Motorola to Lay Off 2,500 at Illinois Plant
Struggling Motorola Inc. said Monday that it will halt cellular phone manufacturing at its plant in Harvard, Ill., and lay off about 2,500 workers in an effort to improve sagging profit.
The announcement came less than a week after the Schaumburg, Ill.-based tech giant, which also is a leading semiconductor manufacturer, pledged more cost-cutting measures in 2001 to try to revive its slumping cell phone business.
The 2,500 or so manufacturing jobs being eliminated represent nearly 2% of its work force of 130,000.
Motorola said the move is “part of a long-term, companywide strategy to improve supply chain efficiencies, consolidate manufacturing, improve financial performance and build on company strengths.”
About 2,500 employees will remain at the company facility in Harvard, 63 miles northwest of Chicago.
“In 2000, the Harvard manufacturing team lowered production costs and improved quality,” said Mike Zafirovski, president of Motorola’s Personal Communications Sector. “But we cannot competitively manufacture products when there is surplus global capacity at Motorola’s lower-cost sites.”
The focus at the key Motorola facility will be on fulfilling customer orders and on new-product sourcing, the company said.
Getting new phones quickly to market has been a consistent problem for Motorola, which was overtaken by Nokia in 1999 as the world’s No. 1 cell phone manufacturer and has fallen further and further behind.
Motorola’s share of the booming global cell phone market slipped to just 13%, while Nokia’s rose to 30%. Sweden’s Ericsson is a close No. 3.
The Harvard manufacturing shutdown is to take place by June 30, the company said.
Remaining manufacturing activity is to be consolidated into lower-cost Motorola locations and outsourced.
The manufacturing plant shutdown continues a restructuring that began under Chief Executive Christopher Galvin two years ago and accelerated in the second half of 2000 when a slump in phone profit worsened.
The company said six weeks ago that it would outsource more of its cell phone production, eliminating 2,870 jobs in Iowa, Florida and Ireland. The move to outsourcing mirrors an industrywide trend.
Sales of mobile phones and other wireless devices rose just 1% in the fourth quarter of 2000, to $3.5 billion. Reflecting a steepening downturn, orders for phones and wireless devices dropped 20% to $2.9 billion.
Motorola had sales of $37.6 billion last year.
