Siemens Will Cut 7,800 Jobs From Gas and Power
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Siemens Energy announced it will cut 7,800 jobs from its gas and power division by 2025 as the company attempts to be more competitive in a global energy market that is moving away from fossil fuels and toward renewable energy.
The company on Feb. 2 in its latest earnings release said it plans to jettison about one-sixth of the workforce that supplies turbines to the power generation sector. It said most of the cuts would come in the next couple of years, including about 3,000 jobs in Germany and about 1,700 in the U.S. The cuts represent about 8.5% of the company's total global workforce.
Siemens said the majority of those being let go currently hold management or sales positions. The company Tuesday, in announcing its first-quarter 2021 fiscal year earnings, for the period ending Dec. 31, 2020, said it will incur estimated restructuring costs in a mid- to high-triple-digit million euro range for the fiscal years 2020 to 2023."
Christian Bruch, president and CEO of Siemens Energy AG, said, The energy market is significantly changing which offers us opportunities but at the same time [it] presents us with great challenges. We will undertake these measures in the most socially responsible way possible." Despite having to make job cuts, Bruch said, The first quarter proves that we are on the right path to reach our annual targets. The Siemens Energy team achieved a solid start into the new fiscal year even under difficult circumstances.
With this program we want to regain our competitiveness and financial strength to shape the energy world of tomorrow," Bruch said. I really believe we're putting together a company that can shape the future of the energy market."
The German company last year announced it would no longer take part in new tenders for coal-fired power plants, joining Toshiba, General Electric (GE), and Black & Veatch among energy companies ending investments in the coal sector.
Siemens Energy had its 16 billion ($19.3 billion) debut on the Frankfurt stock exchange in September 2020 after being spun off from the larger parent Siemens, as part of Siemens' Vision 2020+ strategy. Siemens Energy shares have climbed almost 50% since being listed on the Frankfurt market.
The division bundles the former Siemens gas and power segment, which is mostly gas turbines, and owns the majority in wind turbine manufacturer Siemens Gamesa, which is a major player in renewable energy, particularly offshore wind.
Siemens Energy is among companies increasingly betting on green hydrogen technologies, in part jointly with Siemens Gamesa. The company is placing electrolysers to produce hydrogen from wind power directly at offshore wind turbines.
The company Tuesday said it hopes to reduce costs in its gas and power segment by at least 300 million ($361 million), which it said would improve its competitiveness and enhance its long-term cost structure. Siemens Energy has begun reshaping its business portfolio by modifying its range of aero-derivative gas turbines.
Siemens Energy in Tuesday's earnings announcement said the company's orders in the most recent quarter fell 25.9% from a year earlier, to 7.4 billion ($8.9 billion), mostly due to a sharp decline in Siemens Gamesa orders. Revenue, though, rose by 2.6% to 6.6 billion ($7.9 billion), and the company posted a net profit of 99 million ($119 million), compared to a net loss of 195 million ($235 million) a year earlier.
Among other things, we want to reduce procurement costs and lower non-conformance costs-the extra charges incurred in executing projects," said Bruch. We also want to standardize and modularize our production processes and simplify internal processes and structures."
The restructuring comes as Siemens Energy targets an adjusted earnings before interest, taxes and amortization margin of between 6.5% to 8% by 2023, a large jump from negative 0.1% in the financial year that ended in September.
The job cuts continue a trend of layoffs at major energy companies-including Siemens-over the past few years, particularly among those with various divisions. GE last year announced it would cut 13,000 jobs from its aviation division; the company has had several other workforce contractions at various global sites, after announcing in December 2017 it would cut 12,000 jobs in its power division.
-Darrell Proctor is associate editor for POWER (@POWERmagazine).
The post Siemens Will Cut 7,800 Jobs From Gas and Power appeared first on POWER Magazine.