Unplugging jobs

Germany's two biggest energy companies, E.ON and RWE, aim to make significant cuts in their local workforces as they brace for several years of weak profits.

The move follows the German government's decision earlier this year to phase nuclear energy – a highly lucrative business for both E.ON and RWE. The decision was prompted by Japan's Fukushima nuclear plant disaster.

At a Monday meeting, E.ON's supervisory board is to discuss the mid-term outlook, including staff numbers. In advance of the talks, a company spokesman told German newspaper Rheinische Post that about 6,000 jobs in Germany are on the line.

Cutting 'controllable costs'

In August, E.ON chief executive Johannes Teyssen announced plans to cut around 11,000 staff members from the company' total global workforce of about 79,500. The Düsseldorf-based company said it is targeting "controllable costs," which include head numbers, of 9.5 billion euros ($12.8 billion) by 2015.

Rival RWE plans to axe about 8,000 jobs from its staff 72,000, according to Rheinische Post. Half of the job cuts will come from divestments, the newspaper reported, citing people close to the negotiations.

In August, RWE announced plans to divest assets worth 11 billion euros and cut costs further by 1.5 billion next year. Job cuts, the Essen-based company said, are the direct result of decisions to close its Biblis nuclear power plant and to replace coal-fired plants with new renewable energy facilities requiring fewer people.

Smaller rivals also plan to tighten their belts. Sweden's Vattenfall Europe, which employs 20,000 people, said it intends to cut costs by 600 million euros ($795 million) over the next few years and has not ruled out job cuts as a means to achieve those savings.

France's nuclear giant Areva also reportedly has plans for cutting 1,300 jobs in Germany after Berlin's decision to abandon nuclear energy.

Bottom line impact

The decision is already affecting the bottom line for many energy companies.

RWE plunged into the red in the third quarter, giving the government's energy decision some of the blame.

EnBW reported a first-half loss after mothballing two of its four reactors, according to Chief Executive Hans-Peter Villis, who also hasn't ruled out job cuts.

Meanwhile, the energy shift has already caused Germany to rely more on electrical power imports from neighbors, according to industry association BDEW. Imports rose by 16.1 percent to 37.8 terawatt hours (TWh) in the first three quarter of this year, while exports declined by 8.7 percent to 39.4 TWh in the same period.

Author: John Blau (Reuters, AFP)
Editor: Cyrus Farivar