Portable Phones and Throw-away Workers:
The Telecommunications Industry Cuts Jobs

Jul 30, 2001

Lucent, the giant U.S. telecommunications company which AT&T spun off a few years ago, just announced 20,000 more job cuts, on top of about 75,000 announced last year, using retirement, layoffs or corporate spinoffs. A year ago, Lucent had 155,000 workers; they plan on having only 60,000 when these job cuts are completed.

This followed an announcement by Alcatel, the French telecommunications giant, that it plans to get rid of the majority of its factories. Alcatel’s stock went up at this announcement.

For some months, the announcements of layoffs and job cuts in the telecommunications sector have touched workers in all the main industrial countries. The companies laying off are multi-nationals and, besides, are among the world’s most profitable.

This June, the world’s largest phone manufacturer, Nortel of Canada, announced it would cut 10,000 jobs, in addition to the 20,000 it had already announced earlier this year. Another big company in this industry, Motorola, also announced it would cut thousands of jobs.

These big telecommunications companies look to cut their work forces using three methods: layoffs pure and simple, transfering their factories to sub-contractors, and attrition–that is, not replacing workers who leave or are forced out, making the workers who are left work harder.

While these telecommunication companies get rid of manufacturing plants (to the benefit of their sub-contractors), they keep their research and sales divisions. Cisco, for example, has 20 factories producing telephone products, but owns only two of them. This allows Cisco to produce financial results that other companies can only dream of. Its capital is not frozen in the form of machinery or buildings; it simply goes where profits are best. As for the actual production, Cisco gets its products from subcontractors, putting them in competition with each other, making them face the risks of the market place.

The system is widespread in other sectors of industry as well. Nike, for example, is only a product name and a lot of capital. The production of their shoes is the responsibility of Asian sub-contractors, which allows Nike to hide the disgusting labor practices with which its products are made. This system, wherein several big trusts benefit from their dominant position, lets them reserve for themselves the most profitable activities, while leaving the problems of day-to-day production to sub-contractors–including taking responsibility for cutting jobs. Such a practice is as old as capitalism.

Today with sales slowing down, when a company sells its factories, its stock prices go up. But when the corporations which buy the factories then announce job cuts, their stock also goes up. All of this hides the incredible increase in profits enjoyed by the big trusts.

The electronics industry is made up of gigantic industrial groups. Solectron announced 8,200 layoffs in March, a tenth of its work force worldwide. Two weeks later, the company announced another 12,600 job cuts. Flextronics–to which Alcatel had sold one of its factories in France–is in the process of cutting 7,000 jobs in the U.S.

These electronics companies have engaged in a huge swap meet this past year, buying each other’s factories at the lowest possible price, then carrying out massive reductions of the work force in the factories they bought.

None of this makes sense from the standpoint of society’s interests.

All these decisions to cut jobs for the sake of profits are taken in corporate offices. If this threat of job cuts is to be stopped, it will be up to those who labor to do it. And it’s only with a widespread response that workers can force the bosses to give in to what the workers need: an end to job cuts, layoffs and speed-up.