Siemens on June 18 said it would cut 2,700 jobs from its Gas and Power division, on top of 10,400 positions the German engineering firm last month said it would jettison as part of cost-cutting measures.
The Siemens’ announcement comes one day after U.S.-based rival GE said it would cut 450 jobs at two of its manufacturing sites in Switzerland.
Siemens in May said it would spin off and give up its majority stake in its Gas and Power unit, which includes its power generation, transmission, oil and gas, and related services businesses. The company in that announcement, which it said is part of its Vision 2020+ strategy, also said it was transferring its 59% stake in Siemens Gamesa Renewable Energy (SGRE) to the new business.
Investors have cheered Siemens’ restructuring, with the company’s stock gaining about 9% this year.
Lisa Davis, head of the Gas and Power division, in a statement Tuesday said, “The planned measures will help us create more opportunity for growth and the security that comes from being a competitive player in the energy market.” The cuts represent about 4% of the Gas and Power workforce. The company said they will occur over several years, primarily at engineering, procurement, and construction projects, as well as power transmission products.
Most Cuts in Germany
Siemens said about 1,400 of the lost jobs will be from operations in Germany. The company had 379,000 employees worldwide at the end of 2018, including about 44,000 in the Gas and Power unit. The company in its May announcement said its restructuring will create 25,000 new jobs in digital industries and smart infrastructure, including electric mobility, energy storage, and smart buildings, though it said job cuts in other divisions would reduce the net number of new jobs to about 10,000. The company has said it wants to cut about $2.5 billion in costs by 2023.
The company on Tuesday said the Gas and Power business needs to trim about €500 million ($559 million) to improve competitiveness. It said restructuring the business would save €200 million, cutting support functions would save €200 million, and €100 million in savings could be recognized through a new regional business structure. Siemens said the job cuts will be done after consultations with worker representatives, and happen in what it called a “socially responsible” way.
The IG Metall union in a statement Tuesday said the decision to cut jobs “lacked imagination.” The metalworkers’ union is calling for Siemens to invest more in employee training.
Siemens’ CEO Joe Kaeser in the May announcement said the company’s restructuring “will be positive for all participants and enable long-term value creation for customers, employees and shareholders.” Siemens has signed major power deals in recent years, including a $15 billion deal in Iraq, even amid the company’s struggles in the power market, business conditions that also have challenged rival turbine-makers GE and Mitsubishi Hitachi Power Systems.
The Gas and Power division announced 6,900 job cuts in 2017 owing to a lack of demand for the company’s gas turbines. Kaeser has said he does not expect the turbine market to improve in the next few years.
GE Cutting More Jobs in Switzerland
GE, meanwhile, on June 17 said it plans to cut about 450 jobs at two of its Swiss manufacturing sites to address “challenges on the global energy markets,” the company said in a news release. The company said the reductions will occur at its facilities in Birr and Baden. It said the plants will stay open.
GE on Monday said the latest job cuts are separate from 1,200 cuts announced last year for its Swiss operations centered on power generation. The company has just more than 3,000 workers in Switzerland today.
The company earlier this year announced it would cut 468 jobs at its units in France.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).