Motorola’s new Scotland bombshell
Motorola is searching for a buyer for its semiconductor production plant in South Queensferry, Scotland, and has delayed a planned move to a new plant in Dunfermline, Scotland, due to the company’s financial troubles, a Motorola spokesman said yesterday.
Motorola is also postponing plans to hire 750 new workers for the new plant in Dunfermline, said Tony Joyce, director of communications at Motorola in Scotland. Currently, there are 600 people working in South Queensferry and the plan is to eventually move them from South Queensferry to Dunfermine, Joyce said.
“We intend to carry on production in South Queensferry until the start at Dunfermline, and the (current South Queensferry) jobs are not at risk,” he said.
“We were hoping to start producing in Dunfermline by the end of this year. But the way things look in the semiconductor industry we’ve had to put those plans on ice,” Joyce said.
Motorola announced the acquisition of the plant in Dunfermline in April last year. At the time, the company said it would spend £1.3 billion on the plant, both to buy new equipment and to hire more workers.
When there are times of financial troubles, the first thing a company must do is to stop spending, Joyce said.
“We are not moving to Dunfermline until we can buy equipment for it,” he said. The company is hoping to start production in 2003 or 2004, he added.
“In the meantime, we have to look around to see if we can do a deal” to find a buyer for the plant in South Queensferry, Joyce said, although he added that to his knowledge there have been no offers for the factory yet.
Paolo Pescatore, senior research analyst in wireless mobile communication at International Data Corporation (IDC) is not surprised by Motorola’s decisions to postpone hiring and spending on new equipment.
“Out of all the vendors the two that are feeling the pinch are Motorola and Ericsson” Pescatore said. Nokia is doing better thanks to its popular and user-friendly handsets, he added.
“Given the slowdown in the mobile market many vendors see a way of cutting costs through the handset business and they don’t see a need to put money in,” Pescatore said.
“A means to reduce exposure is to do what Ericsson and Sony have done and form a joint venture where Ericsson can use its own technical expertise and join it with Sony’s market expertise and get the handsets out to the market that way,” he said. Ericsson and Sony announced in April plans to merge their mobile phone businesses and create a new brand.Vendors need to consider long-range plans, he said.
“Many operators are thinking too short term and should try and think about GPRS (general packet radio service) handsets and 3G (third generation). GPRS is just taking off,” Pescatore said. The best way for vendors to boost sales is to concentrate on getting handsets for GPRS and 3G out to the market instead of cutting costs, he said.
Both Motorola and its competitor Ericsson are under pressure from shareholders to reduce costs after reporting losses last month. Nokia, however, reported a profit in April, thanks mostly to its network division, which grew 35 per cent from a year ago. Revenue for Nokia’s handset division grew 20 per cent compared to the previous year.