Siemens, the global industrial technology giant, is set to cut up to 5,000 jobs in its struggling factory automation business. CEO Roland Busch revealed the plans on November 14, following a 46% drop in profits within Siemens' flagship digital industries division. The company has struggled with weaker-than-expected results in its automation business, and the job cuts are part of a broader effort to restructure and adjust to the downturn.

While Siemens has not finalized the exact number of job reductions, Busch indicated that the layoffs will be in the "low- to medium-sized four-digit" range, affecting various parts of the digital industries division. Siemens' digital industries division employs approximately 70,000 people worldwide, and these cuts are expected to primarily impact its automation segment, which has been underperforming.

The decision comes after a disappointing performance in the factory automation sector, which has seen a slowdown in demand. Despite the challenges, Busch maintains that the automation market has long-term growth potential. He points to factors like shrinking populations and low levels of mechanization in small and medium-sized companies, suggesting that automation will play an increasingly critical role in the coming years.

Siemens is working to realign its resources and re-engineer its operations to stay competitive. While the immediate future appears challenging, the company remains confident in the long-term prospects for automation, especially in markets where mechanization is still underdeveloped. The global push toward automation is expected to continue, driven by the need for greater efficiency in an increasingly constrained labor market.

The job cuts are a necessary part of Siemens' efforts to adapt to changing market conditions. The company hopes that by trimming costs and restructuring its operations, it will be better positioned to capture future growth in the automation sector. However, the coming months will be critical for Siemens as it navigates through this difficult period in its business cycle.

REUTERS