RealTime IT News

3Com Outsources Manufacturing, Cuts 1,000 Jobs

Network equipment maker 3Com will outsource all its manufacturing and lay off 1,000 workers to cut costs.

Over the next six months, production will be shifted to Jabil Circuit and Flextronics , which will also handle distribution from its regional hubs.

In addition, 3Com will established a design center in Taiwan. It will be running this fall and fully staffed by spring.

"These actions further enhance 3Com's ability to bring competitive and comprehensive networking solutions to the enterprise market," president and CEO Bruce Claflin said in a statement.

The company did not say how much the cuts will save. 3Com spokeswoman Sondra Magness said financial details will be discussed during 3Com's quarterly conference call Thursday.

The restructuring will mean the closure of 3Com's Dublin facility by March 2004. About 650 people will lose jobs there. Magness confirmed the figure but declined to break out the reductions further.

In past years, many U.S. IT companies have established manufacturing centers in the country because of the skilled workforce and lower costs. They also viewed it as a base to reach European customers. But apparently, the costs weren't low enough for 3Com.

In addition to manufacturing jobs, some product development and supply chain employees will be dismissed.

3Com, which recently moved its headquarters from Santa Clara, Calif., to Marlborough, Mass., will focus its engineering on Voice over Internet protocol , ASICs and security components.

Buffeted by a poor economy and competition from Cisco and others, 3Com has been laying off staff and trying to focus its business for months. Earlier this year, it cut 10 percent staff reduction and sold its CommWorks telecommunications division for $100 million.