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Siemens announces major restructuring, layoffs

Posted: 21 Sep 2005 ?? ?Print Version ?Bookmark and Share

Keywords:telecommunications? networking?

Siemens AG said Monday (Sept. 19) it will eliminate more than 4,000 jobs alone in its telecommunications segment as part of a major restructuring plan. Other segments will also be shuttered or integrated with other units.

The focuses of the restructuring plan are cuts in three loss-making units: telecommunications and enterprise networking: Logistics and Assembly; and the company's IT services unit, Siemens Business Services (SBS). The units are to be either restructured or partially closed.

The telecom division will now focus on marketing telephone equipment for VoIP-based product groups. The move will result in the loss of 1,000 jobs; other affected workers will be transferred to locations outside of Germany. Although Siemens did not supply details, Der Spiegel's online edition reported that 4,224 telecom workers are to be laid off, of which 2,860 work in Germany.

Nearly 800 workers (300 in Germany) are to be furloughed in the mobile telephony and fixed network divisions. According to Der Spiegel, relocating the company's data processing activities to India will result in the loss of 295 additional jobs.

Siemens would not confirm the layoff figures for its telecom activities. "Since we are currently in the midst of negotiations with employee councils, any number I would mention here could be either dead wrong or dead right," noted Siemens Chairman Klaus Kleinfeld.

Siemens is looking to shave 1.5 billion ($1.82 billion) from its SBS unit. Following the divestment of a substantial portion of its maintenance activities earlier this year, Siemens said it plans to farm out low-end maintenance services to partners. It is also aiming to decrease its processing and materials costs while at the same time reducing overcapacity. These steps will translate into the loss of 2,400 jobs in Germany.

Meanwhile, a major executive shakeup is underway. SBS Chairman Adrian von Hammerstein was dismissed and will be succeeded by Christoph Kollatz, currently head of the Intelligent Traffic Systems activities in the Industrial Solutions and Services division.

The Logistics and Assembly Systems division will be eliminated and the successful Postal Automation and Airport Logistics division will be merged with Siemens' Industrial Solutions and Services division. The Electronic Assembly Systems unit, which primarily makes machinery for the electronics industry, will be integrated with the Automation & Drives division.

Elsewhere, the money-losing Distribution and Industry division and its entire product line will be consolidated into Dematic, an independent subsidiary. Approximately 5,000 workers will be affected. One-time divestment costs will show up on a future Siemens financial report.

During conference call, Kleinfeld countered criticism that Siemens is placing undue emphasis on cost controls. "Forty-five thousand of our employees work solely on developing new products. But no matter how you look at it, R&D is cost intensive, which makes it all the more important for us to focus on activities in which we are industry leaders," noted Kleinfeld.

"The pace of events in today's markets is far quicker than in the past, which means that the only way to be a market leader is to innovate. Cost control is only half the battle," he added.

- Christoph Hammerschmidt

EETimes Germany

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