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Siemens to sell electronics assembly unit

German industrial giant Siemens plans to sell its electronic components and circuit boards division or merge it with a competitor owing to tough market conditions, a spokesman said on Thursday.

Published: 20 March 2008 15:38 CET

Siemens to sell electronics assembly unit

Photo: DPA

The Electronic Assembly Systems unit, which employs 2,100 people, “no longer belongs to Siemens’ core business” and operates in a “very competitive” market, the spokesman said, confirming in part a report in the daily Süddeutsche Zeitung.

The unit will be turned into a separate legal entity, he said, a move that is usually the precursor to a sale, merger or closure.

Siemens wants to sell the division, which posted yearly sales of several hundred million euros last year, by the end of the current fiscal year to September 30, the newspaper said.

Half of its employees work in Munich in southern Germany where Siemens has its headquarters.

Earlier this week, Siemens, which has been rocked by a scandal over how it obtained foreign contracts, announced it would take a charge of €900 million ($1.4 billion) due to problems with a range of major projects.

The group, whose operations span lightbulbs, computers, power turbines and trains, said it had been unable to keep up with the contracts it signed in the past few years.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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