BenQ Mobile Germany: 1,900 Jobs Must Be Cut"

FRANKFURT -(Dow Jones)- German mobile telephone manufacturer BenQ Mobile, which filed for insolvency protection two weeks ago, Thursday said 1,900 jobs will be cut.

BenQ Mobile, a former Siemens unit sold to Taiwan's BenQ Corp. last year, employs about 3,000 people.

Germany's IG Metall labor union Thursday called on Siemens to make binding and comprehensive commitments to its former workers following the decision by the insolvency administrator Martin Prager to cut the workforce by about two-thirds.

As well as support for the employees in their search for new jobs, the union has demanded that Siemens make a statement on the security of company pensions for all BenQ workers.

IG Metall called on Siemens to provide an emergency fund of EUR200 million, saying the workers have already done a great deal to secure their jobs.

Those who are set to lose their jobs at BenQ Mobile will take part in a special program to obtain further qualifications.

But IG Metall has demanded further financial support from Siemens for the program to ensure its success, saying the laid-off employees must have a clear path into new jobs.

Siemens said it rejects IG Metall's demands. Siemens spokesman Marc Langendorf said: "We are the only ones that so far have contributed substantial support, without any legal obligation to do so."

Siemens has so far pledged a EUR35 million aid fund to help BenQ Germany's workforce.

Siemens has also said that it will help laid-off BenQ Germany employees with their job search and offer them preferential treatment when they apply for jobs at Siemens, among a host of initiatives.

"In addition to that, we continue to offer BenQ our services, such as, for instance, IT support," Langendorf said, adding that Siemens feels that it is now up to other parties to step in come up with concrete measures to help the development of BenQ Germany.

Radical and fundamental restructuring of the company and its business strategy is the only way that BenQ Mobile can continue to operate after the end of the year, the insolvency administrator Martin Prager told a staff meeting in Munich Thursday.

The new business model focuses on the development and design of mobile phones to order and under other brand names.

If the new model is successful, it could save about 1,150 jobs but about 1,900 people will no longer have jobs at the company, Prager added.

"After three weeks of intensive examination, it is clear that this is the only chance to keep the company intact," Prager said.

Costs increased in Germany when BenQ Mobile took over global contracts, resulting in losses of EUR850 million in 12 months.

The insolvency administrator said that all other options led to a break-up of the company and the sale of individual units.

"If this company is in the red, at the expense of its creditors, then I cannot and may not continue the business," Prager said.

By filing for insolvency, the company is no longer a global player but a European player with a tarnished brand name, a press statement by the insolvency administrator said.

The company must adjust to its new circumstances and restructure accordingly, it added.

The 1,900 job-cuts will affect administration, marketing and sales, and production. The administration and marketing workforce will be cut by about 75%. The production workforce will fall by about the same amount. Least affected is research and development, where about 500 out of a previous 700 employees will keep their jobs.

About 1,100 jobs will be cut in BenQ's Kamp Lintfort site, where 1,800 are currently employed. In Munich, about 850 of the 1,300-strong workforce will lose their jobs.

Prager said the affected workers would receive redundancy payments and the company will try to provide options for further training and qualifications with the help of the Federal Jobs Agency, or Bundesagentur fuer Arbeit, and labor union IG Metall. But the company won't be able to provide a great deal of financing for such training programs, the statement added.

The insolvency administrator said he is conducting "intensive talks" with the regional governments of Bavaria and North Rhine Westphalia, labor unions and Siemens to establish a "transfer-company," which would register the laid-off workers.

Under the new business model, BenQ Mobile will become a development company with a small production unit.

Prager said it is fighting to keep production operations but the market will decide in the end. At the moment, small scale production continues at Kamp Lintford. At the end of the day, only economically viable products can continue to be manufactured, the statement said, adding that there has already been positive reaction from customers to the new business model.

-By Maeve Curtin, Dow Jones Newswires; +49 69 29 725 515; maeve.curtin@dowjones.com

(Torsten Wolf contributed to this article.)

(END) Dow Jones Newswires"

Posted to the site on 19th October 2006