By John Revill
ZURICH (Reuters) -Siemens will cut 5,600 jobs at its Digital Industries business, the engineering company said on Tuesday, in the latest blow for German industry shaken by weak demand at home and abroad.
The job cuts amount to a little more than 8% of the 68,000 people employed in Digital Industries globally, and come as Siemens (ETR:SIEGn) adjusts its production capacity in line with weak market conditions in Germany and China.
It is the biggest number of layoffs announced by Siemens since 2017, with 2,600 of the jobs being axed in Germany, although Siemens said it was still committed to its home country as a business location.
Until recently Digital Industries had been the jewel in Siemens’s crown, with the highest margins in the group for its controllers and factory software.
But Siemens, which employs 312,000 globally, said "muted demand primarily in the key markets of China and Germany coupled with increased competitive pressures have considerably reduced orders and revenue in the industrial automation business" over the last two years.
The job cuts were first flagged by Siemens last November, while in its latest quarter Siemens’ profit at digital industries fell by a third.
The news of the layoffs follows Volkswagen (ETR:VOWG_p)’s Audi on Monday saying it was cutting 7,500 jobs in administration.
Volkswagen itself has also unleashed a cost-cutting programme involving 35,000 job cuts, while Porsche plans to cut 3,900 jobs.
Siemens also on Tuesday said it was cutting 450 jobs at its electric vehicle charging business, a third of the total workforce.
Managing board member Cedrik Neike defended the job cuts, saying Siemens’ automation business had to become faster and more agile.
"We need to become more regionally balanced and gain a broader customer base," he told German newspaper Handelsblatt.
Siemens must grow more strongly in other Asian markets such as India and in the United States, and become more active in sectors such as the aerospace and defence industry as well as the process industry, Neike said.
German trades union IG Metall said the decision shattered the trust of employees who were working to transform Siemens into a tech company.
"Transformation is not achieved through downsizing, but through positive change, above all by primarily further development and training," said Juergen Kerner, vice chairman of IG Metall and a member of Siemens’ supervisory board.