Just over a year ago, Lenovo announced plans to
lay off 1,000 employees and the decision to transfer its headquarters from
Purchase, NY to Raleigh, NC. At the time, the job cuts represented 5% of
Lenovo's global workforce of 21,400 employees and were credited in helping the
company return to profitability.
One year later Lenovo has managed to become the world's #3
manufacturer of PCs behind HP and Dell. However, the company is once again
cutting jobs. The company will cut 1,400 jobs globally which will represent
another 5% decrease. The cuts are expected to save the company
roughly $100 million USD during the 2007-2008 fiscal year. The company will
also take a pre-tax restructuring charge of between $50 to $60 million USD for
its first fiscal quarter which ends on Jun 30, 2007.
"To win in the PC industry, our path is very
clear," said president and CEO William J. Amelio. "We must deliver
the world’s best-engineered PCs, offer our customers an unrivaled ownership
experience, and grow faster and more profitably than the rest of the industry.
This means we must make our organization more efficient by reducing
"There is no doubt we have made strong progress in the
past year, but it's clear we need to further accelerate that progress to be as
profitable and cost efficient as the rest of the industry," said Amelio.
"Today's actions are necessary to enable us to reduce expenses and grow
For Lenovo's operations in the Research
Triangle Park (RTP), 350
employees will be laid off. This represents one-fifth of the 1,600
employees working at Lenovo's Raleigh headquarters.
"I think most employees understand that (these) actions
reflect the realities of our fiercely competitive industry," said Ray
Gorman, a spokesman for Lenovo. "These are difficult and certainly painful
decisions and we do not take them lightly."
As is the growing trend with many companies in today's
cut-throat market, 750 of the jobs will be transitioned to overseas locations
where labor is cheaper. The remaining 650 positions are simply being
eliminated. "This is really about jobs moving to emerging markets, such as
Brazil, Eastern Europe, India and China," Gorman continued.
The average annual salary for Lenovo employees in the RTP
area is $70,000.