Siemens AG has announced a plan to eliminate about 6,900 positions worldwide. The Munich-based company said in a statement that about 2 percent of its 372,000 employees will be affected by the layoffs. Most of the cuts will be made before 2020.
According to reports, half of the cuts will be in Germany. About 640 jobs will be cut at an installation in Muellheim, and another 300 in Berlin. Some of the remaining cuts will be to positions in the United States. Siemens did not specify the costs of the layoffs.
The company will also be closing some of its factories. Siemens is shuttering two facilities in the eastern part of Germany, its Goerlitz and Leipzig sites, and putting the future of others, like its site in Erfurt, under review. An 8 billion-euro ($9 billion) order for power generation in Egypt has kept the German factories operating for the past two years. That order has now been fulfilled.
Siemens’s solutions business at the Offenbach site near Frankfurt will be combined with operations at Erlangen, where Siemens has large installations. It is uncertain whether the Offenbach site will be closed.
The layoffs come less than two months after German general elections. Siemens is currently Europe’s biggest engineering company and is one of Germany’s biggest corporate employers. Chief Executive Officer Joe Kaeser is focusing his attentions on streamlining the company.
The company has been struggling under a sharp drop in orders for power-plant equipment. The global surge in solar and wind power are putting other forms of power generation under increasing pressure. Siemens says global demand for large power and gas turbines is expected to level off around 110 a year, but there is an overall manufacturing capacity of around 400.
Reports state that 6,100 of the jobs targeted for elimination are in the company’s power and gas division. Siemens’ Process Industries and Drives division, which makes large mechanical drives for oil and gas extraction and turbines, was the company’s least profitable business last quarter, recording a profit margin of 2.9 percent. In the statement, Janina Kugel, head of human resources, said, “The cuts are necessary to ensure that our expertise in power-plant technology, generators and large electrical motors stays competitive over the long term.”
The German company has been talking with unions about the plan for months. When management explained the market conditions behind the cuts at an October meeting, union and employee representatives walked out. Union representative Juergen Kerner said, “Job cuts on this scale are totally unacceptable given the excellent overall situation of the company.”