Nearly two years into his job, Joe Kaeser, the chief executive of industrial group Siemens, must be feeling increasingly squeezed.
The capital markets want him to speed up his restructuring program, instigated to reverse declining profits, and to finally catch up with more profitable companies such as ABB in Switzerland and General Electric.
But this will involve job cuts, and dissent is mounting among the workforce, whose representatives wield considerable power on German supervisory (non-executive) boards. Engineering union IG Metall is staging a day of protest at Siemens plants across Germany today.
Siemens’ management is convinced that the restructuring program, which as well as job cuts involves shedding some divisions, hiving off its healthcare operation and buying U.S. oilfield equipment maker Dresser-Rand, will pay dividends.
Soon after he took the helm at Siemens in August 2013, Mr. Kaeser announced a plan to cut costs by €1 billion, or $1.12 billion, by 2016 as part of the “1by16” project. Chief Financial Officer Ralf Thomas told Handelsblatt: “We’re on course to reach our savings potential as part of 1by16.”