x
Optical/IP

Siemens Cuts Another 1,000 Jobs

Siemens Communications Group is cutting a further 1,000 jobs as competition continues to bite and the vendor's financials fail to improve.

The vendor had already reduced its workforce by about 1,500 in the six months to the end of March, taking its total staff level down to about 54,500 worldwide. Com's parent, Siemens AG (NYSE: SI; Frankfurt: SIE), employs around 470,000 people globally.

In a company statement emailed to Light Reading, Siemens says that "the continuing technological change in recent years led to the elimination of production, assembly and maintenance jobs. This process is continuing in 2006 and will do so in the foreseeable future. While business growth in the network and enterprise customer segments has been satisfactory, it has not been enough to compensate for the shortfall in activity."

As a result, "Com is now forced to make further personnel cutbacks in administration, sales and development. These job reductions are unavoidable since Siemens must achieve cost positions that are in line with international competition. After carefully deliberating the necessary personnel measures, management and labor representatives decided to appoint a delegation whose job will be to draw up a plan to reconcile the interests of approximately 1,000 employees."

The impact of changes in the telecom market, including the presence of new competitors such as Huawei Technologies Co. Ltd. , have been causing Siemens problems for some time now. (See Siemens Spawns a Problem Child.)

Just how hard the competition is hitting Siemens was shown again in last week's quarterly financial report from Siemens AG (NYSE: SI; Frankfurt: SIE). The Communications Group business unit made just €27 million operating profit from revenues of €3.4 billion. That gave it an operating margin of less than 1 percent in the second quarter of fiscal 2006, a long way short of its target for the end of fiscal 2007 of between 8 percent and 11 percent. (See Siemens Reports Q2.)

Dealing with the job cuts, and finding a way to boost margins, is now the responsibility of the Com Group's new president Eduardo Montes Pérez, who took over yesterday (May 1). (See Siemens Shuffles Top Deck.)

News of the job cuts will add fuel to the speculation that Siemens is preparing to offload the Communications Group and exit the tough telecom sector, though finding a buyer that will take more than 50,000 staff and the fixed and enterprise product lines, as well as the profitable mobile networks business, might be tough. (See Siemens Comm Has M&A Callers and Sources: Lucent, Nokia in Play for Siemens.)

The industry, though, is expecting further vendor consolidation following the proposed marriage between Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU), with the Siemens unit regarded as a key player in that process. (See Poll: Merging Is Surging, Nortel CEO: We're Ready to Deal, and Alcatel/Lucent: The Domino Factor.)

— Ray Le Maistre, International News Editor, Light Reading

alchemy 12/5/2012 | 3:54:30 AM
re: Siemens Cuts Another 1,000 Jobs Ral le Maistre writes:
There's a feeling from people I talk to in the industry that it will be costly in terms of time, effort and money to slim down the continental European-based headcount of vendors such as Siemens and Alcatel post-merger. WIth Siemens still having such a large number of staff - more than 50,000 - that's a tough pill for any partner to swallow. Cutting back 1,000 staff will make only an incremental difference to the cost base.

To stay on-topic rather than digress onto an Indian/Asian outsource tangent....

Nobody is going to be buying Siemens COM when they still have tens of thousands of employees to axe in a post-sale restructuring where the acquiring company has to pay the extremely expensive costs of terminating European employees. 1,000 just ain't gonna do it. Anyone buying this beast is going to have to slam shut many business units to get it profitable and they're going to have to whack huge amounts of deadwood. I don't see anyone stepping into that sink hole.

Maybe Siemens can sell off the profitable bits of COM and create enough cash to be able to afford to axe the rest themselves?
OldPOTS 12/5/2012 | 3:54:46 AM
re: Siemens Cuts Another 1,000 Jobs A couple of years ago I read an interesting article in a business section of the local newspaper (DMN) that stated that the Japanese had moved back their development/architecting new products to the US and then after this exercise they moved the continuing development/ feature additions back to Japan with manufacturing/engineering in to cheaper labor countries. Who will be the next cheap labor market, Sudan?

As globalization evolves (slowly) this pattern makes sense to me as a retired program manager. I expect globalization to take several (maybe even tens) decades to flow out throughout the world. By then we may even have colonies in space.

Then where the new products be developed/architected?
IGÇÖd like to put my retirement money on that!

OP
brahmos 12/5/2012 | 3:54:47 AM
re: Siemens Cuts Another 1,000 Jobs highly experienced engineers wont magically appear in asia. only a limited no of such asians working in US want to move back and cos have to address the issue such people cost 50% of the US salary even in bangalore or shenzhen, right now what I see is cos focussing on sucking up "cheap but bright" freshers and not too willing to pay top $$ to attract back the best available. well its a no-can-do for new products if the top of pyramid is so slim -- they can only sustain older products or develop incremental new features.
of those who have worked their entire careers locally one sees most of them becoming managers / wanting & jockeying to become managers long before they hit the 10 yr exp level - good enough to run sustaining shops & high degree of social and political skillsets but not more.

asian cos must also give their engineering staff a chance to interact and work with customers so that solution architects and subject matter experts develop - not just "people who read the latest ietf drafts" (need leaders , not followers).

atleast china has a couple of capable looking cos in zte and huawei...indians are a little too good in 'people management' and culturally somewhat power hungry to pass up the manager's corner cabin.

jmht.
jacky lee 12/5/2012 | 3:54:48 AM
re: Siemens Cuts Another 1,000 Jobs The companys in the industry must cut the cost to defense the competition form the asia.so,the advisable way to survive is transfering their staffs to asia for low cost or getting more competive companys relative in IP region in asia.
digits 12/5/2012 | 3:55:17 AM
re: Siemens Cuts Another 1,000 Jobs There's a feeling from people I talk to in the industry that it will be costly in terms of time, effort and money to slim down the continental European-based headcount of vendors such as Siemens and Alcatel post-merger. WIth Siemens still having such a large number of staff - more than 50,000 - that's a tough pill for any partner to swallow. Cutting back 1,000 staff will make only an incremental difference to the cost base.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE