German industrial equipment maker Siemens has announced plans to cut some 10,000 jobs in a major restructuring that will involve spinning off its oil, gas and power generation business and creating new areas of growth.
The company said late Tuesday that it would spin off its division that makes power turbines to increase the division’s entrepreneurial freedom, while embarking on a sweeping cost-cutting effort at its remaining operations.
The gas and power division has been under pressure due to a broader trend toward renewable energy such as sun and wind power. Competitors in the power business such as Boston-headquartered General Electric and Japan’s Mitsubishi have struggled as well.
Siemens said it would keep a significant stake of less than 50 percent in the spun-off company and would bundle in a majority stake its renewable energies company. That would create what Siemens CEO Joe Kaeser called “a powerful pure play in the energy and electricity sector” that could offer products across the entire scope of the energy market from a single source.
Kaeser also announced sweeping cost cutting aimed at increasing profitability at the company’s remaining businesses, which range across factory automation, energy infrastructure such as power grid control and automation and high-speed trains.
The company plans to take out 2.2 billion euros in costs by 2020, in the course of which it will drop some 10,400 positions. The company says it expects growth to create some 20,500 new jobs by 2023, for a net gain of around 10,000. When it comes to job cuts, Siemens said that “all measures worldwide are to be implemented in as socially responsible a manner as possible.”
Siemens AG meanwhile said Wednesday that its net profit fell to 1.92 billion euros ($2.15 billion) in the first three months of the year, from 2.02 billion a year earlier, when earnings were boosted by 900 million euros by a share transfer. Revenue rose 4 per cent to 20.93 billion euros.