Siemens initiated the largest layoff in nearly seven years, and the digital industry sector laid off 5,600 people to cope with the cold market

The Zhitong Finance App learned that engineering company Siemens said on Tuesday that it will lay off 5,600 employees in its Digital Industries (Digital Industries) division. This is the latest blow to the German industry affected by weak domestic and foreign demand.

The number of layoffs accounts for a little more than 8% of the digital industry's 68,000 employees worldwide, and Siemens is adjusting its production capacity according to market conditions in Germany and China.

This is the largest number of layoffs announced by Siemens since 2017, including 2,600 layoffs in Germany, although Siemens said it remains committed to using Germany as the location of its business.

Until recently, the digital industry has been the jewel in Siemens' crown, and its controllers and factory software have the highest profit margins in the group.

However, Siemens, which has 312,000 employees around the world, said that in the past two years, “weak demand, mainly in key markets such as Germany, and increased competitive pressure have led to a sharp decline in orders and revenue for the industrial automation business.”

Siemens first proposed a layoff plan in November last year, and profits in the Siemens digital industry fell by one-third in the most recent quarter.

Prior to news of the layoffs, Audi, a subsidiary of Volkswagen, said on Monday that it would cut 7,500 administrative positions.

Volkswagen itself has also launched a cost reduction plan involving 35,000 layoffs, while Porsche plans to lay off 3,900 workers.

Siemens also said on Tuesday that it will lay off 450 employees in its electric vehicle charging business, accounting for one-third of the total number of employees.

Management board member Cedrik Neike defended the layoffs, saying Siemens' automation business must become faster and more flexible.

“We need to be more balanced and get a broader customer base,” he said.

Neike said Siemens must achieve stronger growth in other Asian markets such as India and the US, and be more active in aerospace, defense, and processing industries.

The German Metall Association of Metals Industries (IG Metall) said the decision shattered the trust of employees working to turn Siemens into a technology company.

Juergen Kerner, vice chairman of IG Metall and member of the Siemens Supervisory Board, said: “The transformation was not achieved through layoffs, but through positive changes, particularly through further development and training.”