Stricken by falling orders for big fuel generators, world expertise conglomerate Siemens AG is reportedly shifting to downsize its Power and Gas phase. The adjustments might embody closure or sale of main websites globally and lead to hundreds of job cuts.

The firm will probably embark on a reorganization plan this November that might outcome within the largest spherical of job cuts in two years, reported Bloomberg on October 19, citing unnamed sources. Reuters additionally reported on October 19, citing a “individual acquainted with the matter,” that “varied situations are being thought-about” and that particulars of the overhaul are nonetheless being decided. German publication Manager Magazin is credited with first reporting on Thursday that 11 of 23 Siemens energy and fuel websites could also be shuttered or bought.

“Please perceive that we don’t touch upon rumors,” stated Siemens spokesman Alfons Benzinger on October 19, responding to POWER’s request for affirmation of those stories.

Benzinger famous, nevertheless, that Siemens is systematically and efficiently implementing its Vision 2020 technique. “Among different issues, we’re regularly fascinated about the proper strategic setup for our companies,” he stated.

“This might embody consolidating particular person actions if market situations make this needed. At the identical time, we’re investing closely in progress fields—for instance, power administration, the digitalization of business, healthcare applied sciences and different associated enterprise areas—and thus in our future.”

Diminished Orders and Shrinking Profits

Siemens AG, headquartered in Berlin and Munich, is energetic in 200 international locations and has 351,000 staff. According to the corporate’s 2016 annual report, its Power and Gas enterprise employs 48,700 staff and accounts for about 20% of its income.

In an August 2017 analyst name centered on its third-quarter 2017 fiscal yr earnings, whereas Chief Financial Officer Ralf Thomas stated the corporate was “totally on monitor for an additional robust yr,” he famous orders inside its energy and fuel division had fallen “sharply”—by 41% in comparison with figures from the third-quarter of 2016.

Revenues for its Power and Gas enterprise fell an estimated 11% throughout that very same interval (from €four.three billion to €three.eight billion) owing primarily to declines in its giant fuel generators and compression enterprise. Profits additionally fell 23% stemming from “continued worth stress as a consequence of overcapacities.”

The Siemens Gamesa Renewable Energy arm wasn’t faring significantly better, and Thomas described a 64% fall in orders for its wind turbine manufacturing arm, primarily as a consequence of a short lived downturn within the Indian market. That entity, nevertheless, noticed a three% improve in revenues throughout that interval.

The firm will launch its fourth-quarter outcomes and preliminary figures on November 9, 2017.

Strong Foundations however a Shaky Future

Siemens, one of many world’s oldest energy expertise corporations, was established in 1847. Its energy sector footing was soundly established in 1866, when the corporate’s founder Werner von Siemens invented a brand new direct present (DC) dynamo-electric machine, which promised to cut back the burden of the drive unit by 85%, the mandatory drive energy by about 35%, and the value of the machine by 75%, all whereas sustaining the identical energy.

The discovery meant that electrical energy may very well be generated inexpensively and used at a lot greater capacities—making it one of many founding breakthroughs of the facility sector’s historical past. [POWER, which this month marked its 135th anniversary, celebrated the Siemens milestone. For extra, see: “History of Power: The Evolution of the Electric Generation Industry” in POWER’s October 2017 subject.)

Today, the corporate is likely one of the world’s largest suppliers of energy technology, energy transmission, and infrastructure options in addition to automation, drive and software program options for business. It additionally gives medical imaging gear.

But as gross sales from its energy enterprise have fallen, the corporate has picked up extra enterprise within the discipline of digitalization and sought to increase elsewhere. On September 27, Siemens…

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