Siemens Cuts IT Services Jobs

MUNICH -- Siemens defined the "Fit4More" program in April 2005 with the goal to reach all margin targets agreed-upon and to put the company on course of sustainable profitable growth. Action must be taken, in particular, at the three loss-generating Groups: Siemens Business Services, Communications (Com) and Logistics and Assembly Systems (L&A). Following intensive discussions and further detailed analyses, the Corporate Executive Committee has decided on comprehensive measures to get these businesses back on the successful course of the other Siemens Groups.

Siemens Business Services is accelerating its operational reorientation. Its product-related IT services (PRS) is to become more flexible and competitive. Early in the year, a major share of this activity in Germany was sold to the IT service provider a&o. As announced late in July, ordinary PC maintenance services in other countries will also be outsourced to partners. This service, however, will be integrated into SBS overall service offering upon request of customers.

In addition, SBS is initiating an extensive program to improve its competitiveness. SBS will cut its costs worldwide by €1.5 billion by fiscal 2007 to pave the way for further healthy growth. Along with making substantial cuts in asset and process costs, SBS must reduce overcapacities. This makes the phase-out of 2,400 jobs in Germany over the next two years unavoidable. Talks with employee representatives in this regard have been initiated.

Dr. Christoph Kollatz (44) will be taking over as Group President of SBS. Kollatz previously headed the Intelligent Traffic Systems Division at the Industrial Solutions and Services Group, and, prior to that, the top+ program for Siemens AG. The current Group President of SBS, Dr. Adrian v. Hammerstein (52), is stepping down at his own request. Michael Schulz-Drost (51) has been named Chief Financial Officer at SBS. Schulz-Drost was previously head of business administration at the Large Drives Division in the Automation and Drives Group. He succeeds Bernd Regendantz (55), who among other things will push the strategic reorientation of the PRS activities from Siemens headquarters.

The Enterprise Networks (EN) business in the Communications Group has been facing major technological and structural changes in recent years. Siemens has enjoyed great market success with innovative communications solutions to boost the productivity of its customers’ business processes. These telephone systems, which are easier to install and service, are being well received by customers. However, these changes – combined with the weak domestic economy and the current reluctance of small- and medium-sized businesses in particular to invest in new, Internet-based communications solutions (Voice over IP) – are forcing EN to make adjustments. Above all, the sales and service functions of EN have to be reoriented to the needs of corporate customer. This will require personnel adjustments, and the company is holding talks with employee representatives and IG Metall in this regard.

Action is being taken at the Logistics and Assembly Systems (L&A) as was reported late in August. The Distribution and Industry Division (DI) – which had slipped into the red – and its associated products and customer service will be spun off into a separate company – Dematic GmbH. In this form, the new company can more flexible respond to market needs and enter into country specific partnerships. The new unit, with around 5,000 employees, will be launched on January 1, 2006. In the future it will be reported as "Other operating activities." These measures will burden earnings in the current and next fiscal year.

The L&A Group will be dissolved as of October 1, 2005. The successful Postal Automation and Airport Logistics Divisions will be allocated to the Industrial Solutions and Services Group (I&S). The Electronic Assembly Systems Division, which is also successful and produces pick & place machines for the electronics industry, will become part of the Automation and Drives Group (A&D). L&A Group President Johann Löttner (56) will coordinate the strategic reorientation of Dematic GmbH from company headquarters. Dr. Hans-Jörg Grundmann (50) and Dr. Peter Drexel (61) will join and strengthen the boards of I&S and A&D, respectively. Employees currently working at L&A headquarters will be offered positions, wherever possible, in other Siemens Groups.

Dr. Klaus Kleinfeld, President and CEO of Siemens AG, stressed that the company’s goal is to quickly put all businesses on a course of profitable growth. This is already the case with the majority of the Groups. "We are on track with Fit4More. We do what needs to be done to achieve our earnings targets. This will ensure that we remain a reliable and top-performing partner. Our customer offerings will thus be even more competitive, which is the basis for our company’s success and for the future security of jobs at Siemens. Only successful businesses can secure and create jobs."

In a separate release:

MUNICH -- Siemens, its Central Works Council and IG Metall have reached an agreement in high-ranked talks on a package of measures to secure the competitiveness of service, sales and marketing for the enterprise business of Siemens Communications in Germany. “With this agreement, we have found the basis for socially compatible personnel adjustments to the changed business conditions in this market segment,” said Jürgen Radomski, head of Corporate Personnel at Siemens AG. “All sides agree that major technology changes in telephone systems for enterprise customers require urgent action.” Layoffs should be avoided.

To cushion the difficult cost and capacity situation, a first step will be taken, primarily in the service sector, to apply a special tariff agreement in order to save as many jobs as possible. This tariff agreement allows the reduction of work time to 30 hours a week, from 35.8 hours. Detailed talks on this point will now begin.

In addition, Siemens will offer employees the possibility of transferring into a company-owned placement and employment firm in order to find a new job within or outside Siemens. Siemens has already successfully used this concept of a so-called “beE” (organizationally independent unit) in other Units. Moreover, the company will also offer to hold talks with employees about severance packages or part-time preretirement schemes.

Siemens, its Central Works Council and IG Metall agree that the measures for improving the competitiveness of the enterprise business in Germany are unavoidable. Employee representatives and IG Metall have agreed to work constructively with these targeted personnel measures.

Siemens AG