To control its handset oversupply, French telecommunications equipment vendor Alcatel SA has stopped production of mobile phones this week, spokesperson Klaus Wustrack confirmed Tuesday.
"We have stopped production now, this week, and we are doing the same thing one week at the end of April," Wustrack said. Although they will not have to report to work, the employees will get paid, he added. However, the workers will have to give up between 8 and 10 percent of their salaries during those two weeks, depending on their position, Wustrack said. It will be treated as paid work furlough or leave of absence, he added.
The temporary closures have been planned for some time. "When you deal with unions, you don't just shut down production the same week you decide to do it," said Wustrack.
A total of 1,500 people, at the company's two plants in France, will get the two weeks off. There are 700 workers in Alcatel's plant in the west of France, in Laval, and another 800 in Illkirch in the east, near the German border, he said. "Our plant in China will not shut down," Wustrack said.
The handset production is the only part of Alcatel's business that is being closed down, said Wustrack. He would not disclose how much the company is expecting to save during the two weeks.
In January, Alcatel lowered its sales forecast for this year, citing weakening demand in the US ]Alcatel's temporary suspension in production coincides with the downward earnings revision of its main competitor, Swedish L.M. Ericsson Telephone Co. and with the announcement Tuesday from Motorola Inc. that it will lay off 7,000 employees. Canadian Nortel Networks Corp., another of Alcatel's competitors, announced job cuts and an expected loss in February. Alcatel, in Paris, can be contacted at +33-1-4076-1010, or on the Web at http://www.alcatel.com/.