Siemens plans 40% cut in jobs in business telecommunications
BERLIN: Siemens plans to announce Tuesday that it intends to eliminate up to 7,000 jobs, or 40 percent of workers, in its troubled business telecommunications unit in Germany and Brazil as it seeks a buyer for the business, a person with direct knowledge of the situation said.
Company executives were to disclose the plans for Siemens Enterprise Communications, which makes corporate phone networks, at a meeting with representatives of the workers' council in Munich.
According to the person, who spoke on the condition of anonymity because the meeting had not yet taken place, executives will announce plans to cut up to 4,000 jobs within the unit, which employs 17,500, and will advise worker representatives that a further 3,000 jobs could be transferred into ventures with new business partners.
The layoffs will likely occur in Leipzig, Germany, and in Brazil, where Siemens has factories that produce phones and corporate communications networks, the person said.
The job reductions and sale of small portions of business are unrelated to the German company's two-year-old effort to sell the entire unit, the person said.
Peter Löscher, president and chief executive of Siemens, has said he wants to sell or find an investment partner for the entire business by June. Plans for the job reductions were first reported Monday in The Financial Times Deutschland newspaper. A Siemens spokesman, Wolfram Trost, said Monday that the company would not comment on the newspaper report.
Siemens and its workers' council representatives met in August to discuss the future of the unit. At that time, Siemens executives said they wanted to eliminate 600 to 650 jobs, said Matthias Jena, a spokesman for IG Metall, an umbrella group that represents Siemens unions.
"We have not heard anything about 7,000 jobs being cut," Jena said Monday.
The corporate telecommunications business was first prepared for a potential sale in 2005, as part of a Siemens reorganization of the company's telecommunications businesses. Siemens put the largest part of that business - a unit that sold network equipment to phone operators - last year into Nokia Siemens Networks, a joint venture with Nokia, the market leader in cellphone manufacturing.
But Siemens has so far been unable to find a buyer for the remainder of the business - which was formerly called Siemens Enterprise Networks, which makes products like the Siemens Gigaset for business customers.
Theo Kitz, an analyst at Merck Finck, a private bank in Munich, said plans for significant job cuts would probably help Siemens rid itself of the unprofitable business.
"This would be a way to dress up the bride, so to speak, so they could more easily sell the business," Kitz said.
But the job cuts could also trigger retaliatory action from unionized workers at Siemens, he added.
Should the cuts be significant, Kitz said workers might vote to go on strike. While that is something they have not done in large numbers during the past decade, German trade unions have become more active within the past two years, Kitz said, with workers at Deutsche Telekom and the Deutsche Bahn recently winning concessions after prolonged strikes.
"That could make job cuts very costly for Siemens," he said.
P&G to trim management
Procter & Gamble will cut about 15 percent of its senior management staff as part of a bid to improve productivity and accelerate growth, the company said Monday, Reuters reported from New York.
The vast majority of the job cuts will come through attrition as employees retire or leave the company, said Paul Fox, a P&G spokesman.
The cuts will affect about 50 jobs at the general manager level and above. P&G, the world's largest maker of household and personal care products, has about 138,000 employees.
P&G also said it was aiming to raise annual productivity growth - or the value of sales per employee - to 7 percent or 8 percent from 6 percent over the next five years.