Unions claim they were reassured by Marconi less than two weeks ago that the company would not be making more job cuts for the foreseeable future.
A delegation from the MSF that went to the group’s London head office on Wednesday 22 August was told by the board that an operational review was going well and the company would meet its break-even target.
A union spokesman said Tuesday’s surprise announcement of 2,000 redundancies, following a trading loss in the first quarter, made a mockery of the new rules governing union consultation.
Period of consultation
‘We are now within the period of consultation which is supposed to last for 90 days. We are concerned that these announcements have breached European law,’ said a spokesman before a meeting of Marconi shop stewards in Birmingham on Wednesday.
Marconi’s chairman Sir Roger Hurn and chief executive Lord Simpson were both ousted after the board was told the company had made a loss of £227m in the first quarter of the current financial year. Sales were reported to have dropped by more than 25% in the three months to the end of June and debt stood at £4.4bn – nearly three times the company’s market value.
As a result Marconi was forced to warn investors that it would fail to meet its previously stated target of a break-even on operating costs for the six months to the end of September. The operating review conducted by Lord Simpson will lead to the job cuts and a cut in development spending and will focus resources on its core network communications business. Plans for a £250m R&D centre at Ansty, Warwickshire, are also expected to be shelved.
Over 600 of the job losses will fall in the UK, with 1,000 going in the US and the rest in central America, Europe and Asia.
The move brings the total number of job losses announced this year to 10,000. So far 5,977 employees have left the company and another 1,625 have been transferred to Jabil Circuit as part of Marconi’s manufacturing outsourcing programme.
Despite the firm’s perilous position, the MSF said it was keen to work with the company to get over its problems, but would fight any compulsory redundancies.’Marconi has areas which are still highly profitable. We would like to sit down with the company and work through this. It is important to get past the short-term mentality of making cuts and take the long-term view. What will happen when the up-turn comes and the company is without its R&D staff?’
However, the future still looks bleak for Marconi and the telecoms sector in general. The City appeared unimpressed by the cost cutting moves and the appointment of Mike Parton as new chief executive.
Meanwhile Marconi shares plummeted 28% to close at an all-time low of 38p on Wednesday.
Shareholders were outraged when it emerged that Simpson could receive a pay-off of up to £1m, while Hurn is expected to receive £300,000. However the amount is likely to be affected by the drop in falling stocks.
Marconi was joined this week in making cuts by the electronics firm Celestica which announced on Wednesday it would make 1,000 redundancies in England. More than half of these would be at the company’s Ashton-under-Lyne factory in Greater Manchester which will close in February 2002. The remaining cuts will fall among its support staff at its Kidsgrove base in Stoke-on-Trent. Its operation at Bradwell Wood, in Stoke, will be moved to Telford and all 300 employees will be offered the chance to move with it.
In response to the continuing decline, unions plan to lobby the government to take action at next week’s TUC conference. The MSF has called for the appointment of a ‘manufacturing Tsar’ and the recall of the Manufacturing Task Force.
‘The Marconi situation is indicative of the general crisis in telecoms and in UK manufacturing, and at the conference we will be meeting trade secretary Patricia Hewitt to discuss measures to rescue the manufacturing sector, including recalling the Manufacturing Task Force set up by Stephen Byers,’ said MSF general secretary Roger Lyons.