FRANKFURT, Germany—The official in charge of a 90-day effort to save aspects of the Munich-based BenQ-Siemens handset business has announced that 1,900 of the firm’s 3,000 workers must be laid off. Insolvency Administrator Martin Prager is hoping the remaining workers could thrive as a handset development and design house for third-party manufacturers. If viable, the new business would preserve 1,100 German jobs.
Under such an approach, 500 of the company’s 700 current research and development jobs would remain, but fully 75 percent of the company’s current administrative, marketing, sales and production workers would be fired.
Prager warned, however, that if the new model continued the company’s plunge into the red, the business would have to close and all employees put out of work.
Meanwhile, Siemens AG, the German company that “sold” its handset business to Taiwan-based BenQ Corp. with a $303 million payment to sweeten the deal, continued to take fire from German unions angry over the turn of events. The unions have charged that Siemens knew the handset business was failing and that the sale to BenQ was a method to abdicate responsibility for eventual job losses.
Though Siemens has created a $45 million fund for sustaining and retraining laid-off workers at BenQ-Siemens, the IG Metall labor union today demanded that Siemens provide $250 million for the laid-off workers. Siemens responded that it had done its part and that other, unnamed parties needed to step forward with assistance.
According to a Reuters report, parent BenQ Corp. is likely to post a fourth straight quarterly loss next week, in part due to losses accruing from its failed German operation. The projected quarterly loss is about $135 million and the annual loss about $478 million, more than doubling last year’s loss.
BenQ was the world’s sixth-largest handset vendor—it also makes laptops, LCD TVs, PC monitors and digital cameras—but profit margins dropped after delays in delivering handsets. Further, the market’s top handset vendors have increasingly grabbed ever-greater market share, squeezing second-tier vendors. Analysts, however, are projecting that BenQ’s losses will slow and that the company will return to profitability next year as it recovers from jettisoning failed mobile phone units in Germany and Latin America.
