The world's largest computer maker, Hewlett Packard (HP) is set to cut 5,700 European jobs from its EMEA (European, Middle East and African) operations by relocating its manufacturing plants from the UK and Germany to Czechoslovakia, to cut costs amid the depressed global market for computers.
Palo Alto-based HP, yesterday submitted a restructuring plan for the region to its European Works Council. The plan envisages HP moving its enterprise, storage and servers (ESS) plants from Germany and Scotland to the Czech Republic in 2010.
This would result in about 5,700 jobs being lost across the EMEA region over the next two years from a workforce strength of approximately 80,000 employees in this region.
The move will affect 843 jobs at the Erskine plant in Scotland, which currently employs around 1,300, but the company has not yet released details of the number of jobs being lost in Germany as the result of the relocation of its plants.
"In keeping with governing local law and established practice, HP will consult with employee representatives in the countries affected by the proposal on the conditions for the implementation of the restructuring measures," the company said in a statement.
Many of the job cuts are also related to the company's plan to cut 24,600 jobs over three years as it integrates enterprise technology firm Electronic Data Systems Corp, which it acquired for $13.9 billion in August, to emerge as IBM's strongest challenger. (See: HP completes $13.9 billion acquisition of EDS)
Before the acquisition, HP had 178,000 employees and EDS 142,000, a total of 320,000, making this cut to 7.5 per cent of the company's combined work force.
HP had said at that time that most of the cuts, with about half of them, that will come in fiscal 2009, would be in non-consulting areas, such as human resources, finance, legal, real estate and other business sectors where there are duplicated functions within the combined companies. (See: HP to lay off 24,600 in EDS integration)
Early this month, HP posted $1.72 billion in net profit in the month ending April although its quarterly profits were down by 17 per cent after sales slumped in all areas of its operations and forecasted on 19 May that this fiscal year's revenue would fall 4 per cent to 5 per cent.
Its imaging and printing revenue had dropped 23 per cent while its storage and server sales declined 28 per cent.
The global economic downturn has pummeled computer companies worldwide have been hit hard due to the global economic downturn and Gartner the research company, releasing its 2009 semiconductor report yesterday, projected ''Worldwide semiconductor revenue is forecast to reach $198 billion in 2009, a 22.4 per cent decline from 2008 revenue of $255 billion.''