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Siemens may slash 12,000 jobs says boss

AFP · 31 May 2014, 10:36

Published: 31 May 2014 10:36 GMT+02:00

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Chief executive Joe Käser told a conference of investors and analysts in New York on Thursday that a previously announced cost-cutting drive would create "noticeable changes all across the entire organization", a spokesman, Michael Friedrich, confirmed.

Some 7,600 positions will be "affected" as part of a company overhaul announced by Käser on May 7th in which 16 divisions will be consolidated into nine and certain levels of hierarchy will be eliminated, Friedrich said.

Another 4,000 jobs are in question as part of a regrouping of regional activities due at the start of the fiscal year on October 1st.

However Käser attempted to calm the waters in a letter to staff, insisting that not all 11,600 positions would be slashed.

"I did mention the numbers reported, but at the same time emphasized that positions could be put to work elsewhere," Käser wrote, according to media reports.

He added that the company was in talks with the works council on the restructuring.

The electrical engineering and electronics behemoth employs over 360,000 people worldwide, making everything from power stations to high-speed trains to medical imaging equipment.

Friedrich said some staff may be redeployed in other Siemens divisions that will be reinforced.

"It's still too early to provide details on the possible impact on individual locations and departments," he said.

"We're dissolving some organisation units and combining others. As a result, certain tasks - for example, internal coordination between units - will, of course, also be eliminated within the company."

Trade union IG Metall said it was "confused" by the announcement.

"We were not aware of this figure. Siemens has not tried to get in touch with us," a spokeswoman told AFP.

Last week saw labour representatives organize demonstrations demanding that Siemens carry out its realignment without a negative impact on its staff or German activities.

Käser aims to slash annual costs for the group by €1bn  ($1.4 billion) from 2016.

The looming job cuts come in addition to 15,000 already axed under a cost-cutting plan.

Siemens said in early May that it expected its markets "to remain challenging in fiscal 2014" with a sustainable recovery not expected until late in the fiscal year.

Käser, who was previously chief financial officer at Siemens, has said he wants to renew the focus on the company's energy activities under a plan called Vision 2020.

The group is currently considering whether to challenge General Electric in its $17-billion bid to take over part of France's Alstom, which is also involved in the manufacture of energy and train equipment.

But Siemens announced its layoffs just as GE upped the ante by pledging to create 1,000 jobs in France, where the embattled government has passed a new law that would allow it to veto unwanted foreign takeovers of major French companies.

Siemens has valued the division at between €10.5 billion and €11 billion and proposed swapping its rail division for Alstom's power business.

It has said it intends to present its full proposal on June 16 at the latest if it is given the same opportunities to look at the Alstom books as was GE.

The head of Alstom, Patrick Kron, who favours the GE tie-up, has promised Siemens that it will be treated fairly.

Alstom is a privately owned company, but depends heavily on contracts from the French government which orchestrated the rival offer from Siemens when it learnt that a deal with the US group seemed close to coming together.

Earlier this month Siemens announced it would buy the energy production arm of Britain's Rolls-Royce for €950 million to strengthen its standing in the oil and gas industry.

On the Frankfurt stock exchange, Siemens shares fell 0.35 percent to €97.46 by the close of trade.

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