Siemens AG's restructuring plans include layoffs of 6000 workers

December 18, 1996

U.S. work force will drop at rate of attritionA restructuring plan in the works at Siemens AG would involvelayoffs of up to 6000 employees, about 3% of the more than 200,000workers at the German industrial giant. The restructuring willinclude

U.S. work force will drop at rate of attrition

A restructuring plan in the works at Siemens AG would involvelayoffs of up to 6000 employees, about 3% of the more than 200,000workers at the German industrial giant. The restructuring willinclude cuts of about 1000 workers at Siemens' Medical EngineeringGroup in Erlangen, Germany, which includes the company's medicalimaging activities.

Siemens reported strong results for fiscal 1996, but said itexpected net income to be flat in 1997 due to several factors,including a restructuring in its medical operations (SCAN 11/20/96).

At a news conference in Germany last week, Siemens officialsoutlined the cuts they planned to make to restore profit growth.Most of those cuts were expected to come from Siemens Nixdorf,its computer unit, and the company's plant engineering and powergeneration businesses.

The medical division will see some job losses, although ThomasMiller, group vice president of imaging systems at Siemens MedicalSystems in Iselin, NJ, characterized the moves as similar to restructuringsthat are commonplace at many medical imaging and European companies.

The Medical Engineering Group has made rapid strides in increasingefficiency and reducing costs over the past several years, buthas not reduced personnel levels in conjunction with those advances,Miller said.

In the company's MRI operations, for example, Siemens onceoperated two manufacturing plants, one in Japan and one in Germany.Those have since been consolidated into one German plant. In addition,the company seven years ago built MRI scanners that were accompaniedby three cabinets with peripheral electronics. Now, MRI scannersare manufactured with just one cabinet.

"We have developed new systems that require fewer hoursto manufacture," Miller said. "If you are delivering10% more systems but you have 40% reduced hours in production,you have overcapacity."

Siemens will experience layoffs in Germany, but the company'sU.S. work force will probably be reduced at the natural rate ofattrition, Miller said. The company's R&D activities willnot be affected by the cuts.

"Basically what we are doing is due to cost pressuresin healthcare that everyone has experienced," Miller said."The only reason that everyone is making a big deal out ofit is that doing it in Germany is harder, from the social systemstandpoint."