German industrial group Siemens AG (ADR) (OTCMKTS:SIEGY) will slash a further 4,500 jobs as it struggles with low economic growth and weak demand from energy customers.
The cuts follow 7,400 job losses already declared and were disclosed on Thursday with a 5% decline in first-quarter profit at its industrial businesses.
The trains-to-turbines group presently has 340,000 people on its payroll globally, which includes 115,000 in Germany, where it is one of the nation’s largest employers.
Chief Executive Joe Kaeser didn’t specify the geographical locations of the cuts. Siemens needs to be cautious when slashing jobs in Germany, home to powerful trade unions. Also, it has decreased earlier declared job losses by a few hundred in this nation.
But Kaeser who is attempting to prune the firm to assist it decrease a profitability gap with competitors General Electric Company (NYSE:GE) and ABB Ltd (ADR) (NYSE:ABB) stated he would retain underperforming enterprises that make up 15 billion euros in sales and zero profit.
This, along with the disappointing quarterly results that made Siemen’s whole year targets seem ambitious decreased its shares by more than 2% near the bottom of the blue-chip DAX index.
Kaiser told journalists that the change may seem slow, but he is not aware of any other firm that has carried out such a fundamental change in a small time frame.
Kaeser has already consented to the priciest acquisition of Siemens AG (ADR) (OTCMKTS:SIEGY). That is the acquisition of US oilfield equipment maker Dresser-Rand for $7.6 billion. Kaeser has also agreed to the disposal of healthcare and the dismissal of several senior managers.
However, he is battling on multiple fronts as tardy economic growth in major markets dulls infrastructure spending, limited demand and a push for additional renewable power adversely affects the energy enterprises that make up around 40% of Siemens’ sales.
According to a statement from Siemens the power and gas division, has to weather regulatory changes, huge price erosion, aggressive rivals and more.
