The former subsidiary of Lucent Technologies told investors April 24 during its earnings call that it would cut 2,000 workers out of 18,500 in hopes of saving about $110 million a year. The cuts will come from three plants in Pennsylvania as well as facilities in California and Florida.
The Allentown, Pa.-based company is not the only component maker to feel the wrath of the downturn affecting the telecommunications sector.
JDS Uniphase announced a major restructuring program that will force the company to vacate 25 buildings, close several operations, and cut 5,000 employees or 20 percent of its total staff.
JDS and Agere supply components to telecommunications equipment makers like Lucent Technologies and Nortel Networks, all of which have experienced slowing business as their telecommunications carrier customers reduce spending on capital equipment.
Agere reported sluggish earnings during its last quarter. The company said pro forma earnings were breakeven for its fiscal second quarter, compared with a profit of 5 cents a share for the same quarter last year and 6 cents during the previous quarter.
Revenue came in at $1.2 billion, up from $1.1 billion last year, but the company said sales for next quarter will fall within a range of $950 million and $1.04 billion.
Ronald Althouse, president of the International Brotherhood of Electrical Workers Local 1898, which represents about 2,050 workers at the plant near Reading, Pa., said that the downturn caught many people off guard. "It just seems like a big ax came down and chopped us," he said, adding that he was surprised that the company did not see the winds changing earlier.
Althouse says incoming workers were told a few months ago before the situation started to deteriorate that there would be work until 2003 at least. Now the company plans to let about 445 union workers go and is conducting talks with unions about the process.
The Reading plant has experienced abrupt change before and operated under several names. Althouse recalls the plant has been controlled by Western Electric, AT&T, Lucent and now Agere during the past 15 years. And the current state of the industry does not ease his concerns.
"We're still worried that our name could change again."