German Redundancies

Fighting the Siemens Job Axe

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Siemens employees protest against job cuts in March this year in front of a Siemens factory in Bavaria. The sign reads "We are fighting for our division." Siemens announced to kill 2,00 jobs in Germany.
  • Why it matters

    Why it matters

    Siemens might slash fewer German jobs than originally planned, which would slow the engineering firm’s process of increasing profitability.

  • Facts

    Facts

    • Siemens wants to cut about 2,000 German jobs at its process solutions and large drives divisions which suffer from low commodity prices.
    • Around 1,000 German jobs will disappear abroad; a total of about 2,500 jobs worldwide will be affected.
    • CEO Joe Kaeser has been reorganizing Germany’s largest industrial group since 2013 to increase profitability and boost growth.
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    Audio

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Germany’s biggest industrial firm last month announced it would cut 2,000 jobs in Germany at its businesses which make electrical motors and automation systems, but that number might not be as high as planned.

“There are always certain concessions in negotiations,” a source with knowledge of the industry told Handelsblatt.

One option, according to insiders, is that Siemens will spread out the job cuts over a longer period of time, or let fewer people go than initially announced.

In the past, the company had planned to eliminate 1,700 posts in its energy unit in Germany, but in the end only cut 1,100 jobs.

Since Joe Kaeser became Siemens’ chief executive in August 2013, he has been reorganizing the group which makes everything from trains to gas turbines to power generators, in an effort to boost profitability and growth. Faced with low profit margins in some businesses, he has announced job cuts totaling 15,000 worldwide and divestments and acquisitions to keep up competition with rivals including General Electric and Swiss-based ABB.

“Employees are living in constant uncertainty which negatively affects the overall mood. ”

Jürgen Kerner,, labor representative on Siemens’ non-executive supervisory board

Labor representatives are crying foul at Siemens’ latest decision to cut jobs in Germany.

It’s one job cut after the other at Siemens, lamented recently Birgit Steinborn, head of the general works council at the Bavaria-based firm. “We fear that the industrial basis is supposed to leave Germany,” she said.

Jürgen Kerner, a labor representative who sits on Siemens’ non-executive supervisory board, said that employees are living in “constant uncertainty,” which negatively affects the overall mood.

The drive technology division, which makes electrical motors, generators and converters, has been in dire need of change for a while. Besides homemade problems and piece-meal production structures, the department is hit hard by the low oil price and other raw materials. The division manufactures large generators for oil production facilities.

In the first quarter of the current fiscal year, which for Siemens started in October, the business reached a margin of 5.7 percent, falling short of the postulated target of 8 to 12 percent. Sales dropped 6 percent year-on-year to €2.2 billion, or $2.5 billion.

 

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Protesters in front of a Siemens factory in Bavaria. Source: DPA

 

Mr. Kaeser’s recent plans affect a total of 2,500 workers in divisions worldwide. Of the 2,000 jobs concerned in Germany, half of them will be axed and the other half will be shifted abroad.

The drive technology division is protesting particularly loudly against the downsizing, for several reasons. Workers at these locations are unionized and well organized, and the regions are economically weak, which means once out of a job, people wouldn’t find new employment easily.

Mr. Kaeser meanwhile fights the accusation that Germany as a location is becoming less important for the company under his reign. The firm plans around 3,000 new hires annually in Germany, he said.

He further emphasized the country’s importance by announcing a new plant for offshore wind turbines worth €200 million in northern German Cuxhaven.

Members of Siemens’ works council, such as Jürgen Wechsler, acknowledge this investment. But that doesn’t change “anything about the fact that 1,000 highly qualified jobs are to disappear into the ether from some rather economically weak regions of Bavaria.”

 

Axel Höpner is the head of Handelsblatt’s Munich office, focusing in particular on Allianz and Siemens. Gilbert Kreijger, an editor with Handelsblatt Global Edition, contributed to this article. To contact the author: hoepner@handelsblatt.com.

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