Siemens CEO completing restructuring with job cuts

Siemens Chief Executive Joe Kaeser applied the finishing touches to his overhaul of the German industrial group with the announcement over the weekend of 7,800 job cuts designed to streamline management and speed decision-making.

The roughly 2 percent cut to the trains-to-turbines group's global workforce will generate productivity gains of about 1 billion euros ($1.14 billion) by the end of 2016, Siemens said, as the company strives to close a profitability gap with rivals such as General Electric and Switzerland's ABB.

The profit margin at Siemens' industrial businesses fell to 10.2 percent in the last quarter of 2014, from 11.3 percent a year earlier, against 14.3 percent at ABB and 18.6 percent for GE's industrial division.

"This completes the restructuring of our company," said Kaeser, who took over in a boardroom coup in 2013 and outlined his vision for the company in May in 2014.

Since Kaeser took over, Siemens has agreed to buy US oil field equipment maker Dresser-Rand and the turbines division of Rolls Royce RRL.L.

On the disposal side, it has shed its hearing-aids unit, exited its BSH household appliance joint venture and is hiving off its healthcare operation as a standalone business.

Siemens said it would reinvest the billion euros of productivity gains in the growth areas of supplying electricity for industrial projects, automation and digitalization, 800 million euros of which will be split evenly between sales operations and research and development.

The rest will be invested in fixed assets.

About 3,300 of the jobs cuts, which Siemens said should be completed within two years, will be in Germany, where the company employs 115,000 people.

Siemens pointed out that it had hired more than 11,000 people since the start of its financial year in October 2014 and said it would avoid compulsory redundancies.

The company source said the restructuring costs for the job cuts would be in the mid-to-high hundreds of millions of euros.