Engineering and electronics giant Siemens is facing heavy criticism in Germany amid accusations it let its mobile phone division die while handing hefty pay rises to top managers.
BenQ Corp (明基), the Taiwanese group which acquired the Siemens mobile phone subsidiary last year, said last Thursday it was pulling the plug because of deepening losses, plunging 3,000 jobs into jeopardy.
That came just days after Siemens announced it was awarding 30 percent pay rises to its top managers.
"Under the leadership of Klaus Kleinfeld, the giant is lurching," the Munich-based Sueddeutsche Zeitung said on Friday of the 48-year-old who took over the reins at Siemens last year.
Over the past two weeks, unions and politicians have hardly had a good word to say about one of Germany's industrial jewels.
Even the conservative leader of the powerful state of Bavaria, Edmund Stoiber, stepped into the row, describing the pay hikes at the Munich-based firm as "extremely regrettable."
Heinrich von Pierer, Siemens' supervisory board chairman, tried to justify the move with a reference to a top soccer team.
"At Siemens, we are playing in the Champions League, not in the Bavarian local league. And like Bayern Munich, we will only attract the top staff if we pay the right sort of money," he said.
It was not an argument that went down well with workers.
In the telecommunications division Com, 1,000 people are about to lose their jobs, hot on the heels of the 1,500 cut last year.
Another 5,400 jobs are set to be slashed in the SBS information technology subsidiary, including 2,400 in Germany.
Rumors are flying that either one or both units might close.
Against this tense backdrop, BenQ's decision to shut down its mobile phone manufacturing in Germany inflicted further harm to Siemens' image.
Siemens offloaded the mobile phone operations to BenQ last year, even paying to have it taken off its hands, observers recalled on Friday.
Unions have told BenQ Mobile's employees in Munich and sites in western Germany to vent their anger at Siemens.
The general opinion is that Siemens raised unrealistic expectations that the loss-making unit could be saved and then left someone else to do the dirty work.
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Editorial: BenQ's failure a cautionary tale