Alcatel-Lucent pressed by French government, unions to diminish job cuts

Earlier this month struggling telecom-gear supplier Alcatel-Lucent said it will lay off 15% of its global workforce. After the statement company made a reaction from French government officials and labor unions were expected to oppose the cost saving policy. Investors also were confused on the move and French officials said they would try to limit its scope.

The phone gear-maker company said two days ago it would cut its global workforce by 15,000 people world-wide by the end of 2015, while hiring around 5,000 new employees as the firm is shifting focus in new technology direction.

The cuts are about to hit France massively, as research sites would close, erasing 900 jobs and another 900 that could be shifted to outsource.

French Industry Minister Arnaud Montebourg said he had asked Alcatel-Lucent to limit the job cuts.

“We asked Alcatel-Lucents management to revise downward its job-cut plan, to reduce it because we cannot eternally pay the price of errors,” Mr. Montebourg said.

The French union CFDT (French Democratic Confederation of Labor) also reacted as stating it was going to fight the job cuts. The union urged for the French government to help it lighten the hit to France. “It is unthinkable to allow this new bloodletting to occur without acting,” the union said.

CEO Michael Combes plan aims to cut 1 billion euros ($1.36 billion) of the firms costs, sell another 1 billion euros in assets and shift to new technology toward growth areas such as Internet routers. The main goal amid those changes is to become cash-flow positive by 2015.

If the plan is fully implemented, the cuts will hit particularly hard Europe, the Middle East and Africa, where a net 4,100 jobs will be eliminated, the company said. Employees will be reduced by 3,800 in the companys Asian Pacific operations and 2,100 in the Americas.

Investors showed mixed opinions. Kepler Cheuvreux analysts said that while the cost of restructuring should be fairly high over the next three years, the measures “are critical to turn around the company.” The stock closed down 4.1%.

The current consensus among 32 polled by CNN Money investment analysts is to hold stock in Alcatel Lucent SA. This rating was downgraded from a buy rating.