Union Warning Labor Unrest Builds at Siemens

The new head of Siemens' powerful workers council, in an exclusive interview with Handelsblatt, said employees are growing weary of constant downsizing at the German engineering firm. That could complicate CEO Joe Kaeser's plans to revive the moribund giant.
Siemens is making big changes but how far they will affect employees is unclear.

As head of Siemens' general works council and soon to be the deputy chairwoman of Siemens' non-executive supervisory board, Birgit Steinborn faces challenges on numerous fronts. In an interview with Handelsblatt editor Axel Höpner, Ms. Steinborn sent signals that Siemens workers were growing weary of further downsizing, and may be preparing to oppose further job cuts, which are rumored.

 

Handelsblatt: You're the first woman to head Siemens' supervisory board. Is that something special?

Birgit Steinborn: Unfortunately, it is still something special, I wish it wasn't so unusual.

Are you now the most powerful woman at Siemens?

I wouldn't say that, there are many other women in management. But we need women at all levels, not just board level and top management. I've spent years fighting for equal opportunities.

What do you want to do with your new power?

I want to build the expertise we have at Siemens – our technical skills, social benefits and committed employees.

But job cuts are expected in the next few weeks as many positions are redundant after the loss of sectors and divisions.

I always say yes to cutting bureaucracy but no to cutting staff.

There's talk of up to 10,000 jobs being eliminated.

Who is saying that? I haven't heard any numbers. We've been rushing from one downsizing program to the next for years. I'm tired of hearing that layoffs are the only answer. That's management taking the easy way out. I'm against pure cost-cutting programs.

 

Birgit Steinborn wants solutions that balance people and profits.

 

But?

We can strengthen other areas like research, development and sales. We want the company to transfer employees whose other tasks are being eliminated into these areas. Incidentally, business-related job cuts are prohibited under our employment agreement.

But there are more job cuts ahead on the operational side of the business. Managing Board member Lisa Davis has mentioned excess capacity in your energy sector.

We're in negotiations over this issue.

There are rumors that there's a lot more at stake than the 1,200 jobs being discussed.

We'll see what happens. We can't ignore capacity issues but we do need to talk about the difference between short-term setbacks and long-term decline. We're still at odds over this issue.

Siemens created some of the problems in the energy business itself, for example by focusing on large power plants for too long.

Yes. Siemens does need to expand its businesses in the decentralized energy supply sector. But it was hard to predict, for example, that the highly efficient gas-turbine-driven power plants are not in demand in the gradual shift toward green energy known as the Energiewende in Germany. This is an issue for policymakers.

 

Birgit Steinborn with Handelsblatt's editor Axel Höpner.

 

Siemens' chief executive, Mr. Kaeser, wants to use acquisitions as a solution to Siemens' problems. What do you think about his progress during his first one-and-a-half years?

I'm not here to hand out grades. It seems like we have many shared agendas: to secure the company's long-term success, strengthen sales and reduce bureaucracy.

Some say that Mr. Kaeser copied some of the ideas of employee representatives, such as their "Vision 2020" restructuring strategy.

We were focusing on the right issues, and Mr. Kaeser seems to be as well. But in the details, the differences are pretty clear.

What are they?

We say: "People before profit margins." Mr. Kaeser says: "People AND profit margins." When push comes to shove, margins will prevail.

So where are the differences?

Reducing bureaucracy, for example. We don't want staff cuts. We also want to see investment in production – in the wind sector, for example, where many employees could work who aren't needed in other departments. But there's more at stake. We're calling for a value-added strategy for Germany. We're in talks about what Siemens, as a global company, can contribute to Germany as a center of production and innovation.

Some analysts praise Mr. Kaeser for tackling so many issues. Others who want to see quick results say he's taking too much time. Who's right?

We've had enough quick cost-saving programs in the past. We want measures that work in the long term. But that requires patience. What's clearly missing, however, is growth.

How can Siemens grow?

Sales needs to be strengthened, and we need more investment in research and development. And there are also acquisitions.

Is the restructuring going smoothly?

It varies. Some employees complain about not being kept in the loop. The flow of information still needs improvement.

Mr. Kaeser has announced that he plans to fix the 20 percent of business that isn't generating any profits. Are you worried that these areas will be spun off?

We opposed that. Siemens needs to fix the problems at these divisions itself. In fact, that's exactly what Mr. Kaeser says. He also wants to encourage a culture of ownership. But that's impossible if employees don't know whether they'll still be part of the company tomorrow.

That brings us to medical technology. The healthcare business is currently being spun off. Are you worried that it could be sold?

We're not looking at a sale, Mr. Kaeser assured us medical technology is a core element of Siemens. But employees are still very anxious, because they don't know whether management is in fact preparing for a sale if business conditions change.

There was a similar situation with the rail technology business, which Mr. Kaeser wanted to incorporate into a joint company during the takeover battle for Alstom.

This is another area that's very uncertain, especially with high-speed trains. Two Chinese competitors have now merged. The Siemens leadership's strategy isn't clear. The strategic decision to sell the rail business in the event of an Alstom takeover was announced at the very last minute in 2014. We would've liked more discussion first.

The biggest acquisition was the takeover of the U.S. firm Dresser-Rand, the largest supplier of rotating equipment solutions. The price of oil has dropped sharply since then. Was the acquisition too expensive?

Well, it certainly cost a lot. But the takeover is the right move in the long term, especially for a company that wants to play a stronger role in the decentralized supply of energy. And besides, Dresser-Rand is involved in more than just fracking.

But the timing was unfortunate?

Well, it was bad luck. But we hope that it will pay off in the end.

What's your opinion of Mr. Kaeser's management style? He surrounds himself with a close circle of advisers.

I can't evaluate that, because he isn’t my boss. The management culture in the company as a whole is more important to me. It was long shaped by fear and a top-down leadership style. You have to be able to report a mistake to your superior without worrying about losing your job.

Has that improved?

There has been some progress, but we haven't completed the cultural shift yet. For me, it's a question of a culture of participation and employee involvement. We need to focus on people, because they are what the company is founded on and what creates its value.

 

Axel Höpner conducted the interview. He heads Handelsblatt's Munich office and covers Allianz and Siemens. To contact the author: [email protected]