Half of the cuts will be in Germany, where Siemens is shuttering two facilities in the eastern part of the country, and putting the future of others under review, the Munich-based company said in a statement on Thursday.
It has said the revamp, which will affect about 2 percent of its 370,000 employees worldwide, is inevitable amid global manufacturing overcapacity for power and gas turbines.
The reductions come less than two months after German general elections, which Chancellor Angela Merkel ran on a platform of economic stability. Siemens, which is among the country’s biggest corporate employers, has reshaped its conglomerate structure over the years in a bid to become more nimble, ahead of U.S. rival General Electric Co., which is undergoing a steep transformation of its own.
The plan to cut jobs sets the stage for a clash with worker representatives such as trade unions, which hold powerful sway at German companies because they make up half of the supervisory board that signs off on major strategic decisions. In a first reaction, the IG Metall union called the plan a “broad-based attack on the employees.”
The cuts come as Siemens Chief Executive Officer Joe Kaeser pushes ahead with broader changes including merging the company’s renewables unit with a rival and a planned listing of its health care division.
The job reduction plan also fell the same week as GE unveiled its own turnaround plan to focus on three businesses and exit others. Both conglomerates are facing global shifts in energy demand favoring renewables over large fossil-fuel plants powered by the types of turbines they manufacture.
At Siemens, 6,100 of the jobs targeted for elimination are in the power and gas division, with the rest coming in the process-industries-and-drives and power-generation divisions, according to Thursday’s statement.
The company’s Goerlitz and Leipzig sites are slated to be closed, while the solutions business of the Offenbach and Erlangen locations will be combined. Options are still on the table for a location in Erfurt, including a sale, Siemens said. About 640 jobs will be cut at a site in Muellheim, and another 300 in Berlin.
“The cuts are necessary to ensure that our expertise in power-plant technology, generators and large electrical motors stays competitive over the long term,” Janina Kugel, head of human resources, said in the statement.
The German company has been in talks for months with unions about the plan, which Kaeser broadly confirmed last week, saying it would be “painful.”
Union representatives walked out of a meeting with Siemens in October when management explained the market conditions behind the cuts.
“Job cuts on this scale are totally unacceptable given the excellent overall situation of the company,” Juergen Kerner, the union’s representative on Siemens’s supervisory board said in a statement.
Siemens, in contrast, pointed to a sharply deteriorating situation in the market for large power and gas turbines, saying global demand is expected to level off around 110 a year compared with an overall manufacturing capacity of around 400.
Siemens’s last major round of cuts was in the process-industries division, where 1,700 positions were cut after negotiations with unions.
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