German electrical engineering giant Siemens AG is expected to unveil a broad restructuring Thursday that could involve as many as 4,000 job cuts in its struggling energy and drives businesses, according to people familiar with the situation.
The cost-cutting moves by Siemens come amid a broader slowdown in the global power plant industry as companies, including rival General Electric Co., grapple with falling demand in their core power businesses.
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Chief Executive Joe Kaeser hinted at the restructuring last week when he presented the company's annual earnings, saying the power-and-gas division had been struggling for a long time with difficult market conditions and structural challenges.
"If this business is going to have a future, then we have to react," he said. "We have to adjust capacities, even if that means painful cuts."
Mr. Kaeser's gloomy comments came on the heels of a decision by GE to halve its dividend and announce a sweeping restructuring to make its businesses leaner and more focused. GE's new CEO John Flannery told investors that 2018 would be a "reset year."
In the year to Sept. 30, Siemens generated revenue of EUR84.3 billion ($99.4 billion), an increase of 4% from a year ago, and profit of EUR9.4 billion, up 8%. However, the power-and-gas business weakened, with orders worth EUR13.4 billion, down 31%.
Together, the power-and-gas division and the drives unit -- which makes gears and turbines used in power plants -- account for nearly 30% of Siemens's total revenue.
The restructuring comes partly as fallout from dramatic changes to the business of making electricity. In Siemens's home market of Germany, huge nuclear, gas and coal power plants that have traditionally used the company's equipment have come under threat from smaller-scale solutions, like windmills and solar panels, that don't require industrial machinery to make power.
It isn't clear if the restructuring will extend across the company more broadly. Overall, the company has 351,000 employees.
Siemens faces stiff opposition to any job cuts from the powerful IG Metall union, which is also represented on the company's supervisory board as is the case at many of Germany's biggest industrial companies.
Jürgen Kerner, a senior union official who sits on the Siemens board, said this week that workers would begin strategies for "a path of creative resistance" to the company's plans.
Siemens executives began laying out their plans in a closed-door meeting with Mr. Kerner and other labor officials on Thursday and are expected to unveil details and speak to investors later in the day.
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(END) Dow Jones Newswires
November 16, 2017 08:20 ET (13:20 GMT)