Job fears haunt Marconi

'Devastating blow'

By Tim Richardson, 29th April 2005

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Thousands of jobs are at risk at Marconi after it failed to win a slice of a major £10bn network contract from BT. The UK telecoms equipment supplier had been tipped to win a chunk of business from BT when it announced its preferred suppliers for its ambitious 21st Century Network (21CN) project yesterday.

But Marconi lost out and could only stand by as it saw its share price bomb 40 per cent on the news.

BT's decision not to name a single British company to supply the gear for its new digital network drew a stark warning from trade union leader Peter Skyte of Amicus.

He said that the announcement by BT "will seriously damage the UK's hi tech skills base and could potentially result in Marconi cutting up to three-quarters of their 4,300 staff and its ability to continue as a free-standing company.

"No other advanced country would allow such a strategic investment decision affecting its national infrastructure to be contracted to foreign-owned suppliers," he said.

Skyte also called on the Department of Trade and Industry (DTI) to intervene to "try and sustain employment in the UK's telecoms industry".

But a spokeswoman for the DTI told The Register: "This was a competitive tender and a commercial decision for the company (BT)."

Indeed, Marconi admitted as much yesterday when Marconi chief exec Mike Parton told investors that "our products performed extremely well technically [but] we have been unable to meet BT's commercial requirements".

In other words, while there was nothing wrong with Marconi's gear, it just couldn't match the price offered by its commercial rivals.

A spokesman for BT explained: "This is the real world and we have to operate in it."

As for jobs, The Daily Telegraph reports that 2,000 of Marconi's 4,500 UK workforce could well be lost with most of the job losses coming from its R&D division. But while it's bad news for Marconi workers, BT pointed out that the companies selected have plenty of workers in the UK already with the expectation that the contract will create hundreds of new jobs here as well.

But what of Marconi? Only three years ago it was rescued from going under after running up more than £4bn in debt. Ovum described Marconi's omission from the supplier list as a "devastating blow" with other analysts suggesting it could well lead to the eventual sale or break-up of Marconi. ®