RESEARCH TRIANGLE PARK -- The state's technology hub took another beating Wednesday when Sony Ericsson announced it would dismantle its Research Triangle Park operations and eliminate 425 high-paying jobs.
Some Sony Ericsson workers will be offered jobs in other states, but hundreds of the cell phone maker's employees could be dumped into a withered job market that experts fear may take years to recover. This latest wave will compete for scarce openings against fellow job seekers disgorged from such high-profile employers as Nortel Networks, IBM, Cisco Systems andGlaxoSmithKline.
"You can spin that any way you like, but losing 425 jobs is a big deal," said Charles A. Hayes, CEO of the Research Triangle Regional Partnership, an economic development group for this region. "Sony Ericsson was one of those knowledge-worker companies that we like to get here."
Sony Ericsson, the world's fourth-biggest maker of mobile phones, is consolidating global operations. The company is in survival mode after losing $1.4 billion in the past year and watching its market share dwindle.
The Japanese-Swedish joint venture broke the news to local employees at an 8 a.m. companywide meeting at the Embassy Suites hotel in Cary.
The RTP closure is part of the company's strategy to cut its worldwide staff of 10,000 by 20 percent.
After a somber announcement by Anderson Teixeira, Sony Ericsson's new president for American operations, stunned employees were told they could go home for the rest of the day, giving the RTP facility a vacant feel more typical of a weekend or holiday. Outside, several workers paced the manicured grounds, cell phones glued to their ears. Throughout the day a trickle of employees flowed out of the building and headed to their cars.
Karen Morris, Sony Ericsson's vice president for marketing, said that no date has been set to close the RTP facility but that Sony Ericsson will be gone within a year. At its peak, the site employed about 1,000 people.
"It's always a shock when the whole place is going away," said Rob Scott, an engineer with the company for five years. "Given what's been going on with the economy, a whole lot of people have been preparing ourselves for a day like this."
The RTP site is one of eight Sony Ericsson sites that will shut down, along with operations in Seattle, San Diego, Miami and abroad. In this country, it will keep facilities only in California and in Atlanta, its newly designated headquarters for the Americas, where Sony Ericsson currently employs 18 people.
Employees hanging
At RTP, Sony Ericsson employees handle customer service, sales, finance market and research. Many of those workers came to Sony Ericsson from parent company Ericsson, which has been operating in RTP since 1991. Ericsson, which builds cell phone networks, once employed 1,800 in the area but is down to 130 today and will cease operating here by the end of the year.
Sony Ericsson executives are drawing up plans to determine which jobs will remain with the company; they will notify employees early next year about their options.
"A lot of people are talking and wondering and thinking and waiting for more details on the plan," Scott said. "There's been other times in engineering that this kind of thing would happen, and you'd walk out the door and there'd be jobs waiting."
What went wrong
Over the years Sony Ericsson unveiled a series of trendy mobile phones but never was able to gain traction in the global handset market against established competitors Nokia, Samsung and LG. The company's global market share has shrunk to 4.9 percent, nearly half its size two years ago. Its market share in North America is just 1 percent.
While Sony Ericsson was focused on phones built on Sony music and camera technology platforms, such as the Walkman phone and Cyber-shot devices, competitors surged ahead with phones featuring keyboards, Internet browsers and navigation. In recent months the company replaced its chief executive and its top executive for North American operations.
"They really didn't catch those trends in time," said Alexander Spektor, a wireless device strategy analyst with Strategy Analytics, a market research firm outside Boston. "It's really a product portfolio issue. They were strongest in the segments that were shrinking, and they didn't have too many products in the areas that were growing."
Staff writer Alan M. Wolf contributed to this report.
