UK and Germany to suffer in IBM job cuts

IBM said today it will be cutting jobs in the UK, Germany, Italy and France as part of a restructuring that will slash between 10,000 and 13,000 positions, mostly in Europe.

IBM currently employs about 3,700 people in Ireland, most of them at its facility in the Mulhuddart area of west Dublin, 25,000 people in the UK and has 100,000 staff across Europe.

Chief Financial Officer Mark Loughridge named the countries affected on a conference call with analysts.

The changes will be implemented by July 4, subject to the completion of a consultation process.

Cuts must be approved by work councils in Europe.

IBM spokesman Fred McNeese said earlier today that most of the cuts will involve workers voluntarily leaving their job.

The company began eliminating jobs in Europe even before it announced its disappointing first-quarter earnings last month. In March, IBM laid off 500 Swedish workers, 9% of its work force there, and shut down most operations in five cities.

“It’s no secret there has been a period of soft economic conditions in Europe and many other countries,” Loughridge said.

The changes will make the company’s services business less hierarchical and more streamlined, Loughridge said.

The company will also cut jobs in the US. Those cuts will be involuntary, meaning workers are likely not to get an early retirement package or other enticement. They’ll just be told to leave.

The cuts, which will affect between three and 4% of IBM’s 329,000-person work force, are in line with analysts’ predictions.

The company said on Wednesday that the pre-tax charge will amount to between £683.6m (€1bn) and £894m (€1.3bn).

IBM surprised investors in April when it missed first-quarter earnings estimates by 5 cents a share.

Loughridge said during the earnings conference call that the company planned a “sizeable restructuring”.

“European sales seemed particularly disrupted as rumours flared in the final weeks of the quarter,” Goldman Sachs Group Inc. analyst Laura Conigliaro wrote in a report last month.

IBM said it will run fewer services offices worldwide and it will reduce European managers.

“As a result, IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact,” the company said.

IBM said it will realign operations in Europe to reduce bureaucracy in lowr-growth countries.

Sales in France, Germany, Italy and Japan, which account for one quarter of the company’s revenue, were down 5% in the first quarter.