Job Cuts Continue at Vendors
Layoffs continue at key telecom vendors, despite claims the industry has hit bottom.
Tellabs announced in August it will outsource manufacturing of its North American products to Sanmina-SCI Corp., resulting in the layoff of about 325 employees. Sanmina- SCI, based in San Jose, Calif., has manufacturing facilities around the world.
Manufacturing operations in Bolingbrook, Ill., are expected to cease by year-end.
Tellabs plans to move remaining employees from its main building in Bolingbrook to its Naperville, Ill., headquarters and sell the 545,000-square-foot main building in Bolingbrook.
Tellabs expects to benefit from lower manufacturing costs and by freeing up capital now tied up in equipment, inventory and facilities. Since implementing outsourced manufacturing will take through year-end to accomplish, these benefits will be slight in 2003 and are expected to increase in 2004 and beyond. Beginning in the third quarter, Tellabs will record $90 million to $110 million in charges connected with the outsourcing move.
Siemens also announced layoffs recently. Given the sustained weakness of the market, Siemens mobile, the mobile communications arm of Siemens AG, says it plans to cut 2,300 jobs, including 500 in Germany, by the end of fiscal 2004.
