Business Services Industry

Siemens L&A Announces Restructuring Plan for Grand Rapids Operations; ``Shrink-to-Grow'' Strategy Includes Launch of Dematic Subsidiary, Workforce Reduction and Plant Closure

Business Wire, Dec 9, 2005

GRAND RAPIDS, Mich. -- Siemens Logistics and Assembly Systems (L&A) announced today a restructuring plan for its Grand Rapids-based operations. The reorganization strategy includes the January 1 formation of a separate legal entity called "Dematic," and the closure of the company's Eastern Avenue manufacturing facility in Wyoming by mid-2006, which will affect approximately 330 Eastern shop employees. Some of the affected workers will be transferred to the Plymouth Avenue plant.

Structuring the new organization also means eliminating 60 employees (or roughly five percent) of the company's 1200-member salaried workforce in Grand Rapids. L&A is taking this action to bring its staff and costs closer in line with reduced order rates. Reductions were announced to affected workers earlier today.

"We evaluated many different options to help the company be more competitive in a difficult market, but ultimately decided that these changes are necessary for the health and future of the organization," said Prashant Ranade, President and CEO of L&A's North American operations. "We understand how difficult this is for our employees, their families and the community, but recognize that we must restructure and scale back, if we want to strengthen our position and move forward."

In August 2005, Siemens announced its decision to fold its material-flow solutions business into a new subsidiary called Dematic GmbH. The decision was driven by a combination of the four-year, 35 percent decline in the market for package handling conveyor, and current customer demand for enhanced systems and solutions based on intelligent and IT-networked products.

The 35 percent decline in the market has left the company with approximately 200,000 excess square feet of manufacturing space.

"In the highly competitive market for conveyance and sortation systems, our customers expect us to control our fixed and variable costs," said Ranade. "So, we need to consolidate our facilities and reduce our fixed overhead expenses. The original (Plymouth Avenue) plant in Grand Rapids will remain the production center. Locating production adjacent to the product and project engineering offices in Grand Rapids makes the most sense. We deeply regret the loss of any job."

Company representatives will be working with affected employees regarding severance benefits and to assist individuals with the transition.

About Siemens

Siemens Logistics and Assembly Systems Inc. (Siemens L&A) is one of Siemens' operating companies in the United States. With its headquarters in Grand Rapids, Mich., Siemens L&A is a leading supplier of logistics and factory automation systems. As a systems integrator, Siemens L&A supplies a full range of products and services, from individual products and systems to complete turnkey facilities as a general contractor. The Siemens L&A Group worldwide has approximately 5,000 employees and a business volume of around $1.1 billion. For more information: www.usa.siemens.com/logisticsassembly.>