Alcatel-Lucent wants to lay off 10,000 worldwide

Alcatel-Lucent (Euronext Paris and NYSE: ALU) says it needs to cut 10,000 jobs worldwide, including 900 in its domestic French market, as part of The Shift Plan announced on June 19 by its new chief executive officer, Michel Combes (see “Alcatel-Lucent shifts and optical transport, FTTx shift with it”).

The company presented its plans to the European Works Council (ECID), saying the job cuts are necessary to ensure a sustainable financial future and successful company transformation.

Alcatel-Lucent’s Shift Plan aims to restore profitability to the loss-making company, by repositioning it as a specialist in the next-generation technologies of IP networking, cloud, and ultra-broadband access. As part of The Shift Plan, Alcatel-Lucent has committed to achieve fixed cost savings of €1 billion or more than 15% of fixed costs by the end of 2015.

The proposals are similar in scope to those by rival Nokia Siemens Networks (now Nokia Solutions and Networks) when it restructured two years ago (see “Nokia Siemens Networks refocus could cost 17,000 their jobs”).

Cost savings will be achieved by reallocating R&D investment to next-generation technologies which should represent 85% of R&D spend in 2015, as opposed to 65% today, while reducing R&D spend in legacy technologies by 60%. Administrative, sales, and support functions will also be reduced to bring those costs in line with industry standards.

Said Combes, "We launched The Shift Plan in June to give Alcatel-Lucent an industrially sustainable future. 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. The Shift Plan is about the company regaining control of its destiny."

During the meeting with ECID, Alcatel-Lucent presented a net reduction plan of approximately 10,000 jobs worldwide by the end of 2015. All geographic areas where Alcatel-Lucent operates will be affected, with the reduction of 4100 positions in Europe, Middle East and Africa, 3800 in Asia Pacific, and 2100 in Americas. By the end of 2015, Alcatel-Lucent will halve the number of its business hubs globally.

In France the industrial transformation will focus R&D activities on future technologies such as 4G and IP platforms, in particular with the creation of a new small cells competency center, an area of particular interest for the company. In terms of research, France will keep its focus on optics and strengthen it in what it called “mathematics,” which it sees as the heart of next-generation network software.

Business activities in France dealing with service providers will be concentrated in two main sites – Villarceaux, south of Paris will become Alcatel-Lucent’s primary R&D center in Europe and one of the world’s largest R&D campuses, and Lannion will specialize in ultra-broadband mobile access and subscriber data management (SDM) technologies.

In France, the company intends to reduce approximately 900 positions in 2014 primarily in support, administrative and sales functions (via a legally-compliant program know in France as Plan de Sauvegarde pour l’Emploi). The reduction in headcount will be offset by the recruitment of 200 engineers and technicians with new technical competencies. The local unemployment figures may be also offset by internal mobility, transfers to partners and redeployments for approximately 900 employees whose jobs will be retained, inside or outside the company by 2015.

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