Siemens AG executives recently delivered a progress report on the company’s Industry sector, including its reaction to last year’s economic crisis and the steps Siemens is taking to position the business unit for growth.
Industry Sector CEO Heinrich Hiesinger told investors on Friday that when customer demand for the Industry sector’s products began to slump in January 2009, the unit froze its capital spending; reduced its selling, general, and administrative (SG&A) expenses by € 750 million for the year; and slashed its permanent workforce by 16,000 people. At the same time, the unit continued to invest in R&D and expanded its footprint in the fast-growing markets of China, India, and the Middle East, Hiesinger said.
“It is the combination of these decisive measures, with a strong customer focus, that made us successful,” he said.
Hiesinger’s definition of success, in this case, is that five of the six businesses that fall under the Industry sector, including Industry Automation, Drive Technologies, Osram, Industry Solutions, Building Technologies, and Mobility, met their target margin range for the fiscal first quarter of 2010, ended Dec. 31, 2009. For the fiscal year, the Industry sector’s operating margin is expected to be just above 9% which is at the low end of its margin target of 9% to 13%. In 2008-2009, margins fell to 7.7%.