Germany's Siemens AG on Thursday said it would cut 6,900 jobs world-wide as it wrestles with a sharp slowdown in the power-plant industry, the latest restructuring move by a global industrial giant.
The move, which involves the company consolidating three of its core businesses, affect its power-and-gas division, power-generation services division and process industries and drives division. Half of the job cuts will be in Germany, likely angering labor unions.
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"The power generation industry is experiencing disruption of unprecedented scope and speed," said Lisa Davis, who sits on the company's managing board.
The restructuring at Siemens comes just days after a decision by General Electric Co. to halve its dividend and launch a sweeping restructuring to make its businesses leaner and more focused. GE's new CEO John Flannery said 2018 would be a "reset year."
Siemens Chief Executive Joe Kaeser hinted at the restructuring last week when he presented the company's annual earnings, saying the power-and-gas division was struggling for some time. The firm is contending with a shift away from big coal, gas and nuclear plants that need lots of its equipment to smaller alternatives such as wind and solar that don't require as much industrial machinery.
On Thursday, the company said demand for large gas turbines generating more than 100 megawatts has fallen to about 110 turbines a year. Siemens said that world-wide the company and its competitors can produce about 400 of these turbines a year.
Demand for large electrical motors the units make has also fallen across the mining steel and shipbuilding sectors, the company said. It said it didn't expect any recovery.
"The cuts are necessary to ensure that our expertise in power-plant technology, generators and large electrical motors stays competitive over the long term," said Janina Kugel, the company's chief human resources officer and a member of its managing board.
"We can reach this goal only if we find answers to the world-wide over-capacities and the resulting price pressure," Ms. Kugel added.
However, 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.
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 profit falling and orders down 31% to EUR13.4 billion.
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.
Overall, Siemens has 351,000 employees.
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(END) Dow Jones Newswires
November 16, 2017 10:58 ET (15:58 GMT)