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Alcatel layoffs sends shock wave over the Atlantic

It may look like an everyday kind of story to North Americans, and especially Ottawa IT workers, but it seems that Alcatel-Lucent SA’s restructuring plans have Europe up in arms.

French unions held a two-hour strike on Feb. 15 to protest Alcatel-Lucent’s unfamiliar North American tactic of cutting jobs in order to reduce costs. Unions are said to expect more action in the future.

Even France’s minister in charge of labour and youth, Gerard Larcher, met with Alcatel-Lucent employees and urged the company to find a “solution” for each worker laid off. It would seem hard to imagine the Canadian minister of labour and housing Jean-Pierre Blackburn making a similar move for Canadian workers.

The Paris-based telecom equipment maker announced it would be cutting 1,468 French jobs within two years and not extending 320 temporary jobs. The cuts amount to less than 12 per cent of the company’s French workforce. One fifth of the 5,000 jobs in Germany will also be cut and a Belgian plant in Geel had been sold, the trade unions added.

Alcatel-Lucent announced earlier this month that it planned to cut 12,500 jobs, or 16 per cent of its global workforce, after it posted a fourth-quarter net loss equivalent to $256 million, compared to a profit of $581 million in the same period the year before.

Alcatel-Lucent began operating as a merged entity late last year following the bid by French company Alcatel SA for U.S. firm Lucent Technologies Inc. last April to create the largest telecommunications equipment maker in the world. The combined company had approximately 80,000 employees at the end of 2006, including about 5,000 in New Jersey and 21,500 across the U.S.

Before the announcement in France, the buzz around Alcatel’s Ottawa-based Canadian headquarters, where 2,000 employees work, was that the majority of job cuts would be in the North American market. However, Ottawa employees will have to wait for the axe to fall as the company has remained tight-lipped about where the rest of the cuts would take place.

“We’re not providing a split by region or country,” said Alcatel-Lucent spokesperson Mary Ward. “We are going to do what is best for the company.”

Gary Davis of the Ottawa Talent Initiative, an organization that works with high-tech workers looking for work, said that he has not heard where the cuts will be.

“When things like this happen at the big places, an invisible wall goes up. I get the sense that even those handing out the notices are worried that they might be getting notices themselves,” he said.

After having a quick look at the strength of French labour groups, it is easy to see why Ottawa workers are nervous.

Last March, more than 1 million people marched through French streets. Workers’ unions threatened a general strike after the government pushed through a law to reduce the nation’s double-digit youth unemployment. The law aimed to make it easier for companies to lay off workers under the age of 26 through reducing severance to two weeks’ notice after the first month and one month’s notice after six months for workers under 26.

Currently, French law dictates that businesses have to pay a worker up to a year’s salary in severance pay if laid of after just two years on the job.

Because of the bloody protests, the government ended up replacing the controversial bill with subsidies to encourage companies to take on unqualified young staff.

“We saw what happened last spring when they tried to change that law, and the government backed off. But if you have a company over here with ties to France, it’s easier to lay people off here,” said Mr. Davis. “It’s a totally different culture as to how work fits into people’s lives. I have a friend who works for an environmental agency in France and right away she got six-weeks holidays. When she works she works like hell, but there is lots of room for manoeuvring.”

Tyler Chamberlin teaches international business and high-tech management at the University of Ottawa. He said although Ottawa workers might be easier to lay off, France is at a disadvantage, not Canada, when it comes to labour laws.

“It’s a major challenge for them (in France). When volatility is high, and people are losing their jobs, it’s difficult for everyone, but that is the reality of the industry. It makes it that much more difficult to deal in these industries when you have labour market inflexibility,” said Mr. Chamberlin.

“In France, they do have very good higher education systems and they produce very good engineers. But the spirit of entrepreneurship is not nearly as good as it is here. It’s hard for them to compete in the world market. It’s a bad environment right now and it could get even worse.”

Mr. Chamberlin was referring to the Socialist candidate in France’s upcoming election, Segolene Royal, who has promised even stronger labour laws. She was a front-runner in the election just a few weeks ago.

Mr. Chamberlin’s assessment of the situation is that the U.S. side of the merger, which included Lucent Technologies, has much more to worry about than the 2,000 workers in Ottawa.

“French labour laws are difficult. It is going to be cheaper to lose the North American. But more likely (cuts are) going to be done in the U.S.,” he said. “In a merger situation, they are going to try to keep the most important workers and reduce the redundancy. Prior to the merger, Alcatel was the side that was doing well and Lucent was a company that had been steadily losing ground. To what extent are they going to be closing the parts that were functioning well (in Ottawa) or phasing out the jobs in the old Lucent?”

But not everyone is convinced.

“I’ve heard that and I’ve heard the opposite. Presumably the company knows what they’re going to do, but they’re not spreading the word,” said Mr. Davis. “Time will tell.”

Comment: cdnedit@itbusiness.ca