Lenovo laying off 1,400 employees, looking overseas

Tough news on the Lenovo front, as the "world's third ranking PC manufacturer" is looking to axe 1,400 of its US-based employees -- and fast. Reportedly, the firm has decided to lay off a good chunk of its American-based work force "within the next 30 to 60 days" as it turns around and creates around 750 new positions in Brazil, China, India and Slovakia. The company stressed that its return to profitability last year was greatly assisted by the laying off of upwards of 1,000 employees, and insinuates that the latest cost-cutting measures are just attempts to "make the organization more efficient by reducing expenses." The cuts also include a whopping 20-percent of the work force at Lenovo's Research Triangle Park (RTP) location and around five-percent overall, but should net some $100 million in savings for the new fiscal year. Sadly, it just seems to get more cutthroat every year in the corporate arena, regardless of accomplishments.

[Via TWW]

[Cupajo @ Apr 21st 2007 10:47PM]

And a great big "____ you" to any company that cuts jobs domestically an opens factories overseas. I hope the overpaid CEO that made that decision gets painful rectal cancer and dies slowly. Seriously.

[NeoteriX @ Apr 22nd 2007 12:43AM]

When we want to point fingers for cost-cutting and a shift of jobs overseas, we need only point them back at ourselves. I mean, look at Lenovo, as it is, they're fighting to maintain profitability in a highly competitive market with razor thin profits.

At the end, we as a society need to ask ourselves what we want... We either can have job security here in the States, or we can have cheap Laptops and PCs... but not both.

[michael @ Apr 21st 2007 10:51PM]

They're the 3rd best? I wasn't even aware of that. I don't even like their computers. They're so bland and ordinary looking. At least even HP and Dell do better than that. But it's at least nice to see they're getting some business sense for once. If only they would just improve their computers.

[Matt @ Apr 21st 2007 11:15PM]

Have you considered that Lenovo is the Dell of China? Most home PC's in China are from Lenovo.

Also, while the Thinkpad line might be "bland" looking, some people have enough of a brain to choose function over form.

[tekdroid @ Apr 22nd 2007 4:23AM]

They're so bland and ordinary looking.
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That's precisely what I like about Lenovo laptops.

In other news, Lenovo does what any international corporation does: focuses resources and investments where they can get maximum efficiency/ profit. Shock, horror. HP, Dell, Apple, Toshiba and NEC and Fujitsu, etc would never do that. They are loyal to their founding fathers and their people, not the almighty dollar/ yen / euro, etc...

[Ishbu @ Apr 21st 2007 10:56PM]

Thats what happens when IBM sells their PC business to the chinese

[justsomebody @ Apr 21st 2007 10:57PM]

Saving money by gong overseas does save money, but i nthe end you get what you pay for (to some degree). Quality is gong down since the last migration of jobs to China.

[mtt @ Apr 21st 2007 11:05PM]

This is horrible news. Regardless that some don't like the way the way they look, the may very well engineered laptops. Laying these people off to improve short-term profitability is a recipe for disaster.

[stinkingpig @ Apr 22nd 2007 1:29PM]

No surprise here... the drop in quality from the T4x series to the T6x series has been sadly impressive. Dell has never made a very good laptop, but as long as I'm facing a 50% failure rate anyway, I might as well buy the cheaper machine. Apple is a nonstarter until they dump that slot loader drive and let me put two 7200rpm drives into a laptop chassis, and get VMWare out of beta, and improve OS X's performance. While they're at it they could also make their UI less annoying. HP isn't an option at my company for a variety of reasons... I miss my T43.

[Abstraction @ Apr 21st 2007 11:13PM]

It's interesting that, even though the company is a Chinese company that has received subsidies and support from the Chinese Government, people still treat it as if it is a distinctly US Company. The majority of the company's user base is situated in China, so I don't see the issue with this decision. Local manufacturing would likely reduce shipping costs anyways. Also, although Lenovo's headquarters are located in the United States, it doesn't imply that it has any special affiliation with the US. It shouldn't be considered traitorous in any sense.

[Big @ Apr 21st 2007 11:24PM]

SOMEONE PLEASE THANK PRESIDENT BUSH and the REPUBLICAN PARTY for costing American workers their jobs by allowing companies/CEO's to skimp on their share of the taxes

[bc @ Apr 22nd 2007 12:28AM]

if congress would lower taxes then business would stay here. learn the facts don't be an id10t.

[Rusty @ Apr 22nd 2007 10:53AM]

Thank George Bush and the Republicans?
Go back and look at your history as to who signed NAFTA. It wasn't Bush, it was CLINTON.
THAT is where the bleed started.

[anonymous @ Apr 21st 2007 11:31PM]

Remember, companies don't lay off American employees and outsource their jobs overseas because of money! They do it because of education! After all, we keep hearing how there are no educated Americans for tech positions and that we are forced to import H1Bs like crazy and send jobs to other countries. The fact that the American worker has to spend more on a gallon of Milk than they do on a month's rent has NOTHING to do with the decision! None at all! NOPE! NOT ONE BIT! NO SIREE!

[Xee @ Apr 21st 2007 11:42PM]

I am *so* glad I switched my major from programming to accounting.

[Mike @ Apr 22nd 2007 11:12AM]

Companies don't pay taxes, consumer's do. The "taxes" are passed on to consumers in the cost of everything we buy.

That's why we need the FairTax. Save companies the hassle of dealing with "taxes" that they really don't have to pay.

[lyl545646 @ Apr 22nd 2007 12:36AM]

oh, f&#$, I am just about to declare my major to computer science (computer programming you know..) ha ha...

[goke @ Apr 22nd 2007 1:08AM]

fuck this....i'm about to major in Computer Science this fall

[l2k @ Apr 22nd 2007 1:40AM]

People need to wake up. Who do you want running your world? There are a few choices. If you think the Chinese are fair and will grant your children political rights, so be it. I for one, hope you are right. Otherwise, put some screws down and start supporting your nation.

[kizildere @ Apr 22nd 2007 3:31AM]

@ michael: it's pretty darn obvious you don't know anything about computers other than alienware, which is quite ugly IMO but I am sure you love them. see, people who use computers for a living would choose an IBM (Lenovo) over your POS Dell or HP because function paired with excellent aftersale support is what really matters. if you want a pretty piece of electronic, go get an Apple or something.

[John Doe @ Apr 22nd 2007 4:26AM]

So let’s see. The way you make a profit is to slash jobs and give them to workers who are paid less. Silly me. I thought the way you make a profit was to make SOLID, innovative, hardware, and a solid product that people will buy, even if it’s at a premium. Oh that's right. People expect everything at rock bottom, dirt cheap prices.

Seriously the main culprits are consumers. Both corp and average consumers who are looking to buy shit as cheap as possible. There is a trickle up effect here. Or as I call it the Walmart effect.
That being said corporations aren’t blameless in all of this either. Meeting “the market’s” expectations leads to shitty business practices all to appease investors. It’s a really shitty circle.
I knew this world was going down the tubes the minute I started seeing air compressors that traditionally were free at gas stations being replaced with paid compressors. .25-.30 cents for air. Oh but you will tell me it costs money for electricity for such things to run. Yah and if the company's CEO would decrease his annual compensation by less then 1% it would pay for this outright. But hey. Why take responsibility for your company? Why not admit you had a shitty year and work on fixing the problem without shit canning people to make up the difference? Why? I'll tell you why. This fucking world is full of cheap ass people, from CEOs to consumers, who deserve to burn in hell because they care more about themselves then others. Its all about me. ME ME ME ME ME. Screw everyone else.

[tekdroid @ Apr 22nd 2007 5:38AM]

So let’s see. The way you make a profit is to slash jobs and give them to workers who are paid less. Silly me. I thought the way you make a profit was to make SOLID, innovative, hardware, and a solid product that people will buy, even if it’s at a premium. Oh that's right. People expect everything at rock bottom, dirt cheap prices.
-------------
The problem with paying a premium is it's nonsensical in many cases: there are very few innovations or distinctive features between brands. Sure there are different configurations, but virtually all manufacturers offer the same ones. Of course lots will be spent on marketing to drum up image and lifestyle to associate Brand X with Attribute Y with Customer Z. So that some will always continue paying a premium on what has essentially become commodity hardware doing more than most users will ask of it.

In the back-rooms, it's all down to who can move the most boxes and get the best price or reduce costs the most to survive. Customer support and warranty (and design) are the only real differentiators.

Little players aren't getting the component deals the big players are - and there are fewer of them because they can't compete with big box vendors on price. Joe User under pressure from corporations looking to maintain "shareholder value" while raping his wallet. Component suppliers under pressure to ink big deals. Joe under pressure to get thrifty. Or at least be convinced that his ultra-cheap-just-like-the-other-brand's-configuration computer is something special by convincing advertising and product placement.

Same can be translated to fast food, and virtually any other area. Diversity down, suppliers (growers) put under extreme price pressure from big vendors, smaller fish going under, nobody really having much of an easily accessible choice in the end. Buy from big fish - or make (grow) your own.

That's exactly what we are seeing in the PC market now. Where is the incentive to pay more?

Aside from different configurations of computer for different tasks (where very few offer something remotely resembling unique), warranty and technical support, there's really not much else if we ignore design and marketing and just talk about the actual products in their respective price ranges.

They are indeed all buying from similar suppliers and offering similar configurations with (in many cases) identical components in their respective price ranges.

(and everyone wants to make money...surprise, surprise).

Oil the marketing machines and move more CommodityBoxes!

[Marian @ Apr 22nd 2007 5:27AM]

Dell is crap. But I agree with the "buy American" remark. There's still Apple, there's still HP...

[tekdroid @ Apr 22nd 2007 5:43AM]

Dell is crap. But I agree with the "buy American" remark. There's still Apple, there's still HP...
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Who all just contract computer manufacture to asian companies...

[Marian @ Apr 22nd 2007 5:56AM]

Only for manufacturing. The design is still done by American employees.

[Jeff Myers @ Apr 22nd 2007 8:50AM]

My decision on which tablet PC to get my daughter for her graduation just got a bit easier.

[zargon @ Apr 22nd 2007 9:55AM]

When I started my recent job a little over a year ago now, I got my first real experience with IBM/Lenovo. I really like their products since using them, someone pointed out that they are bland. Not sure what they mean by that, I would agree with their look, but their feature set and functionality is up there with any other laptop. Plus their computer seem to be build solid, something that I can't say about all Dell's, HP's or some other popular brands. That being said, I don't think I would buy them for home use, their price is a little too much to justify them for me. Overall, they have been great for out company.

I am a little pissed off at the lay-offs since Lenovo bought out IBM's computer lineup and worse, that they are moving those jobs over seas. After reading that, my instant thought was to drop Lenovo at work and support a more US based company.

[Big @ Apr 22nd 2007 4:54PM]

Say something degrading about that idiot Bush and sooner or later - some dumbazz, Fox News watching, neocon trash will drop the "C-bomb".

The Iraq war is alllll Clinton's fault.

[Mike @ Apr 22nd 2007 11:04AM]

I *LOVE* hearing the "education" myth. There are NO facts to back this up... zero, zip, zilch, nada. It's simply an EXCUSE to move jobs to lower wage countries.

[Mike @ Apr 22nd 2007 11:12AM]

We need to point the finger at Clinton and Bush, who support horrible "Free Trade" policies that are not free nor equitable. Americans are getting screwed left and right all in the name of "Free" Trade. The only thing free is our jobs to be outsourced/moved elsewhere. Bush's "Fast Track" trade authority only makes things worse.

What good is it if we get "cheap" asian-made goods when people don't have an income to afford them? Riddle me that one, Batman.

Dobbs: We're on a 'fast track' to bad trade policy
http://www.cnn.com/2007/US/04/03/dobbs.april4/index.html

[PA @ Apr 22nd 2007 1:15PM]

The right moment to stop buying LENOVO products, pass the message along to friends and corps : DON'T BUY LENOVO PRODUCTS or any corp that could be tempted to imitate LENOVO

[Zo @ Apr 22nd 2007 2:22PM]

I believe some of the comments are funny and the highest ranked replies are ridiculous.

There is a circle of dependencies here that few people think about. It is so easy to blame the company CEO or big corporations. We are all in on this problem. The guilt belongs to everyone.

The first economic rule is, businesses are in business to make money, not to provide jobs. Jobs are required to make money -- plain and simply -- if you think otherwise you are wrong.

Healthcare, retirement are the biggest burden to business. The entire system has been setup such that there a certain know amount of deaths and there would always be more workers than people not working. A fully burdened employee in the US (depending on region of the country) costs about $186K/year (this includes salary, benefits, healthcare and the space required for doing the job as well as all the tools). In India and China that same employee is between $30K and $60K/yr. Part of our problem is that regulation and cost of living is damn high. For instance, in some states birth control pills for the wife and daughter are required to be paid by healthcare -- this just adds to the cost of an employee.

Many people like to blame Wall Street -- well 80%+ of US relies on their retirement savings coming from Wall Street -- you can only make money for retirement in two ways 1) Stop spending so damn much. At age 40 75% of Americans have 10K in just credit card debt. While engadget is a great site it is also indicative of our love affair with spending money on often useless junk. Social Security is not enough to pay for anyone's retirement because the entire program is flawed. If you are lucky enough to collect, all your years of giving your money away will only yield you a 2% return on your money. If you are lucky enought to make 100K or more for 10+ years, 1/3 of the money you put into SS you will never see returned to you. Americans spend WAY too much thus driving the standard of living way too high. The best thing that can happen is that the sub-prime space totally blow up and cause a ripple effect in the economy. 2) Invest your money. If your investment can only go up if your investment appreciates, and appreciation can only go up if an business entity makes money -- why is Wall Street to blame?

The theory of the "long tail" is bogus. The more companies in a market the more it will drive down price and the more companies will look for ways to cut costs. Costs in US are very high but consumers continue to demand the lowest prices so that they can purchase more junk they do not need -- in essence -- every US consumer is to blame. Many business cases in many business books have shown that high quality and high price does not mean success because the majority of people will settle for "good enough" and choose the lower price.

Companies and Company CEO's simply react the environment around them. They do not wake up and say -- hey, today I feel like laying off several thousand people -- it simply does not work that way.

Stupid Regulation, stupid laws on social security and healthcare and stupid dependency on middle east oil has caused the situation we have today.

Just like consumers will choose a lower cost but less quality product, businesses will do the same with labor. Because we continue to accept and buy crap, we get crap in return.

Want to fix the situation -- easy, just stop spending unless it is essential and when you do spend, buy only the highest quality item and make it last until it breaks. In the end, we are the problem.

[uclatommy @ Apr 22nd 2007 7:24PM]

For people who are complaining about how jobs are unfairly being moved overseas, you need to get your facts straight. Lenovo is a Chinese company. The jobs aren't moving away, they're going back from where they came.

For those preaching protectionist policy, you need to look at things from the standpoint of a business owner. If I own a business and I can hire a programmer in India who is more skilled and works cheaper than you, why should I hire you? Thats life. Thats human nature. Deal with it. You need to stop complaining about how you're being screwed by the guy who's more skilled than you, and start increasing your skill set. Just because we're American, doesn't mean that we deserve to be more privileged.

[rantanamo @ Apr 22nd 2007 11:49PM]

ridiculous man. Its all about costs, not about skill.

There is an interesting double standard going on in the world right now. If you're a country yielding high GDP, you're expected to be non-protectionist with your industries. If you're a country of low GDP, you can be as protectionist as you like. China and India are notorious for their protectionist policies, but we're supposed to just let our jobs go because we don't need the money.

[sapibobo @ Apr 23rd 2007 1:23AM]

Most of the Lenovo key employee, including at their design center, still consists of Americans. Look at lenovoblogs.com.

I think this layoff have to be done in order to make Lenovo more competitive compare with other emerging Asian tech company like Asus, Samsung, etc. Most of them are Asian based. And there are some disparities between America and Asian cost structure such as wage, utility, etc. Asia have lower cost structure thus, on some aspects, it can bring down some operational expenses.

And dont forget, under IBM ownership, their PC division prove to be not that competitive with other companies - the main reason why they sold it to its long time partner Legend Computer.

Legend Computer (now Lenovo) is the largest PC manufacturer in China and have been making IBM PC products for so many years. The technology transfer have been made for that long.