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Siemens light bulb unit to cut 4,700 jobs

German light bulb maker Osram, which is soon to be spun off by its parent, engineering giant Siemens, said on Friday it is planning to cut costs by €1 billion ($1.3 billion) by 2015.

Siemens light bulb unit to cut 4,700 jobs
Photo: DPA

As part of the cost-cutting programme, the group will sell factories, which will reduce the 39,000-strong workforce by about 4,700 jobs, Osram said in a statement.

Due to fundamental changes in the lighting sector, Osram had already announced in January 2012 that it would adjust its capacities and its workforce “both nationally and internationally by the end of fiscal 2014,” the statement said.

As part of those measures, some 1,900 jobs have already been axed worldwide this year, including 300 in Germany.

Plants producing products at the end of their product life cycle or smaller plants with lower sales would face closure, the company explained.

Osram is grappling with a shift in the industry from traditional light bulbs to light-emitting diodes (LED), a technology where Asian rivals have built up capacity and driven down prices.

Osram said it was building up capacities “in future-oriented business areas” and created 200 jobs here in Germany alone last year.

It plans to invest “a low three-digit million euro figure over the coming years in its LED assembly plant in the Chinese province of Jiangsu,” Osram said.

“In the final completion stage, 1,700 employees will manufacture products for key segments of the Chinese market and entire Asian region. The region will already account for around half of the global general lighting market in five years’ time,” the statement said.

Osram quoted a study on the lighting sector by McKinsey, which estimated the total market to grow by roughly 5 percent per year between 2011 and 2016, and the market volume for LED is expected to rise to €37 billion by 2016 from €9 billion last year.

Over the same period, the market volume of traditional products would decrease by 15 percent, McKinsey estimated.

On Wednesday, parent company Siemens said it would spin off 80.5 percent of its lighting unit Osram with a view to proceeding with the long-planned stock market listing of the subsidiary later.

AFP/mbw

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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