Siemens Energy cutting 7800 jobs from Gas & Power unit
By Jack Burke02 February 2021
Reductions to come through 2025
Siemens Energy will cut 7800 jobs globally in its Gas & Power segment as it plans to improve the company’s long-term competitiveness in a challenging energy market.
The company, which was spun off from Siemens in the fall of 2020, includes both the Gas & Power portfolio as well as renewable energy under Siemens Gamesa.
The company made the announcement as it released its quarterly earnings. The cuts will affect:
- 3000 in Germany
- 1700 in the United States
- 3100 at other locations around the world
The company had about 91 000 employees in 2020.
The reductions are planned by the end of the 2025 financial year, with a large part to be implemented by the end of the 2023 financial year. In negotiations with the employee representatives in geographies under co-determination, the company aims at reaching an agreement on the proposed measures as soon as possible, the company said. The move is expected to save a minimum of €300 million in its Gas and Power segment.
“The energy market is significantly changing which offers us opportunities but at the same time presents us with great challenges,” said Christian Bruch, CEO of Siemens Energy AG. “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.”
In its earnings statement, the company reiterates that the estimated restructuring costs associated will amount cumulatively to a mid to high triple-digit euro million amount for the fiscal years 2020 to 2023. This figure falls within the range of the company’s previously announced expectations. The company’s guidance for the current 2021 fiscal year remains unchanged.
The latest announced cuts are in addition to programs already under implementation. Siemens said the measures are designed to improve the company’s competitiveness by enhancing the long-term cost structure. Siemens Energy plans to optimize the company’s portfolio on the basis of profitability and future viability, to lower the non-conformance costs of major projects, and to reduce procurement costs.
In its earnings report, the company said orders were at €7.4 billion, substantially below the high basis of comparison in the first quarter of the prior year, driven by a sharp decline at Siemens Gamesa Renewable Energy. Revenue increased by 2.6% to €6.5 billion.
Orders in the GP segment showed a solid development and were moderately down compared to the prior-year quarter only due to headwinds from currency translation. The order development was supported by a significantly higher volume from large orders including an Industrial Applications project in Brazil and a Generation project in Libya totaling more than half a billion euros combined.