Siemens Employees Plan to Protest Threat of Job Relocation
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June 18 (Bloomberg) -- Siemens AG, Germany's largest engineering company, today faces demonstrations by as many as 10,000 employees protesting the company's plans to shift some production abroad to help cut personnel costs.
Employees at factories from Berlin, where Siemens assembles gas turbines, to Bocholt, where the world's fourth-largest mobile- phone company makes handsets, will stage marches against a relocation plan that Munich-based Siemens has said may affect 5,000 German jobs, the IG Metall labor union said.
German manufacturers, grappling with labor costs among the highest in the world, are shedding jobs in Europe's largest economy while creating them in the east. Siemens, which employs 167,000 in Germany, is exploring Hungary as a new location for factories producing phones because wages in the country are 30 percent lower than in Germany, according to the company.
``This is about people, not just about technology and costs,'' said Wolfgang Nettelstroth, an IG Metall spokesman for the North Rhine-Westphalia region, where Siemens employees will hold rallies in cities including Cologne, Dusseldorf and Krefeld.
Siemens spokeswoman Sabine Kroemer declined to comment on the effects the demonstrations may have on production.
The German company is boosting efficiency to catch up with competitors and make up for two years of shrinking sales.
Net income per 1,000 Siemens employees was 5.9 million euros ($7.1 million) in the company's most recent fiscal year, compared with $49.2 million at General Electric Co. in 2003. Sales per 1,000 Siemens employees stood at 178 million euros that year, half the tally for General Electric workers.
`Clear Disadvantage'
Siemens is negotiating with works council representatives and unions to cut pay as the company tries to reduce $30 billion in personnel costs. The company generates 23 percent of total revenue at home, making Germany its second-largest market by sales behind the U.S., where 70,000 people work for Siemens.
``We have a clear disadvantage on the cost front,'' said Axel Schafmeister, a spokesman for Siemens's mobile telecommunications division, its largest by revenue. ``Our talks with unions are aimed at addressing this issue.''
Manufacturing work cost an average $23 an hour in Germany in 2001, more than double the cost in Asian economies except Japan and Australia, according to the U.S. Department of Labor. Siemens has been hiring workers in China, where it now has 21,000 employees, making it one of the biggest overseas investors in the world's most populous nation.
Investing Abroad
China, India and the U.S. are the three most attractive destinations for foreign investors, according to a survey of 87 international location specialists by the United Nations Conference on Trade and Development. Poland and the Czech Republic are tied for fifth, with the U.K. the only other European country figuring in the top 10.
In Berlin, where Siemens was founded in 1847 by Werner von Siemens, the company employs 14,600 people, making the city its largest production site worldwide. Siemens said a worker in Berlin earns 2,700 euros ($3,260) a month, compared with 500 euros a month in neighboring Poland.
Siemens, which sells products ranging from phones to high- speed trains to traffic lights and coffee machines, last month said it plans to invest 1 billion euros in China to help it catch up with Nokia Oyj and Motorola Inc. in the world's biggest mobile- phone market by users.
Manufacturing wages in China are about 5 percent of those in the U.S. Siemens Chief Executive Officer Heinrich von Pierer, 63, has said he could hire 12,000 Chinese software programmers for the price he pays to employ 2,000 Germans. The company has 11 percent of its total workforce in Asia, which accounts for 12 percent of total revenue.
`Unpatriotic'
German Chancellor Gerhard Schroeder, facing unemployment that rose for a fifth month in May, has said German companies shifting production abroad are ``unpatriotic.'' German economic growth in the first quarter of 0.4 percent is less than half of the expansion in the U.S. economy in the period.
The adjusted unemployment rate in Germany was 10.5 percent in May, higher than 10 percent for a 19th month, and almost twice the U.S. rate of 5.6 percent. Unemployment in Japan fell to a three-year low of 4.7 percent in March. The number of people in work in Germany will fall by 110,000 this year, the IfW economic institute said this week.
Siemens in April said it will cut 2,500 German jobs as it moves some production to countries with lower wages and relocation plans affect its mobile phone, networks and power transmission and distribution units. As many as 1,000 workers at two phone factories affected by the cuts will probably show up for demonstrations tomorrow, the IG Metall union estimates. |
