German industrial giant Siemens is looking for a compromise to balance the interests of shareholders and employees as it plans a wholesale restructuring of its power-generation division.
This is according to a senior manager who spoke to Reuters anonymously. The manager said Siemens would do its best to handle the overhaul in a socially responsible way. "Maybe you have to give up a percentage point of margin to give people some perspective," he said, adding that management and labour representatives would likely start negotiations in earnest in the second half of November.
The Munich-based group is expected to cut thousands of jobs as demand has collapsed for large turbines that have been replaced by renewable energy in Germany.
News of the likely cutbacks has sparked outrage in Germany, where many Siemens Power and Gas division plants are in the economically-deprived east of the country.
Global demand for large gas turbines has roughly halved since 2017, Siemens estimates, while production capacity is more than three times what the market needs.
Siemens, whose business range extends from trains to factory software, makes about a fifth of its revenues from its power and gas division.
The manager said Siemens could consider keeping plants open in eastern cities and towns such as Erfurt and Goerlitz in exchange for some job cuts in larger centres such as Berlin and Muehlheim in the Ruhr valley where workers have more choices.
The Siemens power unit reported a 41% drop in orders and a worse-than-expected 23% fall in profits in its fiscal third quarter that ended in June.
Excluding its services business, the division has 30,000 employees worldwide, of which about 12,000 are based in Germany.
Germany's economics minister Brigitte Zypries has urged Siemens to rethink the planned job cuts, particularly in economically weaker areas of the former East Germany where she says they could spur an increase in right-wing populism.
Siemens Chief Executive Joe Kaeser has not been slow to criticise the government’s part in what has transpired, saying Berlin's abrupt decision to switch to renewable energy caused a structural change in the industry that made the large-turbine business unsustainable in Germany.