Siemens to cut 16,750 jobs

By Nicola Leske

FRANKFURT (Reuters) - German industrial conglomerate Siemens AG (SIEGn.DE) plans to slash almost 17,000 jobs worldwide to speed up cost savings and boost margins as it prepares for a global economic downturn.

Chief Executive Peter Loescher, who has extensively restructured Europe's biggest engineering group since taking charge a year ago, said Siemens needed to be faster, more efficient and have a leaner administration if it hoped to keep up with rivals.

"This takes on special urgency when one considers the economic downturn," he said.

Siemens will cut 12,600 jobs globally mainly in administration, aiming to meet its 1.2 billion euros ($1.9 billion) savings goal and its margin targets by 2010. It plans to eliminate another 4,150 jobs through restructuring programs.

Negotiations with labor representatives about the planned job reductions will begin quickly, Loescher said.

Engineering trade union IG Metall condemned the plans and did not rule out taking measures in protest.

"Siemens is looking good economically, the order books are full ... That makes the planned job cuts neither comprehensible nor acceptable, and they are excessive in extent," said Werner Neugebauer, head of IG Metall in Siemens home state of Bavaria.

labor representatives planned to resist but would first wait for the outcome of negotiations with management.

Siemens has said it wants to cut selling, general and administrative costs by about 10 percent within two years, partly by shrinking the number of separate legal entities that make up the conglomerate, which employs about 400,000 people.

The job cuts come as Siemens struggles to put an end to a worldwide investigation into a corruption and bribery scandal and as it hopes to regain investor confidence after a profit warning in March that sent its shares tumbling.

Shares in Siemens were down 1.64 percent at 69.66 euros by 1529 GMT, up from a low of 68.53 euros earlier in the day, underperforming a 1.4 percent fall in Germany's blue-chip DAX index .GDAXI.

Siemens shares have fallen almost 35 percent so far this year. By comparison, U.S. rival General Electric (GE.N) has lost 27.4 percent and Dutch competitor Philips (PHG.AS) has lost 28.8 percent, according to Reuters data.

Siemens trades at around 7.2 times estimated 2008 earnings, while GE and Philips are valued at around 12 and 14 times, respectively, according to Reuters estimates.

Loescher has promised to slim down the lumbering giant, which makes a wide range of products from light bulbs and high-speed trains to medical equipment and turbines, so it can catch up with more profitable rivals and improve its technology.

So far, he has regrouped the company's units into three main divisions aligned with global growth trends: infrastructure and industry, energy, and medical technology.