Tomahawk, WI 10/10/2013 (BasicsMedia) – Wherever you look, you are likely you come across more of such headlines. More companies are opting to relieve their workers of their duties. Most of these companies are citing the need to cut down on costs in order to remain competitive in a world which is increasingly getting more competitive by the minute. This same scenario has now befallen Alcatel Lucent SA (ADR) (NYSE:ALU) which will sack close to, or more than, 10,000 of its workers by 2015. This is an exercise which will affect all its facilities throughout the entire globe. But is this warranted?
Sacking 10,000 Workers to Save ALU $1.3 Billion
The company has said that it is embarking on this exercise to help save it close to $1.3 billion. It has said that this move is important bearing in mind the fact that the company has endured a great deal of losses in the recent years. Its quarterly financial results have not been good reading for quite some time and since it has a few responsibilities which it owes both to investors and Wall Street, it has to go through such a period. This is something which more publicly traded companies are discovering that they must carry out fast in order to remain financially stable.
ALU To Lose 1/7 of Its Entire Workforce
The company expects to lose close to 1/7 of its total employees. It currently boasts of 77,000 and above employees working in its many plants located all over the world. The economic situation which affects the world, coupled with the fact that the company faces competition from some market leaders has made this decision one which it cannot avoid, or escape from. ALU hopes that by taking such drastic but necessary measures, it will only be left with employees who serve its high speed broadband and networking departments, which it considers its core products.
Some of the companies which are the fiercest competitors to ALU include Nokia of Finland, Huawei or China, and Ericsson of Sweden. ALU is in a difficult moment where it has not posted periods for a period of five consecutive quarters. This brings the decision to fire the 10,000 workers into perspective. If it fails to take such tough decisions, it may never be able to enjoy better financial returns in future. The company has to find ways of enjoying growth and this will only be possible with programs such as the Shift Plan which has been on since June 2013.
Other Cost Cutting Measures Carried out by ALU
However, the move to sack close to 15% of its workforce, has led to a lot of heated reactions both globally and in France. It also wants to relocate its headquarters from its Eiffel Tower base, to one it considers is a much cheaper option. It is yet to announce the new location where its headquarters will be based. These are measures that are likely to continue attracting a lot of negative response from the public, although investors and Wall Street may consider them necessary due to the effect the will have on ALU’s bottom line both in the short and long term.