Thread: Local tax breaks not enough to keep work here

Compare and contrast:

http://www.newsobserver.com/104/story/566025.html

Lenovo may forfeit grants, tax breaks

Anne Krishnan, Staff Writer
In 2005, state and local governments promised Lenovo $14 million in incentives to stay in the Triangle and create jobs. The company might not see any of that money.
Lenovo was supposed to increase its local work force from 1,850 to 2,250 employees over five years and maintain that level for six more. Instead, the company is cutting 350 jobs after a similar layoff last year.

Lenovo CEO Bill Amelio called the layoffs a "speed bump" on the way to long-term growth in the Triangle. Lenovo promised to create the jobs over five years and that's still its outlook, he said.

"There is plenty of work that will remain here, and we will grow that resource over time," he said.

Lenovo called state and local officials Thursday to notify them of the layoffs and reassure them of its commitment, Lenovo spokesman Ray Gorman said.

The company needed to create 72 jobs in 2006 to qualify for the first part of its $8.4 million job development investment grant. Instead, it cut 330 and ended the year with 1,687 employees.

Lenovo's incentives haven't come before the state for review, but it looks as if the company is not in a position to receive any payment for 2006, said Don Hobart, general counsel for the Department of Commerce. Partial progress toward the goal would have resulted in a partial payment.

Even if it makes up lost ground and adds enough jobs to bring its work force in Morrisville to 1,994, Lenovo will be penalized with a smaller annual incentive award for 2007. Because of the default in 2006, it's possible that the company won't be eligible to receive any money for 2007, Hobart said.

If Lenovo fails to meet its target for a second-straight year, the state could terminate the incentives altogether.

Likewise, Lenovo wouldn't receive an installment from its three-year, $750,000 grant from the One North Carolina Fund if it doesn't meet employment targets. It must create 60 jobs to get the first 25 percent of the payment.

http://www.informationweek.com/news/sho ... =199200005

Lenovo Cuts 1,400 Jobs
The PC-maker also plans to streamline its sales and marketing organizations, centralize teams, and align multi-national investments and resources.

By Antone Gonsalves
InformationWeek
April 20, 2007 06:00 AM


Chinese computer maker Lenovo said Thursday it would cut 1,400 jobs in order to remain competitive in the fierce PC market.
The cuts, which amounted to 5% of Lenovo's global workforce, were expected to reduce expenses by about $100 million in the 2007-08 fiscal year, which started April 1. The majority of the money would be reinvested back into the business to support strategic initiatives, the company said.

"To win in the PC industry, our path is very clear," William J. Amelio, Lenovo's president and chief executive officer, said in a statement. "We must deliver the world's best-engineered PCs, offer our customers an unrivaled ownership experience, and grow faster and more profitably than the rest of the industry. This means we must make our organization more efficient by reducing expenses."

Lenovo expected to take a pre-tax restructuring charge of from $50 million to $60 million, most of which would be taken in the current quarter ending June 30.

The company said 750 positions would eventually be transitioned into emerging markets closer to Lenovo's suppliers and manufacturing operations. The net effect, therefore, is a workforce reduction of about 650 positions from its global workforce, the company said. Most of the cuts would be completed within one to 12 months.

The latest action stems from a recent analysis of Lenovo's global operations and PC market conditions, the company said. Other moves planned by the company included streamlining the global supply chain by aligning more work closer to the supply base, and integrating software testing in Lenovo's China operations. In addition, the company planned to streamline its sales and marketing organizations, centralize teams, and align multi-national investments and resources.

In the first quarter of this year, Lenovo was ranked the fourth largest PC maker worldwide in terms of shipments, according to Gartner. In the United States, the world's largest market, it failed to reach the top five.

For those of you that don't know, Lenovo's move into the triangle was a very controversial issue. A lot of folks weren't happy with the grants and tax breaks the company was given to sit up house in Raleigh-Durham, NC. When will we learn, China is not to be trusted!