Siemens to Lower Costs Via 4% Staff Reduction By MIKE ESTERL Wall Street Journal
June 28, 2008; Page B6 http://online.wsj.com/article/SB121459534338511523.html?mod=hps_us_whats_news Siemens AG plans to slash 17,200 jobs world-wide -- or about 4% of the German engineering company's work force -- in a broad cost-cutting drive amid tougher global economic conditions, according to a person familiar with the matter. The downsizing, aimed primarily at white-collar employees, coincides with Chief Executive Peter Löscher's first anniversary at the helm of the conglomerate, which makes products ranging from trains to light bulbs. Mr. Löscher has promised to cut selling and administrative costs by 1.2 billion ($1.89 billion), or roughly a tenth, by 2010 to boost profit margins that lag rivals such as General Electric Co. The plans represent a departure for Siemens, which in the past has focused on shedding blue-collar jobs. Mr. Löscher is taking steps to thin out management ranks after collapsing the company's myriad businesses into three divisions and combining 70 regional administrations into 20. Munich-based Siemens is active in 190 countries. Germany will be particularly hard hit by the restructuring, with 6,400 jobs earmarked for elimination, according to a person briefed on the plans. The remainder of the cuts will be divided between the rest of Europe and other parts of the world. Siemens employed 435,000 workers at the end of March, including 136,000 in Germany. In a letter to employees Friday, Mr. Löscher said a "significant" part of the 1.2 billion in cost savings will come from trimming external consulting expenses and information-technology costs. He added that "a further substantial contribution" will be derived from streamlining administrative functions. "This is all the more important right now because the risks for the world economy have substantially increased," wrote Mr. Löscher, citing shaky U.S. financial markets and rising prices for energy and raw materials. "We must assume that we, too, will feel the effect of these risks in the coming months." Siemens issued a profit warning in March because of project delays, rising costs and canceled orders. It said in April that it expected revenue in the fiscal year ending Sept. 30, to grow twice as fast as the global economy and that operating profit would match that of the previous year, but didn't rule out more restructuring costs. Mr. Löscher hopes to avoid forced layoffs, and affected employees will be offered financial incentives, said a person familiar with the matter. The plans are to be detailed at a July 7 meeting with worker representatives, and negotiations should begin shortly afterward, the person added. Siemens said in February it would reduce the work force at one of its telecommunications-equipment units by 6,800. The company is in talks with potential partners and buyers to divest the unprofitable unit as it narrows its business focus to energy, health care and industrial infrastructure. The 17,200 planned cuts are in addition to the reductions at the telecom-equipment unit. Revenue at Siemens rose 1% to 18.09 billion in the quarter ended March 31 from a year earlier. Net income attributable to shareholders dropped to 384 million from 1.2 billion. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu ******************************* * POST TO [EMAIL PROTECTED] * ******************************* Medianews mailing list [EMAIL PROTECTED] http://lists.etskywarn.net/mailman/listinfo/medianews
