Siemens to scale down staff at telecoms unit

FRANKFURT (Reuters) - German engineering group Siemens has agreed with workers' representatives to scale down German staff levels at loss-making telecoms unit Com and may bring in a 30-hour working week for some employees.

Siemens and the IG Metall trade union said on Thursday the deal was aimed at averting compulsory redundancies at Com.

Siemens said on Monday it would axe 2400 jobs at its unprofitable IT services provider unit SBS and dissolve its third problem unit, Logistics and Automation.

Com, Siemens's biggest unit which employs some 60,000 staff worldwide, has struggled to adjust to changes in technology which mean telecoms systems are increasingly internet- and software-based.

Engineers who used to service telecoms hardware are no longer in such demand as they once were, while at the same time a reluctance among smaller firms to invest in the newer types of system is hurting Siemens's sales.

Thursday's deal, which potentially affects up to 4600 German service, sales and marketing staff in Siemens Com's Enterprise Networks division, will give targeted individuals options to work fewer hours or go part time prior to retirement.

Others will be offered help in finding new work through a transfer to a placement and employment firm owned by Siemens.

"All sides agree that major technology changes in telephone systems for enterprise customers require urgent action," said Juergen Radomski, head of corporate personnel.

A company spokesman said Siemens could not yet say how many staff would be affected nor how much the company could save through such measures.

"I'm surprised it's taken them this long," said WestLB analyst Adrian Hopkinson. "It seems a little strange that they should catch up with staff adjustments at this stage when they've been introducing the new products for five years."

Siemens Com made an operating loss of 70 million euros (US$85 million) on sales of 3.335 billion euros in the quarter to June despite offloading its mobile-phone division, previously seen as the primary cause of Com's problems, to Taiwan's BenQ.

Germany's Manager Magazin weekly said on Thursday that Siemens Com would make a small operating profit in the current quarter. A Siemens spokesman declined to comment on the report.

Chief executive Klaus Kleinfeld has pledged that all Siemens units will reach goals for operating profit margins of between 4 and 13 percent by April 2007.

In the most recent quarter, just five of the company's 12 units -- whose products range from turbines to lightbulbs -- reached their target.

"The reality is that we are in an economic recovery phase and it should be possible to generate reasonably good economic returns," said WestLB's Hopkinson. "If you can't, it becomes problematic during an economic downturn."

Additional reporting by Mantik Kusjanto and Christiaan Hetzner.

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