Siemens to cut 6,900 jobs amid union resistance | Business| Economy and finance news from a German perspective | DW | 16.11.2017
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Business

Siemens to cut 6,900 jobs amid union resistance

Labor unions have reacted angrily to layoff plans unveiled by the management of the German conglomerate, which aims to cut costs in its energy business to adjust to the disruption sweeping through the industry.

Following closed-door talks with workers on Thursday, the Munich-based industrial group announced that it was planning to cut 6,900 jobs globally as part of a larger restructuring of its power division. About half of the announced job cuts would be in Germany, where the company said it planned to shut down facilities in the cities of Görlitz and Leipzig. A third production site in the town of Erfurt could be sold off, it added.

"The power generation industry is experiencing disruption of unprecedented scope and speed," managing board member Lisa Davis said in a statement, adding that renewable energy was putting other forms of power generation "under increasing pressure."

Siemens said global demand for large gas turbines (generating more than 100 megawatts) had fallen drastically and was expected to level out at around 110 turbines a year. By contrast, the technical manufacturing capacity of all producers worldwide was estimated at around 400 turbines.

Chief executive Joe Kaeser warned last week that "painful cuts" were necessary, saying Siemens must "tackle structural issues in some individual businesses." He added that he would try to "soften the blow" by reassigning or retraining workers.

Read more: No time to rest as Siemens prepares for the future

Siemens's traditional business model of providing technology and services for the electricity industry has changed dramatically in the era of renewable energy. The costs of solar and wind power have plunged, making them cheaper than fossil fuel generation. The result is that the market for the company's gas turbines has become increasingly tight, forcing Siemens to drive down costs in its core business.

As Siemens is looking to cut thousands of jobs, the conglomerate as a whole nevertheless has reported 11 percent growth in net profit for 2016, to €6.2 billion ($7.3 billion).

Profits before employees

Quite naturally, workers representatives were angry after the announcement and vowed to resist any layoffs. Germany's powerful IG Metall engineering union has accused Siemens of being "irresponsible" by showing thousands of employees the door while the group as a whole is turning in healthy profits. They also slammed Siemens for failing to consult closely with workers, as was the norm at big German conglomerates for decades.

"Siemens must gradually ask itself, do we want to remain an integrated technology group, or is it only about pleasing shareholders?" Jürgen Wechsler, head of the powerful IG Metall metalworkers' union in Bavaria, told the German news agency DPA.

And Jürgen Kerner, IG Metall board member, described the planned job cuts as a "widely mounted attack on the employees," saying that job reductions of this size were "completely unacceptable given the excellent total situation of the company."

Read more: Siemens, Alstom merge rail businesses to create 'European champion'

The protest comes after Siemens — whose products range from trains to wind turbines to medical equipment — has already announced some 6,000 job cuts in its wind power unit. The company said falling prices in major markets like India and the US bore much of the blame for the woes at the division, which merged with Spain's Gamesa earlier this year.

In 2013, the group also laid off some 15,000 people, partly as a consequence of Germany's decision to abandon nuclear energy in favor of renewables. Under CEO Kaeser, whole divisions have been abandoned or sold off, including household appliances, telecoms networks and nuclear and solar energy.

The eastern dimension

Three of the sites that are on the Siemens hit-list are in Germany's eastern federal states. Outgoing German economy minister Brigitte Zypries has warned Siemens against closing plants in the poorer eastern half of the country.

In a letter to CEO Kaeser, obtained by German tabloid Bildzeitung, she said that the move "could stoke the discontent and the doubts" that had helped the far-right AfD (Alternative for Germany) party into parliament with 12.6 percent of the vote in September's general election.

uhe/msd (AFP, dpa, Reuters)

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