Motorola to Cut 2,500 Jobs, Close Manufacturing Plant (Update2)
By Anthony Massucci
Schaumburg, Illinois, Jan. 15 (Bloomberg) -- Motorola Inc., the No. 2 maker of cellular telephones, said it will cut about 2,500 manufacturing jobs and shut an Illinois cell-phone plant after sales missed expectations.
The plant is scheduled to shut June 30 and will result in the elimination of about half the jobs at the company's Harvard, Illinois, location. About 2,500 engineering, marketing and administration workers in Harvard will keep their jobs, Motorola spokeswoman Leslie Dance said.
The company, which has 130,000 employees, is cutting costs because cell-phone sales were less than it forecast. It also has contacted out some phone production. Motorola said last week that slower growth in so-called handset sales will persist for as long as six months, after fourth-quarter orders fell 20 percent and profit dropped.
``There's a manufacturing overcapacity worldwide, so we're making these adjustments,'' Dance said. ``We've made it no secret that we're looking for a more cost-effective business.''
The workers will receive unspecified severance packages and be fired by June 30, the Schaumburg, Illinois-based company said. Motorola shares were unchanged at $22.13 Friday. U.S. markets were closed today for the Martin Luther King Jr. holiday.
Sales Are Slowing
Slowing orders for cell-phones may signal further sales declines in coming months, the company said last week. As growth in the mobile-phone market drops, Motorola is trying to cut production expenses to stem declining profit and help it compete with rival Nokia Oyj.
To cut production costs, Motorola has hired other manufacturers to make more of its phones and pagers. Last month, it hired Celestica Inc. to build more than $1 billion of communications equipment over three years and said it would cut about 2,870 jobs.
In May, Motorola announced a five-year, $30 billion contract with Flextronics International Ltd., which will build pagers, cell phones and digital set-top boxes for televisions.
``This particular action has nothing to do with Flextronics or Celestica,'' Dance said.
The Harvard campus will become a larger distribution center, Dance said, where cell phones are packed in boxes with manuals and sent to customers.
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