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Siemens shakeup returns power to country managers

The company logo of Siemens AG is pictured atop an office building in Berlin September 30, 2013. REUTERS/Tobias Schwarz

By Maria Sheahan

FRANKFURT (Reuters) - Siemens' new Chief Executive Joe Kaeser is returning more power to lower-level managers around the world with the aim of making the engineering group more nimble.

The company, Germany's second-biggest by market value, said in a statement on Thursday it was doing away with a level of regional management it calls "clusters", introduced by former chief executive Peter Loescher in 2008, to return to a flatter hierarchy and make it easier to take quick decisions.

"Eliminating the clusters will make Siemens more streamlined and closer to the markets," Siemens said as around 600 of its managers held an annual meeting in Berlin.

Kaeser, a 33-year company veteran, was named as CEO at the end of July after Siemens dumped Loescher four years before the end of his contract, following a series of profit warnings.

Now he has to find a way to whip into shape a lumbering conglomerate with 78 billion euros ($105 billion) of annual sales and products ranging from gas turbines to high-speed trains and ultrasound machines.

Under the new structure, managers in countries that are most important to Siemens in terms of business volume and growth prospects will report directly to the executive board members responsible for Siemens' four main businesses - Industry, Energy, Healthcare and Infrastructure & Cities.

These countries, which Siemens does not specify, account for more than 85 percent of revenue.

A German magazine earlier reported CEO Kaeser was also planning a major corporate revamp that would see him dismantle the Infrastructure & Cities (I&C) division and review the other three main businesses.

I&C was only just set up by Loescher in 2011. It bundles businesses making products ranging from security to power distribution systems and high-speed trains and generates an annual revenue of about 17.6 billion euros.

Manager Magazin cited sources as saying Siemens would shift I&C's businesses to other parts of the company.

It said Kaeser would announce concrete plans for the reorganization in the European spring of 2014, with any new structure to be implemented a year from now. Siemens declined to comment on the report.

The report seemed to contradict recent statements by Kaeser, who said earlier this month that there were no plans for further restructuring measures after the company's current 6 billion euro savings program ends next year.

Kaeser has vowed to put Siemens back on an "even keel" and end years of continual restructuring.

Since he took office on August 1, he has remained largely below the radar, but he has already started to assemble a team of managers to help him close the gap with more profitable rivals like Switzerland's ABB and U.S.-based General Electric.

Earlier this week, Siemens announced Kaeser was bringing back former Siemens manager Horst Kayser as his new head of strategy on November 1, around five years after he left Siemens to become CEO of German industrial robotics company Kuka.

($1 = 0.7412 euros)

(Fixes typographical error in first paragraph)

(Editing by David Evans)