The gas and power unit would need further savings of €500m (£445.81m) to improve its cost competitiveness by a significant extent
Image: Siemens office building in Munich-Giesing. (Credit: Rufus46/Wikipedia.org)
Siemens said that it will cut nearly 2,700 jobs across the world in its gas and power business over the course of several years to strengthen the unit’s productivity and competitiveness.
The job cuts are a result of the company’s announcement last month to separate its power and gas unit to form a new entity in an effort to optimise the business and boost profits. The decision is a part of the Siemens’ Vision 2020+ strategy concept which is expected to impact more than 10,000 jobs at various divisions in the company.
The company then said that the gas and power unit would need further savings of €500m (£445.81m) to improve its cost competitiveness by a significant extent. The company cited that the cost savings were driven by a challenging market environment along with other ongoing programs.
The additional savings are expected to be achieved by establishing GP Operating Company, which will be an independent entity. Through merging and rightsizing the different businesses, the German manufacturer expects to save €200m (£178.33m) and a further €100m (£89.16m) from the new regional setup.
The remaining €200m (£178.33m) in cost savings is expected to be achieved by streamlining support functions, said the company.
Germany to bear the brunt of Siemens job cuts
Germany alone will see nearly 1,400 jobs slashed. The company will start consultations with the relevant employee representatives before executing the planned steps, which include requalification programs.
The new measures are said to mainly address the EPC projects business and also the power transmission products and systems business. The company said that the measures are needed for the EPC projects business to reduce costs, adjust to the decreasing numbers of major projects and to help it strike the right balance between volume and margin.
For the power transmission products business, the company said that the markets for transformers and switching technology are burdened by surplus capacities, thereby needing measures for streamlining cost structures and capacities at all locations to preserve their competitiveness.
Siemens gas and power CEO Lisa Davis said: “Our new Gas and Power Operating Company setup has created synergies that better enable our company to deliver competitive performance in the midst of structural change in our industry.
“The planned measures will help us create more opportunity for growth and the security that comes from being a competitive player in the energy market.”