Alcatel-Lucent will cut 10,000 jobs across the world, including 900 in its domestic French market, as part of a strategy to slash €1bn in costs from the lossmaking telecoms equipment maker, it confirmed on Tuesday.
In total, Alcatel-Lucent will reduce its staff by about 15,000 jobs by 2015, although it will also create 5,000 new jobs in growth areas that it has singled out as the future of the struggling French group.
Alcatel-Lucent has been consistently lossmaking since the ill-fated merger of the two companies in 2006, in spite of restructuring attempts by the previous management headed by Ben Verwaayen.
The job cuts represent about a seventh of the 70,000 people employed by Alcatel. The majority will be in Europe, Middle East and Africa, where 4,100 will go.
About 900 of these will be in France, which is likely to cause concern among the domestic labour unions, with the expected closure of sites at Rennes and Toulouse, according to reports in Les Échos and Le Figaro.
An additional 3,800 job cuts will be made in Asia, and 2,100 will go from its Americas operations.
Michel Combes, who joined Alcatel-Lucent as chief executive earlier this year, has already revealed the broad outline of the turnround strategy, but on Tuesday laid out the scale of the job losses that flow from the plan and informed the company’s European works council.
He said: “The strategic choices we made have been validated by our customers. To carry out this plan we must make difficult decisions and we will make them with open and transparent dialogue with our employees and their representatives.”
On Monday, Mr Combes met Fleur Pellerin, French minister for digital industries, apparently to brief her on the plan. The Socialist government has sought to support Alcatel in what is seen as a last-ditch effort to save the company.
But with union reaction and many on the left within government ranks likely to be hostile, a critical issue is likely to be whether French sites which will no longer be part of the group’s core activities under the restructuring plan will be found new owners.
Analysts had already estimated such a level of job cuts. Mr Combes’ strategy focuses on the faster growing digital operations at the expense of some of its more traditional operations, which Alcatel-Lucent has said will either be run for cash or sold.
The move is similar in scope to the 17,000 job cuts made at Nokia’s rival networks arm when it began its restructuring two years ago.
Additional reporting by Hugh Carnegy