Siemens seeks damage limitation in collapse of BenQ's German mobile phone ops
Monday October 2, 8:40 PM
After a public outcry over the collapse of BenQ's German mobile telephone making operations, electronics giant Siemens has sought to repair its reputation by cancelling a generous pay-rise for top managers and using the money saved to help BenQ's German employees instead.
Siemens chairman Klaus Kleinfeld told the mass-circulation daily Bild that the group was shelving plans to award a whopping 30-percent pay hike to management board members and re-direct the cash into a financial hardship fund for BenQ's German employees instead.
"We want to show solidarity", Kleinfeld said Monday, announcing that Siemens -- which offloaded its loss-making mobile phone operations on to BenQ last year -- had decided to set up a 30-million-euro (38-million-dollar) fund to help pay for employee re-training.
"We think the way BenQ has acted in Germany is unacceptable and want to help where we can," Kleinfeld said.
"If BenQ is going to leave employees in the lurch, then we want to help actively and quickly."
Siemens said the total volume of the fund would actually be topped up to 35 million euros, with five million euros coming from the pay rise that management had decided to forego.
BenQ employees would also be treated as internal Siemens applicants if they applied for any of the current 2,000 job vacancies within the group, Siemens said in a statement.
BenQ's German mobile phone operations filed for insolvency on Friday, a day after the Taiwan-based parent company said that it was withdrawing funding from the unit, just a year after acquiring it from Siemens.
The business has some 3,000 employees at former Siemens production sites in Munich and in western Germany.
For many observers, the affair has cast Siemens in a very bad light, especially after the group announced recently that its management board were set to receive a staggering 30-percent pay rise.
"Siemens is battling to restore its image," ran the headline in the Monday edition of the Financial Times Deutschland.
And the conservative daily Frankfurter Allgemeine Zeitung found on its front page that Siemens was under heavy fire for its role in the BenQ affair.
In fact, at the time, Siemens even paid BenQ to take its mobile phone operations off its hands and suggestions were made in media reports that the German giant might even have been aware of BenQ's plans to shut down the operations.
Kleinfeld denied such speculation.
"Any suggestion that we willingly accepted the insolvency of BenQ Mobile in Germany is a malicious misrepresentation," the Siemens chief said.
And he said that Siemens would consider taking legal action against BenQ.
"We were promised that the German production sites would be maintained and even strengthened," but BenQ had broken those promises, he said.
Kleinfeld insisted that Siemens' supervisory board regarded the proposed pay hikes for top managment as justified.
However, a "new situation" had emerged to change the company's mind, the chairman said.
Not only unions and employees were harshly critical of the closure plans, but politicians of all political colours joined in the protests.
Even Chancellor Angela Merkel joined in the fray, personally telephoning Siemens chief Kleinfeld on Sunday, the Bild newspaper said.
"I can understand the anger and the feelings of the workforce who have suffered great sacrifices in order to keep their jobs," Merkel told Bild.
And Merkel said she had told Siemens that it was in a position of special responsibility.
As a result, she would welcome it "if Siemens will do everything it can to help give as many employees as possible a future perspective," Merkel said.
The head of the conservative sister CSU party, Edmund Stoiber, described the closure as a "slap in the face of employees". Only a few days earlier, Stoiber, regional premier of Bavaria, the home of Siemens, had described the proposed pay-hikes for Siemens' board as "regrettable".
The powerful IG Metall labour union described the announcement that Siemens managers would forego their pay rise was a "small sign" of the company's goodwill, but that the sum nevertheless represented no more than a "drop in the ocean".
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