Siemens Announces Shake-Up, 6,800 Jobs on the Line

Feb. 26, 2008
Might close plants in in Germany, Greece and Brazil

Siemens unveiled on Feb. 26 an extensive restructuring of its communications unit SEN that put thousands of jobs on the line. SEN lost 602 million euros last year. Up to 6,800 from a total of 17,500 was the number of posts Siemens sought to trim from a loss-making division that offers communications systems including telephone, fax and Internet access to businesses. Of the 6,800, about 3,800 would be simply eliminated, mainly in Europe and South America, and especially in Germany at the SEN headquarters and in administrative services. The other 3,000 posts would be stripped from Siemens as it sold off various activities.

The goal, which is to cost between 100-500 million euros (US$150-750 million), according to financial director Joe Kaeser, is to abandon production of telephones, terminals, modems and telecommunications cabling to focus on the supply of software and services.

Siemens has not excluded completely closing down plants, including sites in Leipzig, eastern Germany, Salonika, Greece and Curitiba, Brazil. But it stressed that jobs in Leipzig would be guaranteed "for a few years," amid growing tension over German job cuts.

"We have not been on the cutting edge of innovation," Kaeser said, acknowledging a "competitive handicap" with respect to rivals such as Cisco, Nortel, or Alcatel-Lucent. The latter is often cited as a possible buyer of SEN, with which Siemens wants to make a "clean" break, Kaeser said. "We will assume our restructuring responsibilities and the consequences for the staff concerned," he added. "There will not be another BenQ." Germany was shocked in 2005 when Siemens sold its mobile telephone business at a loss to the Taiwanese group BenQ, which then declared the unit bankrupt and eliminated 3,000 jobs.

Bit by bit therefore, Siemens is taking its distance from telephone production activities that were once a pillar of the engineering group along with the construction of power generators and trains. Telecommunications network construction has been placed in a joint venture with Finnish giant Nokia, and Siemens is now mulling changes to units that make cordless telephones and modems for retail sale.

A few weeks ago, Nokia announced it would close the last German plant that made mobile telephones, with the loss of 2,300 jobs in the western city of Bochum. Manufacture of electronic components is now threatened as well, some experts said, particularly sites in the former eastern communist Germany.

Copyright Agence France-Presse, 2008

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