Siemens' New CEO Could Face Uphill Struggle

Analyst say it might be hard to change company's traditions.

The choice of a little-known outsider to be Siemens' new chairman could be a way out of the damaging scandals at the German engineering giant, analysts said. But the new CEO Peter Loescher may find it difficult to impose change on a company so steeped in -- and fiercely proud of -- its traditions, they said.

Furthermore, 49-year-old Loescher has never held a CEO position. And he comes from the pharmaceuticals sector, with little experience of running a sprawling company like Siemens, which has 11 divisions and makes a wide range of products from lightbulbs to power stations.

Nevertheless, investors were relieved that a replacement has finally been found for Klaus Kleinfeld, who announced at the end of April that he was quitting as the company sunk ever deeper into a quagmire of bribery and corruption allegations.

And the choice of someone from outside the group, wholly untainted by the current scandals, could offer a fresh start for Siemens, one of Germany's best-known and hitherto most respected companies, analysts said.

"Loescher is a very good choice," said UBS analyst Michael Hagmann. "He has all the qualities one would expect of a future Siemens CEO. His international experience and previous successes will make up for his lack of knowledge of the sector."

Austrian-born Loescher, a lanky skier with grey hair, is currently head of global human health at Merck. Healthcare is his specialist area, having held a number of senior management positions at former German chemicals giant Hoechst before it merged with Rhone-Poulence to become Aventis, as well as at Amersham and the medical division of General Electric.

The fact that Loescher has no connection with Siemens will mean his name cannot be linked with the myriad allegations of systematic corruption that have tarnished the company's image over the past six months.

"Siemens is a highly complex company and it's the first time that an external CEO has been appointed. So there could be some acceptance problems. Loescher will need time," said MM Warburg analyst, Michael Bahlmann.

"It'll be a culture shock for Siemens," DSW spokesman Juergen Kurz said. "One of his main tasks will be to garner acceptance within the group. He'll have to forge himself an internal position of power. That'll take time." At the same time, Loescher had the advantage that Siemens was currently in good financial shape, Kurz continued. "He's not going to have push through more painful restructuring measures. That could put him on a good footing with the workforce."

Copyright Agence France-Presse, 2007

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