loescher. But last week Siemens union leader Werner Moenius described the plans as 'a catastrophe,' adding that they had 'dropped like a bomb' and warned that that industrial action might be necessary. Shortly after taking over from Kleinfeld, Loescher announced plans to streamline Siemens' business operations by splitting the corporate structure group into three divisions, with the group cutting its board members from 11 to eight. The job losses are to hit Siemens three key business divisions with the company planning to cut 6,350 jobs at its industry unit, 3,950 from its energy operations and 2,800 from it healthcare business, the company said, with most of the job losses in administrative areas.

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