Siemens Power

Attacked for job cuts, CEO flames politician

Protest gegen Entlassungen bei Siemens
SPD Leader Martin Schulz leads a demonstration in Berlin against Siemens. Source: DPA

It was the kind of rousing speech that Donald Trump used to fire up his base: castigating the executives of a multinational company for killing domestic jobs. But when Martin Schulz, the leader of Germany’s left-leaning Social Democratic party, blasted the giant industrial concern Siemens for planning job cuts, the company’s CEO promptly fired back.

To be sure, Mr. Schulz is still smarting from the severe beating his party received in the country’s election in September, when a third of traditional SPD voters – mostly middle class workers from companies like Siemens – defected to an anti-immigrant party. So the announcement this week from Siemens, which competes with General Electric to make power plant equipment, that it was downsizing 2,900 jobs because of a sharp drop in sales, was seized upon by Mr. Schulz, who jumped at the chance to man the barricades outside Siemens’ offices and show solidarity with angry members of the company’s union, IG Metall.

Mr. Schulz said the company’s leaders were “completely irresponsible” in making the cuts and said Siemens “is endangering Germany as a location for business.” He was particularly concerned that the firm is making the cuts while still profitable, adding “in order to make a little more profit, they throw people out.”

“Perhaps you should also consider who really acts irresponsibly”

Joe Kaeser, CEO, Siemens

But Joe Kaeser, the 60-year-old lifetime Siemens employee who now runs the company, had enough of Mr. Schulz’s political posturing. He fired off an open missive to the SPD leader, which has been obtained by Handelsblatt. “The use of populist and aggressive slogans and the refusal to have a dialogue does not help those who are really affected, but aids our competition,” he said in the letter.

Mr. Kaeser conceded that his company was cutting jobs in the power and gas division, equally divided between workers in Germany and in foreign countries. He explained that there has been a worldwide reduction in the construction of traditional power stations because renewable energy is growing at a rapid clip.

But he said that in the same period as the nearly 2,900 job cuts in the power division, the company will add 16,000 jobs in other parts of the firm. The company’s total number of employees in Germany stands at 115,000. Mr. Kaeser said that calling him a “irresponsible manager” or a “Manchester capitalist” – a reference to 19th Century England’s embrace of the free market – “may be popularly applauded,” but the attack missed the point.

He also pushed back on the charge of being irresponsible, needling Mr. Schulz for refusing to join a coalition government with Chancellor Angela Merkel and leaving the country drifting politically two months after elections. “Perhaps you should also consider who really acts irresponsibly,” Mr. Kaeser said in the letter. “Those who proactively tackle foreseeable structural issues and seek long-term solutions, or those who avoid responsibility and dialogue.”

Siemens is proposing to close turbine factories in the cities of Leipzig and Görlitz. The company said that “global energy trends continue to structurally reduce overall demand in markets for the division’s offerings, resulting in declining new-unit business and corresponding price pressure due to current overcapacities.” Unions have vowed to oppose the job cuts, pointing to job guarantees Siemens made back in 2010 and arguing the company has had plenty of time to adapt to the decline in demand over the past few years without cutting staff.

Mr. Schulz appeared to be most angered by the fact that the company was making profits while cutting jobs, without seeming to understand that firms stay profitable by making products that people want to buy. Indeed, Siemens just reported a great financial year, with revenues up 4 percent at €80 billion ($94 billion), and profits up 11 percent to €6.2 billion.

Speaking in parliament, Mr. Schulz also made a thinly-veiled threat against the company’s business if the job cuts go forward. “One can once again remind Siemens that the Federal Republic of Germany is a big client,” he said. Mr. Kaeser responded to that threat by noting in his letter that Siemens paid €20 billion into state coffers in taxes and social security contributions.

Jürgen Kerner, the union’s representative of Siemens’ board of directors, told Handelsblatt that executives like Mr. Kaeser are out of touch with working people and suggested that he go to some of the affected job sites to get a better feel for the hurt being inflicted on workers. “The energy transition didn’t fall suddenly from the sky,” Mr. Kerner said. “Why is Siemens only reacting now?”

This article was reported by Franz Hubik, who covers renewable energy for Handelsblatt, Axel Höpner, the head of Handelsblatt’s office in Munich, Sven Afhüppe, who is the co-editor-in-chief of Handelsblatt, and Frank Specht, who covers labor unions for Handelsblatt. It was adapted into English by Charles Wallace, an editor in New York for Handelsblatt Global. To contact the authors: hubik@handelsblatt.com, hoepner@handelsblatt.com or c.wallace@extern.handelsblatt.com

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