The ax will soon start swinging in the executive offices at Motorola Inc.
On Monday, the struggling technology giant confirmed that about 20 percent of its 600 top executives will be laid off by the end of March.
The high-level cuts, which could start as early as next week, will substantially reduce the ranks of Motorola executives with the title of vice president or higher.
These layoffs come about as Schaumburg-based Motorola continues paring its workforce worldwide. By the end of this year, the company expects to have shed 48,400 employees through layoffs and sales of business units, reducing its workforce by nearly one-third compared with August 2000, when it had 150,000 employees.
The company also announced Monday that as part of an earlier layoff announcement, 900 workers at a Motorola semiconductor plant in Hong Kong would be released.
While the Hong Kong cuts continue Motorola’s effort to slash expenses as demand falls, the planned executive departures represent a new effort to streamline the top of the company’s corporate ladder.
Responding with a statement to questions from the Tribune, Motorola said the executive layoffs are part of the company’s previously announced cuts.
“While our sales have dropped more than 20 percent, our officer level has remained fairly constant,” the statement said. “As a result of the changes in the business, we have a clear responsibility to eliminate management layers. This effort is critical to increasing our responsiveness and improving our operating efficiency.”
Two former Motorola officials said the executive cuts address a long-standing problem at Motorola, which they described as “top-heavy” compared with other firms.
The former executives and other Motorola trackers say the cuts are the handiwork of Ed Breen, who was named the company’s president and chief operating officer in October. Breen assumed those positions Jan. 1.
“I’m sure he feels it’s too fat at the top,” said one former executive. “You can’t possibly come from the industry and not feel that. It’s overwhelming.”
Through a company spokeswoman, Breen declined to comment.
Analysts have criticized Motorola for not being nimble enough in its fast-moving technology markets, and the former Motorola officials said the company’s top-level bureaucracy contributed to its inability to move quickly.
“When a guy takes over, he’s got to make a couple splashes and that’s a good one to make,” the other former executive said.
Wojtek Uzdelewicz, an analyst at Bear, Stearns & Co., also praised the move by Motorola to restructure its organization, but said he is concerned about whether a long-term strategic gain will result from the short-term cost savings.
“The big mistake was [Motorola CEO] Chris [Galvin] didn’t set a big accountability culture from the beginning,” Uzdelewicz said. “It’s very hard to change that. They typically wait too long before taking drastic steps.”
Responding with a statement to questions from the Tribune, Motorola said the executive layoffs are part of company’s previously announced cuts.
The Motorola statement said the decision to reduce the executive headcount was made by Galvin.
“It’s important to point out that members of the officer corps have not been singled out, but rather are part of a global force reduction across the company,” the statement said. “It would not be equitable or sensible to make any one level immune to these actions.”
