ST-Ericsson is not planning to make any further redundancies according to the French National Union for Autonomous Unions (UNSA) which is fighting a redundancy plan announced last June.
"Although we have strong concerns for the second part of 2012 and 2013, to our knowledge there are no other currently restructuring plan formally provided in ST-Ericsson," says UNSA, "it is true that we are to take action against the new plan being deployed, there is not to our knowledge of other world officially planned, except the one already in progress."
STE also says it does not plan any more redundancies. "ST-Ericsson firmly denies any new round of redundancies on top of the cost savings plan outlined on June 23, 2011, "STE communications executive Roland Sladek, told EW, "as any high technology company we cannot rule out limited mobility within the group or the supply chain but without an impact on employment."
Under its June 2011 redundancy plan STE said it would reduce employment by 500 people to save $120m a year in costs by the end of 2012.
That was the fourth round of redundancies since the company was established in 2008.
In November 2008, the company cut operating expenses by $250m in an initial round of restructuring.
Then, in April 2009, the company said it would cut 1,200 jobs expected to save $230m in costs. Later that year a further 600 jobs were cut with the aim of saving a further $115m.
The June 2011 cuts prompted UNSA to state: "We believe it is no longer possible for ETS (ST-Ericsson) to make a new plan (for re-structuring) without permanently compromising its viability."
However the hard facts are that the company seems incapable of sustaining itself at its present size of 6,700 people unless its management finds new market opportunities for STE address.
Assuming STE can gain a 20% share of the 3G chipset market for smart phones – a market share which is essential because third party developers will only fully support the top two or three chip-sets - and assuming the 2012-13 TAM will be 600m to 700m units with an average price of $8, then STE could command revenues of $1bn a year.
Assuming a margin of 30%, then this level of sales will permit an R&D budget of about $500m a year – which allows for the employment – at European salary levels – of about 2000 people. That’s a long way from the 6,700 employees which UNSA says are the minimum level to ensure viability.
If the STE management could find new applications areas and new markets for its undoubted expertise, then there would be a route to keeping the company at its present size. But, so far there has been little sign of STE management looking to identify or address new market challenges
