Siemens is axing 1,200 jobs from its large drives division - cutting the division`s workforce by about a quarter. The company says that the cutbacks, combined with a realignment of the division, are necessary if it is to achieve a sustained improvement in its competitiveness and profitability.

"Our market is characterised by overcapacities, intense competition, and heavy price pressure," says Dr Ulrich Feldmann, the division`s president. He adds that customer requirements are changing "drastically", from products towards systems.

"To conduct successful business in the future again, we will have to convert from a supplier of products to a supplier of systems," Feldmann says. "This calls for a realignment of our business, involving comprehensive process optimisation and capacity readjustment within the next two years."

About 550 of the job losses will be in Germany, where Siemens is considering converting two of its operations into separate legal entities. Outside Germany, about 650 jobs will disappear.

The large drives division, part of Siemens` Automation and Drives group, supplies motors, drives and combined systems in ratings from 200kW up to 35MW, mainly for industrial and railway applications. In the year to September 1999, its sales amounted to some £492m.

Siemens` Nuremberg plant will lose around 350 jobs as the product range is pruned, and the plant is turned into a global centre of competence for standard, high-performance drive systems.

Siemens is considering spinning off its converter and mechanical pre-assembly operations based in Erlangen. One reason given for this is that the site also manufactures for external customers and it will be easier to win this business as an independent company.

In an effort to make Siemens` Berlin plant economically viable, unprofitable production of industrial motors and generators will end there, cutting its workforce from 500 to around 300. The site will then concentrate on special drives and this business may also be spun off.