Siemens Axing 11,600 Jobs

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Siemens AG (NYSE:SI) (Munich, Germany) is to axe 11,600 jobs in an effort to cut its costs by €1 billion ($1.34 billion).

The German engineering giant said that the cuts will form part of its 'Vision 2020' plan. It aims to shed 7,600 jobs as part of its efforts to create a new divisional structure, which it claimed will "streamline operations." Another 4,000 people who work at surplus positions at regional offices will be made redundant. For additional information, see May 13, 2014, article - Siemens Targets 200,000 Employee Shareholders, $1.4 Billion Productivity Gain with Vision 2020.

"A certain amount of people do stuff for coordinating things, analysing things," new chief executive officer, Joe Kaeser told investors and analysts in a webcast. "About 20% of those we believe can be put to work elsewhere, but not there. They can be taken out of the system because the work goes away."

He said that 10 of the company's business units, which account for just under 20% of company revenues, "do not make any money, not a single dime. Three years from now, those businesses are going to make money, one way or another."

The new cuts, which account for 3% of its workforce, come on top of 15,000 cuts announced last year by former CEO Peter Loescher in an effort to save over €6 billion ($8.2 billion) by the end of this year. Last June, it has pulled the plug on its solar power business following reports that the business had lost almost €784 million ($1 billion) in the previous two years. For additional information, see June 20, 2013, article - Siemens Shuts Down Solar Business.

Siemens looks set to enter a bidding war with General Electric Company (NYSE:GE) (Fairfield, Connecticut) to purchase the power business of engineering giant Alstom S.A. (Paris, France). GE has submitted a €12.35 billion ($16.9 billion) bid, and Siemens is expected to make a counter offer before the June 16 deadline. Siemens Kaeser said that it is still considering its options. At an investor meeting, he said: "So far, we've got everything we wanted. Now we will make up our mind what that means for us."

The French government has made it clear that it wants GE's bid to be successful. Recently, it broadened an existing 2005 law that will let it block foreign takeovers of French companies operating in what it termed 'strategic industries'. For additional information, see May 22, 2014, article - France Could Block Alstom Takeover.

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