Dell, Lenovo lay off workers

Belt tightening measures by computer manufacturers Dell and Lenovo will result in the mass lay off of more than 4,400 workers in Europe and Asia.

About 1,900 employees will be laid off over the next year at Dell’s factory in Limerick, Ireland as the computer company wind down operations and transfer manufacturing activities to Poland.

The Limerick facility will continue to coordinate manufacturing, logistics and supply chain-related functions but Dell’s factory in Lodz, Poland, which began producing products such as the Latitude and Inspiron laptops in 2007, will pick up the slack, the company said. Dell also recently revamped its business sales unit.

Meanwhile, amid growing fears that many countries face a long and painful economic recession, Lenovo plans to lay off 2,500 workers, cut the salaries of its executives and restructure its Asian operations in an attempt to weather the downturn, the company said Thursday.

Lenovo will take a US$150 million restructuring charge, the majority of which will be taken during the current quarter, as a result of these changes. Looking ahead, the company hopes to save US$300 million during its upcoming 2009/2010 fiscal year, which ends on March 31, 2010.

The layoffs, described as part of a “resource redeployment plan,” represent 11 percent of Lenovo’s global workforce, and the employees will be let go during the first quarter of 2009, the company said. It did not say where the layoffs will take place or whether they would be spread evenly across all of the regions where the company operates.

Dell said its Global Innovation Solutions Center and EMEA Command Center will stay in Limerick, and other sales and marketing activities will continue at its Dublin office.

Dell said the changes are part of its three-year, $3 billion cost-reduction plan that has including a review of its supply chain. Dell has been trying to revamp its business as the direct sales model it pioneered lost effectiveness. Dell warned in early 2008 that it would cut at least 8,800 jobs in an effort to streamline the company’s operations.

Dell has been increasingly trying to move into providing IT services such as infrastructure management to help make up for falling margins on PCs.

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Dell’s net income and revenue dropped in its third quarter results reported in November, in part due to declining demand. Revenue for the quarter came in at US$15.16 billion, a 3 percent drop compared to its third quarter a year prior, with its net income at $727 million, a 5 percent decline.

Lenovo will also cut the pay of managers by 30 percent to 50 percent, including bonuses, and wants to rein in spending on expenses and other functions, such as human resources, finance and marketing, it said.

The company also plans to combine its operations in Asia-Pacific and Russia under the lead of Chen Shaopeng, who currently heads Lenovo’s China operations.

The new region headed by Chen, to be called Asia-Pacific and Russia, bucks a recent trend of companies elevating China’s role as a single market of global importance. But Lenovo said forming the new region will lower operating expenses by combining support and other functions.

Lenovo is eyeing to purchase Fujitsu, in the hopes of gaining entry into the European PC.

As a result of these changes, the current head of Lenovo’s Asia-Pacific operations, Senior Vice President David Miller, will leave the company after the restructuring is complete.

Scott DiValerio, senior vice president and president of Lenovo’s Americas Group, is also leaving the company. The Americas Group will be led by Rory Read, Lenovo’s senior vice president of operations, the company said.

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