The CFO strikes back

If Siemens is pledging to protect French jobs, it has a funny way of showing it

May 30, 2014
Obsession
Euro Crunch
May 30, 2014

Earlier this week, Jeff Immelt, the CEO of the US conglomerate GE, was summoned to France’s parliament to speak to nervous lawmakers about his company’s $16.9-billion bid for the power division of Alstom, the Paris-based industrial group with 86,000 employees. He pledged to French president François Hollande to create 1,000 new jobs in the country within three years of a deal, a key concession to a government fearful about its sputtering economy.

Also looming in the background is Siemens, the German industrial heavyweight. Openly encouraged by French officials, Siemens is mulling an asset swap with Alstom—taking over the French firm’s power business, which accounts for nearly three-quarters of Alstom’s sales. In return, the French group would take Siemens’ transport arms and some extra cash. Thus, the American predator is repelled and two “European champions” are strengthened. Or so some in the French establishment hope.

But it remains to be seen which deal would better protect French jobs. For its part, Siemens says it would guarantee the jobs of French workers it takes on for at least three years after a deal. But the last time we checked in on Joe Kaeser, the CEO of Siemens (pictured above), one of his first orders of business after stepping up from CFO last year was to announce 15,000 job cuts.

This week he delivered more bad news for workers. In a presentation (pdf) to an investor conference in New York, Kaeser said that nearly 12,000 more jobs at Siemens are now on the block. The move, intended to cut €1 billion ($1.36 billion) in costs by 2016, follows a similar pattern to the previous layoffs—removing layers of management and narrowing the focus of the sprawling conglomerate, which employs around 360,000 workers (for now).

The waves of restructuring at Siemens are plucked straight from the CFO playbook, albeit amplified by the German group’s immense size. Given Kaeser’s previous actions as he shifts Siemens firmly into to cost-cutting mode, the French officials rooting for the German group to win the battle for Alstom should perhaps be more careful what they wish for.

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