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Abu Dhabi, UAESunday 23 September 2018

Exclusive: Siemens confirms job cuts as it restructures power generation business

The chief executive says union and the company need to initiate a dialogue to find a solution

Germany's industrial giant Siemens has decided the number of jobs it will cut as it reorganises its power and gas business. Pawan Singh / The National
Germany's industrial giant Siemens has decided the number of jobs it will cut as it reorganises its power and gas business. Pawan Singh / The National

German industrial giant Siemens has decided the number of jobs it will cut at the conglomerate’s power and gas business, which is struggling amid falling demand for large electricity generating turbines, its chief executive said.

“We pretty much know how many jobs will be [made] redundant over time because we see the markets and how markets develop,” Joe Kaeser told The National in an interview in Abu Dhabi, without specifying the time frame or the total number of job losses when asked if the headcount will be reduced by hundreds or by thousands. “What we want to find out is not so much the diagnostics. We want to find out actually the solutions – how we can manage the transitions.”

Media reports in recent weeks have suggested that the company could cut thousands of jobs and shut manufacturing facilities as the industrial giant reorganises its power and gas business. This could be the largest restructuring since Mr Kaeser initiated 4,500 job cuts in May 2015. The company has announced more than 15,000 retrenchments since the chief executive came to the helm of the company in 2013, according to a Bloomberg report, which also said layoffs may also happen at the firm's industries-and-drives unit.

Siemen’s human resources chief, Janina Kugel has said that “massive changes” were afoot and that workers would be informed about the plans in mid-November, a Reuters report cited Ms Kugel’s interview with German news agency DPA.

There has been intense media scrutiny in recent weeks and opposition to the company’s plans from the workers’ representatives. Mr Kaeser however said there was no dispute that the economic environment has structurally changed as far as fossil power generation is concerned.

“So we need to optimise and realign our resources. It’s a very natural thing [for a business] and there is no factual dispute about that,” he said. “The question now is exactly how we are going to do that.”

It is important, he said, that union representatives and the company work together as it “doesn’t do much good to have the debate in the public”.

“We [at Siemens] are people -- and I personally am someone -- who stands for dialogue and I think that’s where the union needs to be a bit more serious and mindful about the value of dialogue,” he said. “Just pushing the concerns of the people who might be affected doesn’t do any good. We will consciously work together on dialogue and see how we can manage the situation.”

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The situation, according to Mr Kaeser, is “favourable” as the company last year hired about 30,000 people worldwide and about 5,000 in Germany. Siemens is willing to re-skill employees and transfer them to jobs in other parts of the business, preferably matching them with employment opportunities open within the same region where they are employed, he said. At the end of 2016, the company employed 351,000.

“If we have some jobs being made redundant on the power generation [business] because there is no market then we have the opportunity to re-skill them [affected employees and] use them somewhere else,” he said. “So assuming we can find the [geographical] match this would ease the situation dramatically. For those we don’t find the geographical match …. we will make sure that through huge efforts of free qualifications we keep these people employed in their own region. It is about people coming together and looking for solutions and that’s exactly what we are doing.”

The Munich-based company, which sold its remaining 17 per cent stake in light manufacturer Osram in a US$1.4 billion deal last month, will be busy pursuing its strategic plans initiated in the 2014. “We are busy with that so you may see slower mergers and acquisitions activity going forward in the company,” he said when asked if the company plans to spin off more business units.

The company in April teamed up with Spain's Gamesa to form one of the top global renewable energy firms and has also announced its partnership with France's Alstom to become the world’s most vertically integrated mobility solutions provider. Siemens also plans to bring its healthcare business to public further down the road.

The company is committed to its operation in the UK and will remain a “happy participant of the British society and industry”, post Brexit, Mr Kaeser noted. “As far as Siemens is concerned the focus is on our customers, the focus is on our local value add, but of course, we are sorry about the fact that UK eventually leaves the European economic environment,” he said.

"There are no winners," according Mr Kaeser, in Britain’s exit from the European Union. “No one benefits …. I don’t think so because the more [countries] join, the more powerful the Europe is,” he said. “I think Europe is well advised to form a unified economic force to be on par with the US and China.”

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