Siemens Energy is looking to cut costs – 7’800 jobs lost

Siemens Energy says that its executive board has provided employee representatives details about its previously announced plans to reduce costs by a minimum of EUR 300 million in its Gas and Power segment. This is in addition to programs already under implementation. The measures are designed to improve the company’s competitiveness by enhancing the long-term cost structure. The company plans to optimise the its portfolio on the basis of profitability and future viability, to lower the non-conformance costs of major projects, and to reduce procurement costs. The new measures range from cost reductions related to external service providers, purchasing and logistics, to streamlining the IT landscape. Siemens Energy says it has already initiated its portfolio-reshaping process by modifying its range of aero-derivative gas turbines. In addition, the company will no longer bid on contracts for new coal-fired power plants. Siemens Energy has made the reduction of its material expenses a high priority and the majority of reduction measures are related to those costs. However, optimised processes, leaner structures, the reduction of overcapacities and portfolio adjustments will result in the reduction of approximately 7,800 jobs around the world in the Gas and Power segment – around three-quarters of which will be made in management, administration and sales, a press release reads. Geographically the workforce reductions will be impacting approximately 3’000 jobs in Germany, 1’700 in the United States and 3’100 at other locations around the world, the company says. The reductions are planned by the end of financial year 2025, with a large part to be implemented by the end of the financial year 2023. “The energy market is significantly changing which offers us opportunities but at the same time presents us with great challenges,” says Christian Bruch, Chief Executive Officer of Siemens Energy AG, in the press release. “With this program we want to regain our competitiveness and financial strength to shape the energy world of tomorrow. We are fully aware that this is a challenging program for our employees. Hence, we will undertake these measures in the most socially responsible way possible.” The company reiterates that the estimated restructuring costs associated with these measure will be in the mid to high triple digit euro million amount for the fiscal years 2020 to 2023.