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Restructuring at Siemens

Workers Fear 15,000 Job Cuts Planned

The massive corruption scandal at Siemens may have a greater impact on employees than previously expected. According to new reports, as many as 15,000 jobs may soon be cut at the German multinational.

Scandal-plagued German multinational Siemens is reportedly preparing to cut 15,000 jobs -- a far higher number than previously mentioned in the engineering and electronic giant's restructuring plans. Citing unnamed employee-representative sources, German financial daily Handelsblatt reported Wednesday that the company was planning large cuts in its sales and administrative divisions.

A Siemens official refused to comment on the report on Wednesday evening, saying only: "We are planning to make a statement soon."

Werner Neugebauer, regional director of the IG Metall union in the state of Bavaria where Siemens has its headquarters, said he had not been provided with any exact numbers on the planned job cuts. The company's works council, consisting of employee-elected representatives, has submitted 200 questions about the restructuring plans to company executives. "Company management is working on" the answers, he said.

Neugebauer added that the works council has engaged an attorney in order to "legally demand up-to-date, comprehensive and complete information" from Siemens.

Radical Reorganization

Siemens CEO Peter Löscher recently announced that the company planned to cut its sales and administrative costs by 10 percent by 2010 in order to save €1.2 billion ($1.9 billion). He also made clear that those savings would include job cuts.

This weekend, the Frankfurter Allgemeine Sonntagszeitung newspaper quoted union sources saying 10,000 jobs were thought to be at risk. Industry sources say the company is expected to make an official announcement about its savings plan and associated job cuts in July.

In Germany alone, according to the daily Die Welt, 3,000 to 4,000 jobs could be at risk. Most of the cuts are expected to come in divisions that Löscher believes have become superfluous as a result of the company's restructuring.

Under Löscher's leadership, the company has undergone a radical reorganization. Executive committees have been pared down and the company's energy, health and industrial divisions have been merged, including 15 attached business units. The next step is expected to be related personnel changes.

Löscher recently said cuts would not be restricted to factory jobs and that marketing and administrative positions were also vulnerable. The company employs 435,000 workers worldwide, about one-third based in Germany.

Siemens has been plagued since 2006 by the biggest corruption scandal in German corporate history. The company discovered that its employees had used slush funds to bribe clients and win contracts to the tune of €1.3 billion ($1.9 billion). The scandal forced the resignation of former Siemens CEO Klaus Kleinfeld and former Chairman Heinrich von Pierer, though both have denied any wrongdoing. Munich prosecutors are currently conducting an administrative probe against von Pierer over claims that he did not prevent misconduct at the company.

dsl/dpa/ddp