Bradley Associates Post Code BA 34911414218: New Siemens Chief Sees Weakness in

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02/08/2013 at 04:18

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FRANKFURT — The newly named chief executive of Siemens has promised to restore stability to the company that symbolizes German engineering and electronics prowess. But he also issued a warning that could bode ill for the euro zone economy: Don’t count on China.

Only hours after his predecessor was toppled because of operational problems and declining profit at the German industrial giant, Joe Kaeser, a Siemens insider promoted to the top job on Wednesday, warned that China could take longer than expected to resume its rapid growth. China is a crucial market for Siemens and hundreds of other European companies, and a continued slowdown there could delay recovery of the euro zone.

“The economic reorientation of China will take time,” Mr. Kaeser said at a news conference at Siemens headquarters in Munich.

The comments by Mr. Kaeser, who has worked at Siemens since 1980 and previously was chief financial officer, came only hours after the Siemens supervisory board named him to replace Peter Löscher, who took the blame for the mixed financial results also announced Wednesday.

The faltering Chinese economy has become a major concern for Europe and especially Germany. While Germany’s most important trading partners remain the United States and other European countries, demand from China and other developing nations has in recent years grown much faster and has compensated for weakness in the traditional markets.

“Given Germany’s higher dependence on the emerging markets in recent years,” Ralph Solveen, an economist at Commerzbank, said in a note to clients, “much lower growth of the economy there would have a marked impact on Germany and could push the long-awaited upswing further into the future.”

The appointment of Mr. Kaeser, 56, is a return to the Siemens’s tradition of naming insiders to head the company. He promised to restore the company’s reputation for reliability and top-flight engineering, which has suffered recently because of a number of well-publicized fiascos.

Siemens has been late to deliver high-speed trains for the German railroad and had problems connecting a huge offshore wind generation project to the power grid. Those problems contributed to a profit warning last week, and a decline in sales and operating profit that Siemens reported on Wednesday. Those problems led to Mr. Löscher’s departure.

Mr. Löscher, 55, who had previously worked in top management at the American drug maker Merck and at General Electric, was brought aboard in 2007 to lead the company, one of Germany’s largest employers, during a corruption scandal.

The appointment of an outsider made sense at time when many existing Siemens managers were under a cloud, said Christian Stadler, an associate professor at Warwick Business School in Coventry, England, who has studied Siemens.

But over the long run it is difficult for an outsider lacking extensive internal connections to manage a company as diverse and far-flung as Siemens, Mr. Stadler said. Siemens products include trains, medical scanners and equipment for generating and transmitting electricity, and it operates in almost every country in the world.

“It is really hard for an outsider to get a grip on an organization as large and complex as Siemens,” Mr. Stadler said. “Without having the necessary networks, it’s almost impossible.”

Mr. Löscher’s departure was a foregone conclusion after Siemens said on Saturday that the supervisory board planned to vote on his dismissal at a meeting on Wednesday. In a statement on Wednesda

02/08/2013 at 08:05

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