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Appeared on: Thursday, October 19, 2006
BenQ Mobile cuts two thirds of workforce

The only chance to bring insolvent cellphone manufacturer BenQ Mobile to profitability is adopting an development-centric business model, said insolvency administrator Martin Prager at a press conference.

The price for the turnaround will be a radical staff reduction.

While expectations and estimates as to the unavoidable job reductions so far oscillated around the number of 1000, Prager now almost doubled this figure. Hoping to save 1150 jobs in production and design, he said there is not enough work for 1900 employees.

"After three weeks of intensive review, it became clear that this model is the only chance to save the company", Prager explained. Concentrating on design and development and, to a lesser extend, on manufacturing would have been the only viable option for the company to survive. "All other options would boil down to asset stripping and the sale of the company part by part", he said.

Besides jobs in administration, marketing and sales, manufacturing is hit the hardest: In these departments, 75 percent of the jobs will be dispensable. In contrast, 500 of the 700 designers and developers in Munich will keep their jobs.

In the future, BenQ Mobile will focus on R&D, quality management and customer specific logistics, offering its services to large mobile phone OEMs and mobile carriers. Thus, the company will become an R&D-centric organization with minor manufacturing activities, explained CEO Clemens Joos.

Prager said the insolvency transformed the former global player BenQ Mobile into a company with a damaged brand and with a business restricted to European markets. Thus, the entire value chain will need to be restructured. He also said that besides restructuring and legacy charges, the assumption of global responsibilities were contributing factors for the insolvency.

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