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To conclude Siemens’ organisational restructuring, the company has announced plans to lay off around 7,800 employees worldwide, about half of which (3,300) will be from its headquarters in Germany.
The job cuts are part of plans announced by Siemens to streamline its administrative and overhead functions in May 2014, called the Vision 2020. This would lead to a flattening of their organisation structure as well as a more customer-oriented company.
“Our Vision 2020 concept will enable us to get our company back on a sustainable growth path and close the profitability gap to our competitors. Our strategic reorientation has enabled us to considerably streamline our organisation and remove entire intermediate levels,” said Joe Kaeser, president and CEO of Siemens AG.
“These steps will bring our businesses closer to our customers and make us significantly faster. As a result, certain tasks and functions will be completely eliminated.”
The company plans to reduce their number of divisions from the current 16 to 9 divisions, along with the separately managed healthcare business.
The company is currently discussing the job cuts with employee representatives in Germany, aiming to reach the most “socially responsible solutions”.
“We’ve made an agreement with the employee representatives that states that we want to avoid layoffs due to operational requirements. And of course, this agreement still applies,” said Janina Kugel, member of the managing board and labour director.
The company’s restructuring measures include the simplification of internal workflows and processes, which is estimated to generate productivity gains of about €1 billion, to be realised by around the end of 2016.
The savings will be channelled into initiatives for innovation, productivity and growth and the company expects to put aside €1 billion for them in fiscal 2015 alone.
“Of this sum, about €400 million will go for sales operations, a further €400 million for research and development, and some €300 million for fixed assets,” the press release stated.
Despite the planned layoffs, Siemens expects the company’s employee count to remain relatively stable, with the first four months of the current fiscal year seeing more than 11,000 hires worldwide, with more than 1,500 in Germany.
Due to the ongoing discussions, the company is unable to release a more detailed, locational breakdown of the jobs and businesses affected.