Siemens has announced its intention to spin-off 80.5% of its subsidiary Osram. The plan requires approval of at least three-quarters of voters at Siemens’ Annual Shareholders' Meeting on 23 January.
If approved, the transaction will see Siemens shareholders receiving one Osram share for every ten Siemens shares [held]. Siemens announced that it also intends to remain an almost 20% shareholder in Osram (holding a 17% stake, with Siemens Pension Trust holding a further 2.5%).
Osram to cut another 4700 jobs
An intrinsic part of this massive reshuffle of two of the world’s largest technology brands is that lighting giant Osram will cut another 4700 jobs (12% of its workforce) by 2014, as the firm - alongside the wider lighting industry - tries to deal with global markets’ legislation- and technology-led transition from traditional lighting sources (such as incandescent and fluorescent) to solid-state technologies.
Osram announced, “Given the accelerated transformation of the lighting market to semiconductor-based products, [we are] pushing forward our corporate reorganization”.
The job cuts will mostly be achieved through plant sales. However, Osram said that staffing levels will be increased in future-oriented business fields, which will partly compensate the adjustments in the traditional business. The measures of the entire program are to result in cumulative gross savings of about €1bn by 2015. The total costs in the period from now until 2014 will amount to a “mid-three digit million [euro] figure”.
One notable development in Germany will be the establishment of a center of excellence for LED-based product manufacturing processes at Osram’s facility in Augsburg, although much of the LED investment will be made outside the country, including at its recently established Chinese plant.
Osram will invest in its Jiangsu-based LED assembly plant in China
“Osram will invest a low three-digit million euro figure over the coming years in its LED assembly plant in the Chinese province of Jiangsu,” said the firm. “Currently in the final completion stage, 1700 employees will manufacture products for key segments of the Chinese market and entire Asian region. The region will already account for around half of the global general lighting market in five years’ time.”
In early 2012, Osram had already initiated a comprehensive corporate program, which in principle focuses on processes and structures, operational activities as well as the further development of the corporate culture. Before the latest job cuts were announced, some 1900 jobs had already been reduced worldwide in fiscal 2012, of which 300 were in German locations.
Osram says that these measures in Germany and internationally are aimed at plants with products at the end of their product life cycle or the closure of smaller plants with lower sales. At the same time, the company is aiming to restore profitability with efficient structures in production, research & development, sales as well as in central functions.
“We are entering the digital lighting age. Compared to traditional products, the depth of our added value in LED-based products will be significantly reduced,” commented Wolfgang Dehen, CEO of OSRAM Licht AG. “Consequently, the personnel increase in the future fields will only partially compensate for the change in the traditional business.”
On 7 December, Osram aims to publish the prospectus for its public listing of shares, which it targets for after the spin-off from Siemens.
