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Motorola switching off 1,900 jobsPosted by Retirement on: 2005-10-06 07:09:34 in category:
Stocks & Securities [ Print | Permalink / 0 Comment(s) ] By Mike Hughlett CHICAGO _ As part of an ongoing effort to improve the performance of its supply chain efficiencies, Motorola Inc. said it will shed 1,900 jobs. Most of the global job cuts formally announced this week, however, had been disclosed in recent months. Many of the cuts are part of Motorola's attempt _ outlined over the summer _ to improve profit margins in its supply chain. For example, Motorola's Elgin, Ill., repair and distribution facility is being sold to another company, effectively outsourcing the work done there. Schaumburg, Ill.-based Motorola, the world's second-largest mobile phone maker, employs about 68,000 worldwide, including about 15,000 in the Chicago area. Those numbers aren't expected to change because despite job cuts in some areas, Motorola is hiring in other areas, said Motorola spokeswoman Jennifer Weyrauch. The 1,900 job cuts are spread across 29 facilities in more than 20 countries, Weyrauch said. The biggest single reduction is at the Elgin plant, which employs about 700. Motorola said last week that it's selling the facility to Pennsylvania-based Communications Test Design Inc. Motorola will keep about 150 of its Elgin employees. The other 550 are included in the 1,900 job reductions, though not all those workers will actually lose their jobs. CTDI will retain about 280 of those positions. Another 270 workers will be laid off, or may be able to get jobs at other CTDI plants. The 1,900 job cuts also include layoffs made over the summer in Motorola's Michigan-based automotive components business, Weyrauch said. The company said in June it had begun laying off up to 250 people in that division. The automotive operation makes electronic and navigational controls, and has struggled along with the auto industry. The unit, which accounts for about 5 percent of Motorola's revenues, is reportedly up for sale. Some of the job cuts _ the company didn't say how many _ also came from the conversion of a manufacturing plant in Korea into a design center. The company declined to give further specifics about the cuts. "One (cut) may be 20 people, one may be 100, so it really fluctuates," Weyrauch said. Many of the cuts are part of an effort to squeeze costs out of its supply chain. Earlier this year, the company created a new senior vice president post focused on that task and filled it with former IBM Corp. executive Stuart Reed. Reed outlined a plan this summer to improve efficiency by, among other things, cutting back on the number of its suppliers and by reducing Motorola's "physical footprint," a reference to its network of manufacturing and distribution centers. The effort is part of Motorola's goal of bringing its operating profit margins _ which have hovered between 10 percent to 11 percent _ to 13 percent to 15 percent. As part of the supply chain retooling, Motorola is likely to continue cutting jobs, said Ben Bollin, a stock analyst at FTN Midwest Securities in Cleveland. "I think you will see this pretty consistently in 2006, where they are cutting 1,000 employees (at a time)," he said. Other analysts said they also expect more job cuts for the same reason, but anticipate overall employment to remain flat as Motorola hires more people in other areas. "I don't expect net headcount reductions that are significant," said Brant Thompson, a stock analyst at Goldman Sachs in New York. Analysts do expect Motorola's sales to continue growing at a healthy clip, so revenues per employee should increase. This week's job cut disclosure came in tandem with a federal filing made by Motorola late Tuesday. The filing with securities regulators says Motorola will take a pretax, $70 million severance charge in the third quarter associated with the job cuts, and a pretax $20 million asset impairment charge. "This is just so small that it doesn't really matter," said Ed Snyder, a stock analyst at Charter Equity Research. "(Wall) Street is just not going to care that much." In trading Wednesday, Motorola's stock closed at $22, down 32 cents or 1.43 percent. Homepage Other open community sites http://www.business-business.biz Please support our sponsors: To design your custom retirement plan. http://www.retirement-plan.us For planning IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management- Nationally ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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