German engineering giant Siemens AG (SIEGY) will cut around 11,600 jobs, or 3% of its workforce, as part of a global drive to slim down its sprawling empire of businesses, Bloomberg reported chief executive Joe Kaeser as saying.
Kaeser, who took over at the underperforming behemoth last year from Peter Loescher, had said at the start of the month that he intended to cut over €1 billion ($1.4 billion) a year from group costs by 2016, but had shied away from spelling out where the ax would fall. Kaeser told an investor conference in New York on Thursday that the company would cut 7,600 jobs by streamlining its divisional structure, and another 4,000 by simplifying regional operations, Bloomberg said.
Siemens, founded in the 19th century by the pioneer of the electric telegraph, now makes everything from hearing aids to suspension bridges and high-speed trains, and is present in one shape or another in virtually every country of the world. However, some of its investors have complained that that geographical and business diversity makes the company impossible to manage.
Kaeser said at the start of May that the company would restructure along four main lines of automation, digitalization, electrification and healthcare, although there have been hints that the healthcare segment may eventually be disposed of.
“We do not intend to sell the health-care business but we are flexible in being prepared for anything that comes along,” Bloomberg reported Kaeser as saying yesterday. He added that Siemens had invested too much in acquisitions in health-care diagnostics, which include the pre-crisis takeover of Dade Behring Holdings Inc. for $7 billion.
Siemens is already in the middle of a plan to cut 15,000 staff worldwide, under a plan devised by Kaeser’s predecessor, Loescher. Around a third of those job cuts will be in Germany.
Analysts have expressed doubt that Siemens, in the middle of such a far-reaching revamp, is capable of launching the kind of deal it is reportedly considering with regard to French engineering giant Alstom SA . The French company is in talks with GE (GE) to sell its struggling energy business, but Siemens is rumored to be planning a counter-bid, offering its train business in return. That would create two big Franco-German companies each with single business lines and–so the logic goes–enough scale to succeed in the global market. Kaeser said the company would decide on whether to bid for Alstom’s assets by June 16.