Siemens shake up

At its management conference in

Berlin

, Siemens AG presented the basic structure of its new company-wide program to some 600 top executives. The emphasis on cost cutting and organizational restructuring has led to fears over job losses across divisions. But Siemens executives promise that the new program's goal is not to cut jobs.

Despite a difficult market environment, the company expects to achieve one of the best operating results in its history in fiscal 2012. Nevertheless, Siemens will likely not meet the ambitious goals it defined for itself within the framework of the One Siemens target system. 

By implementing this new program, which will be in effect for two years, the company intends to focus on cutting its costs, boosting its competitiveness and becoming faster and less bureaucratic. Under the program, Siemens will concentrate on five areas: Cost reduction, go-to market, simplified governance, optimized infrastructure, strengthen core activities.

Concrete measures geared to these areas are currently being developed. Milestones and concrete figures are to be announced at the Annual Press Conference on November 8.

Peter Löscher, president and CEO of Siemens, explains. “We aren't satisfied since we didn't reach our goal of being better than the market and competitors. So we drew our conclusions. I think it's important that we all have a common understanding of what lies ahead. Each of us knows what needs to be done, and now it's about tackling the work.

With One Siemens, we also have a demanding target system and want to grow with capital efficiency with a revenue goal of 100 billion euros in the medium term. This is all set and official. In past years we continually improved the company and reached a profit level that is far higher than the average of past decades. In 2011 we achieved record results – in a very good market environment. 2012 was a more difficult year. The level we are at now, however, is still quite respectable. 

But we did not reach our overall goal for the year. As a leading company, we want to be better than the competitors. We don't want to bob along somewhere in the broad masses of the middle field. 

The development in the past year was therefore not good enough. We believe our new company program will get us back in top form and enable us to stand at the top again despite a challenging global economic situation. 

We clearly banked on growth in the global economy and on the recovery in the second half of the year expected by the economists. But then the forecasts were steadily adjusted downward. And instead of seeing a recovery, we had to deal with a worldwide downturn. In

Europe

, where we do around half of our business, many countries are even in a recession. We didn't succeed in adjusting to this development fast enough. 

We couldn't expect any tail winds from the economy. But – and I want to clearly address this point – we also have homemade problems, such as with individual projects like connecting wind farms in the North Sea and with insufficient profitability in some businesses. In addition, our costs are too high and we must be faster to better respond to changes

. "