Memo: Siemens ‘Committed’ to Gas Turbines Unit

Siemens still hasn’t commented on reports it could be looking to sell its gas turbine business. But the managing board member responsible for the company’s power and gas division reportedly issued a memo to staff in the wake of those reports, saying Siemens remains committed to its long-time flagship product.

Bloomberg, which on June 13 first reported the company could shed its gas turbines, on June 15 reported a memo was sent by managing board member Lisa Davis, citing what it called “a person familiar with the document.” The Bloomberg report quoted the memo as saying “There is no truth to the rumors” about a possible sale of the turbine unit. “Siemens is committed to the power generation business for the long term! And of course this is also true for our large gas turbines.”

Bloomberg said the memo, which it claims to have seen, contained instructions on how staff should respond to media inquiries about the future of Siemens’ turbine business. The text quoted by Bloomberg was under a heading “Background guidance for journalists,” it said.

“Overall, the market environment for power and gas remains tough,” the memo reportedly said. “This requires [us] to stay focused on reducing our capacities and cost. We have a clear path in place and are dealing with the challenges in a forthright and urgent manner.”

Bloomberg’s report, while noting the possibility of a sale, also said Siemens could keep the unit and try to weather the current global slowdown in demand for gas turbines. The company, along with long-time competitor General Electric, has fallen behind Mitsubishi Hitachi Power Systems in global orders for gas turbines.

Siemens has told media outlets, including POWER, that it does not comment on rumors, nor on its discussions with individual customers. Siemens CEO Joe Kaeser on June 19, speaking in Zurich, Switzerland, characterized reports the company was contemplating the sale of its gas turbines unit as “media speculation.”

Bloomberg on June 15 reported that top executives at Siemens said Davis’ memo is her opinion, and not the thinking of senior management, citing “a person familiar with the matter.” Bloomberg said that could “reflect a split within the German engineering firm’s top brass over the [turbine] unit’s future.”

Heather Eason, CEO of South Carolina-based Select Power Systems and a former director of engineering at Siemens, told POWER in an email: “As sales continue to fall and the [turbine] market shrinks each year, it is better to sell now. This will hopefully reduce the impact on employees and retain value for shareholders.” Eason said, “As a former employee of Siemens Energy Management division, I can tell you that Siemens cares about their employees and hated to cut jobs and close some factories in the power and gas division.”

Siemens in November 2017 said it would cut 6,900 jobs, most of them in the power and gas division, in an effort to reduce costs. The company has said the final number of positions being eliminated is still being negotiated with its labor unions.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).