FRANKFURT, Germany (AP) — German industrial equipment maker Siemens AG has launched a sweeping restructuring to raise disappointing profits and better compete with peers such as General Electric.
The company said Wednesday it is knocking out a layer of upper management, buying a key business to strengthen the crucial power generation division and shedding its line of hearing aids.
Siemens is a huge company with 359,000 employees worldwide that makes everything from gas- and wind-powered turbines to trains, medical imaging devices, factory machines and security equipment. But it has struggled to cut costs and raise profit margins.
Its new CEO, Joe Kaeser, hopes to make it nimbler by eliminating the four broad sectors overseeing its many businesses, and trimming the number of those business divisions from 16 to nine. Each division will get a profit margin target as Siemens aims to focus on fields where it can grow and earn the most.
Cutting out an entire level of management will reduce bureaucracy, speed up decisions, and save 1 billion euros a year, the company says.
Kaeser, who laid out the changes at a news conference in Berlin on Wednesday, took over last year after the previous CEO, Peter Loescher, missed several profit targets.
The revamp comes as Siemens is considering making an offer for the power generating business of France's Alstom, which has already received an offer from General Electric. Kaeser dismissed speculation that Siemen wasn't really serious about Alstom and mainly hoped to raise the price that GE would pay. "If I was not serious I would not waste my time or the time of my team," Kaeser said.