Siemens will lay off 6,900 jobs across its global energy business as part of a restructuring move, amid a decline in demand for traditional power generation.
The technology group said that the decision is driven by accelerating structural changes faced by the fossil power generation market and the commodity sector.
The company stated that the demand for large gas turbines having capacities of over 100MW has come down drastically across the world. Siemens expects the numbers to balance out at about 110 turbines a year.
In contrast, there is more supply than demand in the gas turbine manufacturing sector with the technical manufacturing capacity of all producers globally estimated to be close to 400 turbines, as per Siemens.
Siemens managing board member Lisa Davis said: “The power generation industry is experiencing disruption of unprecedented scope and speed.
“With their innovative strength and rapidly expanding generation capacity, renewables are putting other forms of power generation under increasing pressure.”
Davis added that the company intends to implement the changes quickly yet judiciously while investing in future-oriented technologies.
Germany, where Siemens is headquartered, will see nearly 3,500 jobs made redundant.
Employees working in the Power and Gas Division (PG), the Power Generation Services Division (PS) and the Process Industries and Drives Division (PD) of the company will be impacted by the decision.
Siemens says that it has come up with a consolidation plan for the divisions with an objective to boost capacity utilization at production facilities, bring in efficiency and improve expertise by bundling resources.
Siemens chief human resources officer and managing board member Janina Kugel said: “The cuts are necessary to ensure that our expertise in power-plant technology, generators and large electrical motors stays competitive over the long term. That's the goal behind the measures we're taking.
“However, we can reach this goal only if we find answers to the worldwide overcapacities and the resulting price pressure.”
Earlier this month, Siemens Gamesa announced a restructuring program that could result in around 6,000 layoffs across its operations in 24 countries.
Image: Siemens says that there is a drastic decline in demand for large gas turbines. Photo: courtesy of Siemens AG.