Siemens is co-operating with another German company, VEM Sachsenwerk, in the area of large machines. Under the deal, Siemens will obtain its medium-power squirrel-cage and slipring induction motors, and synchronous motors from VEM, while VEM will sell Siemens` fin-cooled high-voltage motors.

The strategic partnership follows Siemens` decision last October to restructure its large drives division and to buy in items that it no longer manufactures itself. The restructuring has involved the loss of around 1,200 jobs - about a quarter of the division`s workforce. A key aim has been to transform the operation from being a product vendor to a system vendor.

Manufacturing of large industrial machine has been transferred from Berlin to Nuremberg, and the components business based in Erlangen has been hived off as a separate business called Sykatec.

As an independent company - but still a wholly-owned subsidiary of Siemens` A&D Group - Sykatec will be able to sell its products more easily to non-Siemens customers.