Telecoms suffer as global slowdown bites

The gloom surrounding the telecommunications industry appeared to worsen this week, with further announcements of heavy job losses in the sector.

The gloom surrounding the telecommunications industry worsened this week, with further announcements of heavy job losses in the sector.

Both Cisco Systems and Philips have issued warnings of job cuts, with more bad news to come from Ericsson and Motorola.

Ericsson is expected to announce another 6,000 job losses when it publishes its first quarter results this week. It is believed to be cutting jobs from its research and development operations, as well as IT, marketing and administrative staff, as part of a global cost cutting drive.

Bob Shannon, AEEU national officer, said the union hopes compulsory redundancies will be avoided, as the company has a good record in handling job cuts. ‘If there are compulsory redundancies in the UK it will be a first,’ he said. ‘Ericsson tends to adopt the Swedish method of dealing with job losses rather than simply obeying what is required under UK law.’

The move follows a recent profits warning, in which Ericsson said it would lose between £275m and £340m in the first quarter of this year.

Ericsson axed 3,300 jobs from its plants in Sweden and the UK in March, and announced the closure of two of its UK plants, at Carlton near Nottingham and Scunthorpe.

But in a letter to The Engineer, Kirti Patel, an engineer at the Carlton site, said closure was purely a last resort. Ericsson has offered to help local managers find an alternative buyer for both plants, he said. ‘The management have been very helpful — it’s not a doom and gloom scenario yet.’

Motorola is also expected to announce the extent of job losses at its Bathgate plant near Edinburgh in the next few days. Fears that Motorola was planning to close the site altogether, with the loss of up to 3,200 jobs, have already prompted prime minister Tony Blair to contact the company’s chief executive, Christopher Galvin.

Cancelled orders

In a further sign that the US slowdown may be spreading to Europe, Dutch-based electronics group Philips said it plans to cut 7,000 staff from its global workforce of 200,000.

The company, which employs 6,300 people at manufacturing plants in the UK, blamed the rapid downturn in the telecommunications and PC industries for the job cuts. Details of the job losses will be announced later in the year.

Russ Mould, telecoms analyst at UBS Warburg, said the semi-conductor industry has taken a sharper downturn than Philips had expected, causing customers to cancel orders.

Cisco Systems, which makes much of the infrastructure used to power the internet, also announced this week it would slash 8,500 jobs from its global staff of 40,000, in response to a slowdown in the worldwide telecommunications industry.

Warning of a 30% drop in revenues for this quarter, Cisco’s chief executive, John Chambers, said the downturn was ‘the fastest any industry our size has decelerated.’ The company employs 2,000 staff in the UK.

Marconi, the UK telecommunications equipment maker, last week said it is to cut 3,000 jobs worldwide, of which 1,500 are in the UK, as part of a restructuring programme. The company said the majority of job losses would be among its IT and logistics staff.