Siemens’ long-feared slimdown isn’t as drastic as feared

February 6, 2015, 1:21 PM UTC
Companies Exhibit At The Light And Building Architecture And Technology Fair
The logo for Siemens AG sits at the company's booth at the Light and Building Architecture and Technology Fair, in Frankfurt, Germany, on Monday, March 31, 2014. The Light and Building Architecture and Technology Fair takes place from March 30 to April 4 2014. Photographer: Ralph Orlowski/Bloomberg via Getty Images
Photograph by Ralph Orlowski — Bloomberg via Getty Images

German engineering giant Siemens AG (SIEGY) said it will cut 7,800 jobs–around 2% of its global workforce–as it tries to slim down its sprawling empire.

The announcement ends a strategic review announced in May last year aimed at making the group’s structure flatter and more customer-focused, mainly by stripping out layers of middle-management.

Even though the restructuring plan cuts the number of company divisions from 16 to nine (10 if the healthcare business, now being run as a standalone business, is included), the job cuts are far less aggressive than originally feared, and will avoid compulsory redundancies entirely. Initial estimates had put the number of possible job cuts as high as 11,000 out of a workforce of 343,000.

Once hiring in other areas is taken into account, the company said, overall staff numbers will remain “virtually stable,” the company said Friday. However, one thing is clear: Siemens’ will be employing proportionately fewer people in its home country, as 3,300 of the jobs affected are based there.

Siemens has been traditionally reluctant to cut jobs at home both for political reasons and because an ageing labor force is making it difficult to find adequately-qualified replacements. Unions had extracted concessions in previous years that made redundancies in Germany virtually impossible.

Despite the fact that overall numbers are hardly falling, Siemens still expects the cuts to result in efficiency gains of over €1 billion ($1.14 billion) by the end of 2016. The company said it would invest the resources freed up roughly equally between sales operations and R&D (€400 million each) and investment in fixed assets (€300 million).

Reuters cited a company source as saying the cuts would cost somewhere between €500 million and €1 billion.



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