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Motorola to cut up to 4,000 jobs |
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February 10, 2001
CHICAGO (AP) — Motorola Inc. plans to eliminate as many as 4,000 jobs from its semiconductor operations by year's end — its third round of cuts in 10 weeks as it scrambles to cut costs and stem slowing sales and profits. The reductions announced Friday amount to about 12 percent of jobs in its semiconductor products division, which operates big chip-making plants in Austin, Texas; Phoenix; and five countries in Europe and Asia. Since early December, Motorola has announced more than 9,000 cuts totaling some 7 percent of its work force, now about 130,000. The world's No. 5 maker of semiconductors and No. 2 in cell phones, it has been suffering from a slowdown in the semiconductor or computer chip market and falling profitability in its cell phone operations. Todd Bernier, an analyst with Chicago-based Morningstar, said Motorola's costs were high compared to its much larger chip competitors, including No. 1 Intel. He said the cuts were not a surprise since the company warned last month it would take the necessary steps to return to profitability. ``The only way you do that is to take a hatchet to the expense line, and this is the first step,'' he said. ``When you're trying to cut costs you have to outsource, shutter plants and cut people out of your business, unfortunately.'' A spokesman for the Schaumburg, Ill.-based company said the latest reductions are a reflection of the slowing economy rather than internal problems at its 34,000-employee chip operations. ``This does not signal any fundamental problems within Motorola's semiconductor business,'' said spokesman Ken Phillips of its chip division. ``It is literally driven by market weakness.'' The company has been hit by an industrywide slump in demand since last fall. While semiconductor sales rose 7 percent in the fourth quarter to $1.9 billion, totaling $7.9 billion for the year, orders slipped by 19 percent. Shares of Motorola were trading down 92 cents, or 4.6 percent, to close at $18.90 Friday on the New York Stock Exchange. Motorola began handing out pink slips Friday, although it said the cuts will be through a combination of attrition, voluntary severance and layoffs. Phillips declined to give a breakdown of where they are taking place, citing competitive reasons. ``It's not focused on any one business or manufacturing site, it's across the board. It will affect to one degree or another every one of our business units,'' he said. Previous job cuts in the last two months focused on its struggling cell phone business. Last month it eliminated 2,500 jobs at its cell phone manufacturing facility in Harvard, Ill. — one of its last two in the United States. In December it disclosed 2,870 layoffs in Iowa, Florida and Ireland as part of a moneysaving shift to more outsourcing. Semiconductors, used in computers, cars, Internet equipment and entertainment imaging, accounted for nearly a quarter of Motorola's $37.6 billion in total sales last year. Motorola earmarks a significant amount of its chips for use in the company's cell phones; Phillips said about 25 percent are used in Motorola wireless products which include phones and pagers. As the company pursued a restructuring to fix sinking profitability in its cell phone division last year, its stock plummeted and some shareholders urged that its chip business be sold. The big falloff in the market has made the semiconductor less attractive to possible suitors, however. The company's recent focus has been on cutting costs. ``We've been doing everything we can since last fall to get our costs down,'' Phillips said. ``The last thing we ever want to do is reduce our people.'' Motorola still is investing strongly in semiconductor research and development, he said. The company's semiconductor operation employs about 10,000 people in Austin and 7,700 in Phoenix. Other large manufacturing plants are located in Glasgow, Scotland; Toulouse, France; Hong Kong; Tianjin, China; Sendai, Japan, and Kuala Lumpur, Malaysia. Motorola also has chip-related operations in Edinburgh, Scotland; Geneva, Switzerland; Munich, Germany; Rio de Janeiro, Brazil; and Santiago, Chile. Phillips said four wafer-fabrication plants, each employing 300 to 400 people, will be phased out, but those workers will be offered jobs at other facilities. Two of the plants are in Austin and one each in Phoenix and France. On the Net: http://www.motorola.com |