Massive overcapacity in the large gas turbine market and growing competition from renewables has led Siemens to cut around 6,900 jobs, with 6,100 jobs to be lost in its Power and Gas Division.
According to Siemens, global demand for gas turbines above 100MW has levelled out at around 100 per year, while the leading manufacturers have, between them, capacity to produce around 400 machines per year. “In Europe, particularly in Germany, the market for large gas turbines hardly exists – so there are dramatic over-capacities,” said Janina Kugel, Chief Human Resources Officer and member of the Managing Board of Siemens AG.
“The power generation industry is experiencing disruption of unprecedented scope and speed. With their innovative strength and rapidly expanding generation capacity, renewables are putting other forms of power generation under increasing pressure,” said Lisa Davis, member of the Managing Board of Siemens AG.
Willi Meixner, CEO of the Power and Gas Division, Siemens AG, told a conference call he was certain the lagging power generation market was a deep structural change rather than a cyclical dip in the market. “Power generation costs for renewables are heading in a certain direction, and we have coped with that quite well… but what’s really caught us by surprise was the dynamism [for renewables] we saw coming from the Middle East: only two years ago nobody would have thought that a country like Saudi Arabia, as the biggest oil or fossil fuel exporter, within the space of two years would decide a) not to build any new [fossil] power plants and then decide to have 10GW of renewable power plant.”