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Siemens Confirms Offshoring Plan

Siemens AG (NYSE: SI; Frankfurt: SIE) is planning to relocate thousands of jobs outside its German homeland in an effort to reduce labor costs, and its telecom units are set to be affected.

The future of about 5,000 jobs is being weighed as Siemens feels the pinch from competitors that already have manufacturing facilities in countries and regions with lower average earnings, such as India, China, and Eastern Europe.

A spokesman says discussions are underway with employee representatives, and that jobs at Siemens Information and Communications Networks Inc. and Siemens Information and Communication Mobile Group could be affected. Final decisions are expected to be reached within weeks.

Of the estimated 5,000 posts under consideration, about 2,500 are being considered for relocation, while the rest are set to be affected by the consolidation of facilities in Germany and long-term cost-cutting measures (also known as job cuts).

Cost-cutting measures are unlikely to include outsourcing manufacturing, to judge from remarks made recently by Thomas Ganswindt, group president of Siemens ICN. "I'm convinced that I can do better than the contract manufacturers. I view them as my competitors," Ganswindt said at a meeting of analysts in February.

Only last week, Siemens hit out at suggestions that it was to relocate 10,000 jobs and issued a press release quoting CEO Heinrich Pierer as saying: "We will not stand idly by while one job after another is lost to Germany for competitive reasons. We are therefore fighting to keep the jobs in question."

Siemens currently employs about 170,000 in Germany.

Today's news follows the unveiling of a similar strategy at Infineon Technologies AG (NYSE/Frankfurt: IFX), which contributed to the recent departure of its CEO, Ulrich Schumacher.

The notion of major employers relocating jobs outside Germany has become a political hot potato, with the country's Chancellor Gerhard Schröder reportedly describing the tactic as unpatriotic.

— Ray Le Maistre, International Editor, Boardwatch

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whyiswhy 12/5/2012 | 2:07:49 AM
re: Siemens Confirms Offshoring Plan This very issue toppled the conservatives in France. It will do the same in Germany. It will do the same in the US.

JMHO

-Why
eyesright 12/5/2012 | 2:07:47 AM
re: Siemens Confirms Offshoring Plan I guess being unprofitable and going out of business is "patriotic"?

Problem is the euro unions and socialist work rules. Reform them, and keep jobs.
whyiswhy 12/5/2012 | 2:07:47 AM
re: Siemens Confirms Offshoring Plan Siemens is a long ways from being un-profitable. And they "knew the job was dangerous when they took it" i.e. operating in a country that protects its workers equal to its companies.

Problem is: anarchistic capitalists.

Latest US jobs report: un-employment rises (again).
truelight 12/5/2012 | 2:07:40 AM
re: Siemens Confirms Offshoring Plan Outsourcing is not the way to build a company thatwill last. It is the way if the quick buck.

Time will tell when we look back.
technoboy 12/5/2012 | 2:07:30 AM
re: Siemens Confirms Offshoring Plan truelight wrote: Outsourcing is not the way to build a company thatwill last. It is the way if the quick buck.

Time will tell when we look back.

The labor situation in Germany and other European countries makes the U.S look phenomonal. Given the unions will not even budge from the 37 hour work week to a 40 hour week, moving these jobs to other countries is almost automatic. For a company like Siemens (and alcatel, ericsson, and nokia for that matter), the productivity must rise per employee in order to maintain and grow profitably. It is a much different situation than in the U.S. where productivity has increased substantially in the last few years yet off-shoring continues to move forward.
nanobaud 12/5/2012 | 2:07:28 AM
re: Siemens Confirms Offshoring Plan "Outsourcing is not the way to build a company that will last. It is the way if the quick buck."

Taking that a step further, any industry that requires slave labor to be competitive is already bankrupt. The fact that the 'slaves' are not so mistreated because the local systems and currency controls cover presently subsidize their basic needs goes a long ways towards easing the conscience's of the executives driving the move (goodness knows we wouldn't want them getting stressed-out by it), but that will quickly evaporate once it is seen that consumers don't want to pay even for the slave-produced goods and in fact may be willing to not buy them at all (gasp!).

I've always believed that in the far-far future, goods will be plentiful and free. People would be employed in services, arts, design of new goods, etc., but manufacturing would not provide any significant employment. Perhaps that day is much nearer than we imagined and this is how it starts.

nBd
technoboy 12/5/2012 | 2:07:26 AM
re: Siemens Confirms Offshoring Plan nanobud wrote:I've always believed that in the far-far future, goods will be plentiful and free. People would be employed in services, arts, design of new goods, etc., but manufacturing would not provide any significant employment. Perhaps that day is much nearer than we imagined and this is how it starts.

Someone or something to has to make those plentiful goods. This is not about making slave labor. This is about remaining competitive and appeasing the wall street gods. If people dont buy the goods than everyone will suffer. None of these companies are bankrupt
whyiswhy 12/5/2012 | 2:07:26 AM
re: Siemens Confirms Offshoring Plan "Given the unions will not even budge from the 37 hour work week to a 40 hour week, moving these jobs to other countries is almost automatic."

Wha? I mean, I buy the premise, but the conclusion is going the wrong way.

Much more likely the government will get ousted unless they promise to defend the jobs and benefits they have. This just happened in France. Conservatives out, socialists it.

If you watch DW-TV (German TV via satellite), you will see it is about to happen in Germany too.

That does not mean offshoring. It means the opposite. It's true, the unions may have to offer some concessions like going back to 40 hours. But you can bet your bottom dollar there will be no offshoring....at least up front.

The way the companies will get around, or try to get around the issue will be numerous. In any event, there is plenty of domestic business to keep the EU busy.

-Why
Indy_lite 12/5/2012 | 2:07:23 AM
re: Siemens Confirms Offshoring Plan I've always believed that in the far-far future, goods will be plentiful and free. People would be employed in services, arts, design of new goods, etc., but manufacturing would not provide any significant employment. Perhaps that day is much nearer than we imagined and this is how it starts.


No way. The most expensive item your life is house, and guess what, the more advanced an area is, the more expensive the price of a house becomes - not just the absolute value, also as proportion of your income. This is true in New York, San Jose, Boston, as compared to less developed areas such as Montana.

Does this tell you anything ? goods will NEVER be plentiful and free. The world population is going up, the resource is going down, goods for free ?
Jo-bar 12/5/2012 | 2:07:20 AM
re: Siemens Confirms Offshoring Plan I guess most of the peaople working at Siemens Fab-¦s in Germany don-¦t have 37 hours per week. They have 35 hours. The real issue seems to be that H. von Pierer was absolutely not happy about the latest tariff. To outsource that amount of jobs is another base for next negotiations with the labour-unions as a profit growing company.

Servus,

Jo-bar
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