Siemen's is cutting 15,000 jobs out of the 370,000 total positions it has.
"If you see a billion euros in charges this year, that pretty much lines up with 15,000 job cuts," Andreas Willi, a London-based analyst at JP Morgan Chase and Co. told Bloomberg Businessweek. "There have been charges in drive technologies, power generation and transmissions, so you expect them to bear the weight."
The company is increasing job cuts from an original plan after it was unable to keep up with the profits of its competitors in General Electric and ABB. Siemen's former chief executive officer Peter Loescher was forced to step down July 25 after the company announced its sales goal of 12 percent profit was not met.
Former chief financial officer Joe Kaeser who took over chief executive officer duties in August and is figuring out how to gain investor confidence after five forecast cuts and a 22 percent decline of its stock. The company was hoping to obtain 6.3 billion euros or 8.5 billion in savings Bloomberg Businessweek reported.
The cuts make up four percent of the company's total jobs throughout the world. A third of the cuts will come from the company's German headquarters. Two thousand will come from the industry division. According to Bussinessweek, 1,400 will come from the energy sector and 1,400 from the infrastructure and cities unit. An additional 200 administrative roles will be eliminated by next September.
Roughly half of the cuts have been implemented. The remaining cuts are being negotiated with unions, and will include early retirements. The largest engineering company in Europe previously called for 8,000 jobs to be cut. The company fell 1.3 percent to 88.70 euros Monday morning in Frankfurt, Germany. Siemens trading was down 0.9 percent which led to a further reduction of 12 percent; giving the company a value of 78.4 billion euros.
