World from Berlin: 'An Icon of German Industry Is Wobbling'

Peter Löscher (R), the outgoing CEO of Siemens, and Gerhard Cromme (L), the supervisory board chief. Zoom
REUTERS

Peter Löscher (R), the outgoing CEO of Siemens, and Gerhard Cromme (L), the supervisory board chief.

Siemens, a pillar of Germany's proud industrial reputation, has fired its CEO Peter Löscher for presiding over a series of mishaps and failing to meet earnings goals. German commentators welcome his departure and say chief supervisor Gerhard Cromme should go too.

German industrial giant Siemens has plunged into management turmoil triggered by a profit warning last week that has led to the removal of its CEO Peter Löscher. A supervisory meeting hastily arranged on Saturday decided to oust him, and the company is expected to appoint Chief Financial Officer Joe Kaeser as his successor at a meeting on Wednesday.

But Löscher won't leave without a fight. According to a report in the newspaper Süddeutsche Zeitung on Monday, Löscher will only step down voluntarily if the chairman of the supervisory board, Gerhard Cromme, quits too. Otherwise, Löscher will insist on a vote and try to prevent the two-thirds majority necessary for the supervisory board to remove him, the paper reported, citing unnamed sources on the supervisory board.

But the sources added that Löscher has no chance of remaining in his job. Löscher, sources say, blames Cromme for plotting to remove him to distract attention from his own failings. Cromme was forced to step down as supervisory board chairman of steelmaker ThyssenKrupp in March for failing to prevent the company from making billions of euros in losses.

Cromme, reported the Süddeutsche, now wants to avoid being blamed for failing to take timely action at Siemens, which has encountered a number of major problems including the delayed delivery of 16 urgently needed high-speed ICE trains to rail operator Deutsche Bahn, and difficulties connecting North Sea wind parks to the electricity grid. The widely diversified group makes products ranging from gas turbines to high-speed trains and hearing aids.

Löscher became CEO in 2007 as the first company outsider to take the helm at Siemens, and won praise for leading the company out of a major bribery scandal. His contract was extended by five years in 2012.

Since then, criticism of Löscher has mounted. He was accused of misjudging market developments with his goal of expanding sales by a third to €100 billion, and the company is suffering from a decline in global demand. In addition, Siemens' earnings have been hit by one-time charges related to project delays and other issues.

German media commentators write on Monday that Löscher deserves praise for cleaning up the company after its corruption scandal, but say he had to go because he failed to define a vision for the group and presided over mistakes that were putting its technological reputation at risk. Several say supervisory board chief Cromme should also go.

Center-left Süddeutsche Zeitung writes:

"The challenges facing this global company could be likened to those of the aging industrial nation. Just as Germany the export giant once had the world at its feet, Siemens made lucrative business deals in almost 200 countries. But today, emerging countries are pushing their way into the markets and their companies are putting Siemens under pressure. In this wild world, the company needs the best engineers, salesmen and managers -- it needs an executive at the helm with nerves of steel and an irrepressible will, a leader. Peter Löscher wanted to be that. He successfully trimmed down the company and boosted efficiency. But this success didn't last because it was purely driven by costs and figures, at the expense of the workforce. And because there was no discernible vision behind it. In short, it was because he didn't take the people along with him."

Conservative Frankfurter Allgemeine Zeitung writes:

"An icon of German industry is wobbling. It's been evident for a long time that one of Germany's biggest companies isn't making progress and that its position in the world markets is in danger. Siemens used to be the calling card for technology 'made in Germany,' for industrial plants, energy-saying power stations, wind turbines, trains and computer tomography. But the company is losing its profitability and competitiveness, and its innovativeness in particular -- one of the virtues of the German economy. The erosion was recognizable. But the management board under Peter Löscher and the supervisory board with Gerhard Cromme as chief supervisor took no action."

"It's not surprising that the goals of 'Siemens 2014' have been abandoned -- and that Löscher is leaving. His Chief Financial Officer Joe Kaeser is now supposed to put things right -- someone who is partly responsible for the misery. But he always managed to walk the tightrope between being both loyal to Löscher and an opponent to him. However, he could manage to restore Siemens to its old glory. He knows how to motivate the workforce, he knows the company inside out and he's highly regarded by investors."

Conservative Die Welt writes:

"It's praiseworthy that Peter Löscher is being replaced as chief executive at Siemens. His record is disastrous. The company has lost its aura of infallibility. That applies to its technology: high-speed trains aren't completed and there are quality problems with wind turbines. But it also applies to the management: Löscher's corporate targets such as the €100 billion sales target seemed alarmingly off-base. But the circumstances surrounding his dismissal suggest that the Austrian alone isn't the problem. It's not only Löscher who lacks the qualification to lead a construct as complex as the Siemens group with its 70,000 employees, the rest of the leadership has behaved like a squad of trainees. "

Business daily Handelsblatt writes:

"The removal of the Austrian manager was unavoidable. First, the company would otherwise never have settled down and the tortuous in-fighting would have continued. Second, Löscher really did make mistakes in his second term, and showed weak leadership. He let the reins slip and he didn't develop any visions for the coming years."

But the current crisis at Siemens isn't just Löscher's fault, Handelsblatt argues. In his first term as CEO, between 2007 and 2012, Löscher cleaned up the company after it had been shaken by Germany's biggest bribery scandal: "His mantra 'Only clean business deals' seemed credible. The old corruption scandal has been consigned to the history books thanks to this clear line, and around the world Siemens is regarded as a model when it comes to fighting corruption."

"But since then, the mistakes and setbacks have been piling up -- and that's partly down to Löscher's shortcomings. He was constantly travelling to clinch an export deal and always in touch with governments -- he was the company's chief lobbyist but he wasn't the big playmaker the team had hoped for. He never worked himself deeply enough into issues. The chief executive relied on his sector heads and left a lot of responsibilities up to them."

"The entire management board went along with Löscher's strategy. And the supervisory board with Cromme signed off on bad decisions, gave the nod to bad acquisitions and extended Löscher's contract even though he hadn't presented a clear strategy for the future. Now that Löscher's gone, the debate surrounding Cromme will be reignited. Rightly so. Siemens needs a strong new chief executive and a strong supervisory board chairman."

-- David Crossland

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No wonder 08/30/2013
Right on. Great articles. The system that relies on old blood and spends all energy on useless internal turf walls are incredible. It is not mr. Loescher's fault. It is the siemens system and internal bureacacy that failed him. True, he should have kept a tighter leash on the sector heads and fire those asses that failed to perform.
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