Siemens is to cut 17,200 jobs worldwide in a bid to compete more effectively with rivals such as General Electric of the US and withstand the economic slowdown.
The job cuts are among the largest in the German industrial conglomerate's history and could revive debate in the country about companies slashing their workforces even as they make record profits, as Siemens did last year.
Some 6,400 of the cuts will come in Germany with a futher third elsewhere in Europe.
It is the boldest move so far by Peter Löscher, the first outsider to lead Siemens in 161 years, and is designed to cut bureaucracy and make Europe's largest engineering group leaner, on the lines of GE, which earns twice as much as Siemens per employee.
News of the drive to cut overheads was revealed by the Financial Times last November when it was estimated that 10,000-20,000 jobs would be lost.
It follows thousands of job losses in recent months at German companies, including BMW, Continental and Henkel.
Mr Löscher cited economic risks last night in a letter to employees explaining the cuts: "This is all the more important right now because the risks for the world economy have substantially increased in the wake of skyrocketing prices for energy and natural resources and the crisis in the US financial markets."
Siemens declined to comment.
However, people close to the company, which employs 430,000 people in 190 countries, said the 17,200 job losses, to take place by 2010, would be discussed in a -special committee of the company's supervisory board on July 7.
Siemens is hoping to avoid compulsory redundancies, but refuses to rule them out.
About 12,000 of the proposed job losses are to be in administration.
Another third will come as part of the restructuring of various business units, led by the mobility division that includes trains and trams.
The job cuts are part of Mr Löscher's plan to reform -Siemens after a €1.3bn bribery scandal that led to the resignation of the former chief executive and chairman.
He has appointed an almost entirely new management board, reorganised the company's structure and broken taboos, such as buying back Siemens shares for the first time.
Mr Löscher last week told the FT that Siemens had too many German, white and male managers. The interview provoked deep debate in Germany, where there is not a single woman in the executive offices of the country's 30 leading companies.
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