Sales employees at Gateway Computer's Dublin-based European headquarters claim they have been told they may lose their jobs at the end of the month unless they meet targets for over-the-phone sales.
But Gateway's European director of marketing, Mr Michael Maloney, denied the reports. "There are going to be no mass layoffs coming at the end of this month." Sales staff make up about 200 of the company's 1,800 employees in the Republic.
The issue has arisen as Gateway - which formerly only sold computers directly to customers over the phone and Internet - has supplemented sales by opening retail outlets, known as Gateway Company Stores in the US and Britain. Sales employees, who say there is a poor atmosphere in their division, believe the computer maker will need fewer phone sales staff as it prepares to open 17 British stores this year.
Sales staff, who do not make cold calls and rely on customers phoning into Gate way, say they cannot increase sales because their phones are not ringing. However, Mr Maloney says calls remain strong, but employees are not closing sales. "We're driving more phone calls now than we've ever had before," he said.
Gateway, which reported record earnings of 81 cents per share last quarter due to strong consumer sales, has said it is interested in strengthening its position in the small to medium business sector through the stores, where customers can view and handle merchandise. Additionally, the stores provide a stronger link with the European market, since Europeans are far less likely to use the Internet or respond to print advertisements for phone purchases than North Americans, Mr Maloney said.
To date, four stores exist in Britain, with a further 17 to launch before year's end. In the Republic, Gateway will relaunch its factory-based store as a retail unit and open an additional store in Dublin's Liffey Valley centre this summer. Gateway's 144 retail units in the US have proven highly successful, and the company plans up to 400 stores. A Salomon Smith Barney research analyst predicted in a report last month that up to 60 per cent of Gateway's 1999 sales growth will come from the stores.
According to Mr Maloney, the flagship London store has significantly boosted phone and Internet follow-up sales after customers visit the store and take home a Gateway catalogue. Thus, he said, the company needed sales staff and would be unlikely to lay staff off. However, "our close rates are not where they should be", he said.
Staff sources claim section managers were called to an emergency meeting last Friday with Gateway's recently-appointed European senior vice-president, Mr Todd Bradley. They were told the company had experienced losses this quarter in sales to the European, Middle East and Africa (EMEA) region.
According to one employee, section managers then informed telephone sales staff that they must meet targets or be laid off at the end of the month.
In turn, the employee said managers explained they themselves would be laid off if their teams failed to make quotas.
Mr Maloney said sales figures were not broken down until the end of quarter and so Gateway would not know specific figures for regional sales. "If we were making that kind of loss, we wouldn't be in business," he added.
Gateway has noted in a press release that EMEA sales were flat through the third quarter of 1998. In September 1998, Gateway appointed Mr Bradley, former president and CEO of Transport International Pool, to the post of EMEA vice-president. According to one employee, they were told Mr Bradley, who has a reputation for turning around flagging sales, had been brought in "to sort out Gateway Europe".
For the previous year, Gateway did not have a European-vice president. "That clearly impacted our performance," said Mr Maloney.
Many of Gateway's sales staff were taken on during a hiring binge last summer, when Gateway launched a programme called YourWare, which enables computer buyers to trade in their current Gateway purchase towards a new Gateway system in two years time. YourWare was a hit with US buyers, but has yet to establish itself firmly with European buyers.
Mr Maloney said any changes in Gateway's retail model would not affect its Dublin manufacturing facility. "We have only one manufacturing point in Europe. It's Dublin and it always will be Dublin."
