Siemens AG may cut as many as 17,200 jobs, or about 4 percent of its workforce, by 2010 as part of an effort to save 1.2 billion euros (US$1.9 billion), reports in Sueddeutsche Zeitung and Financial Times said.
Europe’s largest engineering company, based in Munich, plans to eliminate 6,400 jobs in Germany and 12,500 administrative positions worldwide. The reductions will include upper and mid-level managers, Sueddeutsche said.
Siemens spokesman Marc Langendorf declined to comment when contacted by Bloomberg News on Saturday.
Chief executive officer Peter Loescher, who took the company’s helm last July, set the savings goal in November after Siemens reported its first loss in six years. Loescher has cut management layers and pooled nine operating units into three — energy, industry and healthcare — to better compete with US rival General Electric Co (GE).
The reported job cuts are “very realistic” if the company wants to meet its targets, said Michael Busse, an analyst at Landesbank Baden-Wuerttemberg.
“Even with job cuts of that amount, it will be difficult to reach their goals because of big wage increases, not just in Germany but also in China and India and other countries,” said Busse, who rates Siemens a “sell.” “Their cost-saving targets are very ambitious because they want to get there by 2010.”
Siemens generates less money per employee than peers including GE, which competes with Siemens in industries such as healthcare and power generation. The company earned about US$12,710 per employee last year, compared with US$67,914 for each worker at GE, data compiled by Bloomberg showed.
Loescher said it was a mistake to announce the 1.2 billion euro savings goal as early as November knowing that it would take months to work out the details, German magazine Focus reported on Saturday, citing an interview with the CEO.
Loescher, who joined Siemens from US drugmaker Merck & Co, was chosen to head the company after a bribery scandal led predecessor Klaus Kleinfeld and supervisory board chairman Heinrich von Pierer to step down last year.
Siemens’s products range from light bulbs to medical scanners and wind turbines. The engineering company’s customers include German carmaker Daimler AG and utility E.ON AG.
Earlier last week, Loescher gave labor representatives and managers documents on the plan to reduce sales and administrative expenses in preparation for a July 7 meeting at which board members will discuss the project, the CEO wrote in an e-mail to employees forwarded by the company to reporters on Friday.
An “essential contribution” to the cost savings “will have to come from a slimming of central and administrative functions,” Loescher wrote. “We want to achieve clarity quickly, negotiate a fair balance of interests for the affected employees, avoid socially harsh measures and prevent forced layoffs as much as we can.”
Siemens has already reduced the number of employees in Germany by 40,000 to 130,000 since 2003, Sueddeutsche said in a separate report. An additional 1,330 jobs may be lost in Erlangen, 900 may be eliminated in Munich, 600 in Nuremberg, and 340 in Berlin, the newspaper said, without specifying where other workforce reductions will take place.
About 2,000 jobs will be cut at the Mobility traffic unit, which counts building trains among its operations, Berlin-based newspaper Die Welt said without attribution on Saturday. The reduction is a “last chance” for the division, which was unprofitable last year, and Siemens may sell a part of the business, the newspaper reported, without specifying where it got the information.
Siemens closed down US$0.12, or 0.2 percent, at US$70.89 in Frankfurt Xetra electronic trading on Friday. The stock has dropped 35 percent this year, valuing the company at 64.8 billion euros.
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