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Business

Shift Change at Siemens

The leadership of Germany's largest private employer is changing on Thursday: Siemens CEO Heinrich von Pierer hands over the reins to Klaus Kleinfeld, who has to keep the giant competitive on a global level.

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An old company's new face: Siemens CEO Klaus Kleinfeld

After 12 years at the helm of the Munich-based company, 64-year-old Pierer is vacating his post to move across the hallway as head of Siemens' supervisory board.

He is leaving his successor, who received praise for streamlining the company's US operations, with the task of making some difficult decisions to keep Siemens -- a concern that produces everything from light bulbs to high speed trains to nuclear plants and employs some 430,000 people -- competitive.

Siemens Hauptsitz in München

Siemens headquarters in downtown Munich

Financial analysts credit Pierer with setting clear goals for each of Siemens' 13 divisions and generating a profit of €3.4 billion ($4.43 billion) with revenues of €75 billion in 2004.

But all is not well, according to some.

"Many divisions remain far below the goals that have been set," said Willi Bender of the German Investors' Protection Association (SdK), according to AFP news service. "It's time to make some decisions."

Mobile phone division is problem child

While the recall of Cambino trams was costly, Siemens' mobile phone division is the current problem child: It accrued losses of €152 million last year. Accenture management consultants have criticized a slow reaction to new trends and a weak branding compared to other global players.

Galerie Top-Manager Heinrich von Pierer

Heinrich von Pierer

Pierer (photo) failed to make a final decision about the division's future, mulling everything from reorganizing to finding a partner to selling or shutting down the mobile phone sector altogether. He made it clear that a swift decision's unlikely now that Kleinfeld is calling the shots.

"It would be wrong to expect a decision at the annual meeting on Thursday," Pierer told Frankfurter Allgemeine Zeitung, adding that he did not think closing the division would be a good idea after all, as a lot of value would be lost.

Extended work weeks

Pierer also said that the 158-year-old company had to think about its employees, whose jobs would be threatened in case of a closure. Last June, workers in two plants in North Rhine-Westphalia had agreed to work 40 instead of 35 hours per week without more pay in order to save their jobs.

1891: Einführung des 8,5-Stunden-Normalarbeitstages

Siemens introduced 8.5-hour work days in 1891

This week, 8,000 Siemens employees in Germany also agreed to work 37 instead of 35 hours per week in exchange for a guarantee by company officials to keep plants open at least until 2009.

Kleinfeld hasn't given any indication whether -- and how quickly -- he intends to move on dealing with the mobile phone business. But the 47-year-old is not known to hesitate for long. He swiftly fixed Siemens' US operations between 2001 and 2003, turning losses of more than $500 million into a profit of the same amount.

Communications master

While 10,000 people lost their jobs in the process, experts believe that Kleinfeld won't apply this solution to the company's German operations, where trade unions have stronger bargaining power.

Galerie Cebit 2004 Gerhard Schröder Penphone

German Chancellor Gerhard Schröder already seems convinced of the advantages of Siemens mobile phones

US co-workers remember Kleinfeld as a master of communications and the marathon runner already gave media representatives a taste of his skills last November. When a journalist asked Kleinfeld about his plans to catch up with mobile phone competitor Nokia and waved around his own phone made by the Finnish company, the Siemens executive grabbed it and dropped it in a glass filled with water, offering two waterproof Siemens models as compensation.

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