Tellabs blames downturn for Shannon closure

The downturn in the global telecoms sector was yesterday blamed for the closure of the Irish operation of the US-owned telecommunications company Tellabs Ltd, with the loss of 400 jobs in the Shannon Free Zone.

At a meeting yesterday morning, the company's employees were informed of the news by company management. The job losses are equivalent to more than four times the net jobs loss recorded last year for the entire Free Zone, which employs more than 8,000 people.

Speaking after the meeting yesterday, senior vice-president of Tellabs global manufacturing division Mr John Kohler blamed the downturn in the telecoms sector for the closure of the plant.

"There has been a continuous decline in the telecoms sector for the past two years. This started to impact Tellabs in the first quarter of 2001, when we announced our first restructuring and this decline has continued. We have seen a continued fall-off in our sales and, in order to maintain a healthy company, we have to be responsive and consolidate our operations and this is about consolidation," Mr Kohler said.

The closure of the Irish operation is part of a global restructuring in which Tellabs is reducing its workforce by 800 - the other 400 jobs being lost are in the US.

The job losses at Shannon are to take place over a phased basis until the end of this year, with the first jobs expected to be lost within the next four weeks.

A company statement said Tellabs expected a third-quarter loss in 2003 as a result of lower North American spending, with third-quarter sales anticipated to be down about 15 per cent to 25 per cent from its second-quarter sales of $345 million.

The Shannon facility is the fourth manufacturing plant to be closed by Tellabs in the past 12 months - in August 2001, the company's Drogheda operation closed with the loss of 204 jobs.

With the closure of Shannon, only two Tellabs manufacturing plants remain, with one located in the US and the other in Finland. Mr Kolher said the decision was made to close Shannon ahead of the other plants due to the other locations having the most company infrastructure. "Our other two facilities are tightly linked with our R&D activities. They are major locations as they relate to all other functions of the company and, from an efficiency point of view, consolidating into those locations is a logical decision."

Managing director of the Shannon facility Mr Pat Shanahan said: "This is a very sad day for our employees in Shannon, but it is something we can't avoid because our customers continue to spend less."

Mr Shanahan has been associated with Tellabs since it established its Shannon base in 1989 through the purchase of Delta Communications - that company was formed in 1984 through a management buyout led by Mr Shanahan.

The decision to close its Irish operations comes only three years after Tellabs invested $32 million in its Irish operation with the opening of its new 130,000 sq ft Shannon plant.

It emerged yesterday that Tellabs owe Shannon Development €6.6 million in Government grant liabilities - the company has received €9 million in grants since it set up in Shannon in 1989.

A spokesman for Shannon Development said that it would be looking to recoup the money from Tellabs in the normal way.

Mr Kohler said: "We are a very responsible partner and we will certainly honour any grant obligations that we may have."