Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MP - Market Pulse -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (127)	6/26/2001 9:14:58 AM
From: Chispas	Read Replies (1) \| Respond to of 1328

From a Friend Who Works (Worked?) at Siemens.. He didn't give me the URL, so this a C & P -- SIEMENS ICN TO CUT WORKFORCE 120 PERCENT SANTA CLARA, Calif. May 18 (Reuters) Siemens ICN will reduce its workforce by an unprecedented 120 percent by the end of 2001. Believed to be the first time a corporation has laid off more employees than it actually has. The reduction decision announced Tuesday, came after a year-long internal review of cost cutting procedures, said the Siemens CEO. The initial report concluded the company would save $250 million by eliminating 20 percent of its employees. "From there," said the CEO "it didn't take a genius to figure out that if we cut 40 percent of our workforce, we'd save $500 million and if we cut 100 percent of our workforce, we'd save $1.25 billion. Then we thought, why stop there? Let's cut another 20 percent and save $1.5 billion." Inspiration for Siemens' plan came from previous cutback initiatives said company officials. Sources inside the company reveal that experts from McKinsey and Company, long time Siemens' partner in defining strategy, were the real initiators of the plan. In March of 2001 the company announced it would trim jobs. However, just a month later, Siemens said it had already reached it's quota. "We were quite surprised at the number of employees willing to leave Siemens in such a hurry, and we decided to build on that", Siemens' CEO said. "I am defining success in three ways: delivering superior financial returns, achieving market leadership and creating great places (outside Siemens) to work. We believe in increasing shareholder value and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line. I am pleased today to announce the decisions resulting from that work." He added, Siemens plans to achieve the 100 percent internal reduction through layoffs, attrition, and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 1600 non-Siemens employees who presently work for other companies. "We pretty much picked them out of a hat" the CEO said. Among firms Siemens has picked as "External Reduction Targets" or ERTs, are Quaker Oats, AMR Corporation, parent of American Airlines, Callaway Golf, Charles Schwab & Co and between tech companies Intel and Cisco. Siemens' plan presents a "win-win" for the company and ERTs, said the CEO, as any savings by the ERTs would be passed onto Siemens while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcement. "We're also hoping that since over the years, we've been really helpful to a lot of companies, they'll do this for us as kind of a favor." said the CEO. Legally, pink slips sent out by Siemens would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate. "This is ridiculous, I don't work for Siemens. They can't fire me" said Kaili Blackburn, a flight attendant with American Airlines. "Reactions like that," replied Siemens' CEO "are not in the spirit of the initiative." Analysts credit Siemens short term vision, noting that the announcement had the desired effect of immediately increasing Siemens share value. However, the long-term ramification could be detrimental, said Bear Stearns analyst Beldron McInty, "It's a little early to tell, but by eliminating all its employees, Siemens may jeopardize its market position and could, at least theoretically, cease to exist." Said McInty. Siemens' CEO, however, urged patience: "To my knowledge, this hasn't been done before, so let's just wait and see what happens."