Heavy job cuts at Siemens may hit Polish operations

The local operations of German electronics and engineering conglomerate Siemens could be affected by a new round of 6,500 job cuts in the firm's faltering telecommunications equipment unit, Karol Szyndzielorz, the spokesman for Siemens Poland said last week. In late April the Munich-based parent company said it would cut the jobs in its information and communications networks (ICN) group - the company's telecoms subsidiary - outside Germany by the end of 2003 to save about €1.5 billion. The announcement came when Siemens reported that its financial results for the second quarter beat expectations. "What kind of adjustments we will make will be decided by management," Szyndzielorz said, adding that Heinrich von Pierer, Siemens chief executive officer, had not yet specified the locations to be affected by the cuts.

Last year Siemens Poland remained untouched by the more than 15,000 job cuts the company planned for its distressed telecom business. But decreased demand for hardware from its main client, Telekomunikacja Polska (TPSA), could make it vulnerable to the new round of headcount reductions. "The possibility (of job cuts) exists because TPSA is our main partner, and TPSA is ordering only 50% of what it ordered last year," Szyndzielorz said, adding that Siemens Poland is still discussing equipment orders with the country's dominant fixed-line operator for 2003. TPSA owns about 94% of Poland's stationary phone lines. Orders for telecom equipment have dwindled around the globe during the past year and a half, chipping away at manufacturers' bottom lines. Sales in Siemens' ICN group - the conglomerate's second largest unit - have continued to decline in the wake of ongoing weak demand for telecom hardware. Siemens racked up disappointing figures in its ICN unit for its second fiscal quarter of 2002, from Jan. 1-March 31, despite the conglomerate's €703 million increase in net income to €1.28 billion compared to €578 million in the same quarter a year ago. Last December the parent company reduced the ICN unit's earning target to allow it to adapt to the market slump while the group underwent stringent restructuring. But while sales in its power generator and medical equipment sectors flourished in the second quarter of 2002, ICN's sales dropped 16% to €2.66 billion from €3.16 billion in the same period last year. The ICN group also reported a second-quarter loss in earnings before interest and taxes (Ebit) of €158 million compared to a €50 million profit in the same quarter a year ago.

In Poland, Siemens has increasingly shifted its focus to the better-performing areas of power generation, medical equipment service and cell phones and is involved in negotiations for contracts for various infrastructure projects and hospital equipment. Siemens Poland had a net profit of zł. 46,753 in 2001, Szyndzielorz said. Siemens, which employs about 450,000 in 190 countries, has 5,000 workers in 11 factories in Poland, most of which produce telecom equipment. The company's facilities in Warsaw - its most important production and administrative center - employ one-fifth of its total domestic workforce.