Siemens is restructuring, to cut 7000 jobs |
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Tue, 20 Sep 2005 16:05
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BERLIN: German engineering giant Siemens AG is streamlining and shutting down three of its unprofitable units and in the process shedding more than 7,000 jobs in Germany. At least 2,400 jobs will be lost when it restructures its IT services business, Siemens Business Services, through September 2007, which will cut down annual costs by 1.5 billion euros, the company said.
The company will also close down its logistics and assembly systems unit from 1 October, which may affect some 5,000 employees. It will also cut down its telecommunications equipment division, which will lead to more job losses. The company said its loses in the Business Services unit had been to the tune of $133 million for the last quarter.
Siemens has some 430,000 employees on its rolls worldwide, with 164,000 located in Germany. It has already sold its unprofitable mobile phone unit along with 6,000 employees to Taiwanese firm BenQ Corp.
The company's chief executive Klaus Kleinfeld said these steps needed to be taken to achieve earnings targets. He said he hoped to get to an operting profit margin of between 4 and 13 per cent by April 2007.
The company saw the exit of Business Services division president Adrian von Hammerstein, who came on board a year ago to effect a turnaround. He is being replaced by Christoph Kollatz, formerly at Siemens' Industrial Solutions and Services unit.
Siemens warned that the restructuring costs would affect its earnings during the current fiscal ending September and also next year. It said it is in talks with workers' representatives about the planned job cuts.
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