Motorola cuts mean 750 fewer jobs at new Chicago headquarters

The Motorola plant located at 600 N. Highway 45 in Libertyville. | Thomas Delany Jr.~ Sun-Times Media

Updated: October 24, 2012 10:09PM

Motorola Mobility will bring just 2,250 jobs when it moves its headquarters from Libertyville to the Merchandise Mart, not the 3,000 jobs previously announced, as a result of Google’s announcement Monday it plans to cut 4,000 jobs worldwide in its wireless phone business.

For weeks, Mayor Rahm Emanuel has been touting the Motorola jobs coup as evidence of Chicago’s emergence as one of the nation’s technology centers.

The cuts could put $100 million in state credits at risk, because the agreement is contingent on Motorola Mobility retaining a work force of 2,500 in Illinois.

Mayoral spokesman Tom Alexander acknowledged Monday that Motorola Mobility’s surprise announcement is a blow for Chicago.

It will reduce by 25 percent — or 750 jobs — the number of employees that Motorola Mobility will be moving to Chicago.

“Any time there are job losses, it’s not ideal, but this is an important step to make the company healthy for a long time,” Alexander said. “They’re still taking three and a half floors [at the Mart]. They’re still…making a $300 million commitment to Chicago [and] taking the same-sized lease. And they have every intention of growing the head-count once they get to Chicago. They still want to develop new technologies and advance their business. None of that changes.”

Though the mayor never talked about it publicly, Alexander said Emanuel has known all along that job cuts could be coming to the Merchandise Mart’s new tenant, Alexander said.

Motorola Mobility is in the midst of a “corporate restructuring” ordered by corporate parent Google to reverse job losses in 14 of the last 16 quarters, the spokesman said.

“We believe this will be a temporary reduction in staff as they get the company going in the right direction,” Alexander said. “They’ve been talking about the need to get the company profitable and reduce losses for a long time. We knew this was an option. We see this as a long-term relationship. We want Motorola Mobility to be healthy and vibrant in Chicago for decades to come.”

Alexander noted that the 750 employees Libertyville employees targeted for layoff prior to the move to Chicago are “outstanding employees who would be great additions to any company in Chicago or the Chicagoland area.”

He added, “This is a move about getting the costs down for the company—pure and simple.”

Emanuel is scheduled to do a blitz of one-on-one telephone interviews later Monday in an effort to minimize the political damage of Motorola Mobility’s announcement.

But there’s no hiding the fact that 750 fewer employees will make the move from Libertyville to Chicago.

Just last week, Emanuel bragged about the Motorola move as he showcased three fast-growing technology companies in the West Loop.

“Right now, within a mile of the Merchandise Mart, there are 5,000 employees in the digital, new economy,” Emanuel said that day. “That didn’t exist before. There are 71 start-ups and digital companies, all within a mile of the Merchandise Mart. It’s becoming a new focal point for this new economy that’s adding to the depth and breadth of the city.

“New York is led by its financial industry. L.A. is led by its entertainment [industry]. Chicago’s strength is the diversity of its economy, and one of the pieces of that diversity, the depth of its diversity, is its technology force….There’s a new part to the Chicago economy, and it’s adding to its strength and depth and these companies collectively are gonna add 200 jobs or more over the next 18 months. There are openings today.”

In its announcement Monday, Google also said it will close or consolidate about one-third of its 90 locations.

The reductions represent about 20 percent of Motorola Mobility’s 20,000 employees and 7 percent of Google’s overall work force. Two-third of the job cuts will take place outside of the United States, Google said.

The job eliminations come three months after Google bought the once-dominant U.S. cellphone maker for $12.5 billion, chiefly with a view to using its large patent portfolio to bolster its legal defenses.

The cellphone pioneer has been struggling for years. It hadn’t produced a mass-market hit since it introduced the Razr cellphone in 2005 and its market share has plummeted.

Before the acquisition, Motorola had been trying to turn itself around by focusing on smartphones, and the cuts announced Monday will shift that goal even further. In the first quarter, Motorola sold 5.1 million smartphones and 3.7 million “dumb” phones.

The migration toward smartphones has slowed Motorola’s decline, but it has still lost money in 14 out of the last 16 quarters.

Google said in a filing with the federal Securities and Exchange Commission that the changes are intended to make the unit profitable, but warned that investors should expect revenue to fluctuate over the next few quarters, and sales will drop before the cost savings take effect.

Severance payments will cost Google about $275 million, which will largely be recognized in the current quarter. The company also expects to book an unspecified amount in restructuring charges, mostly in the quarter.

Motorola announced in June that it would move its headquarters from Libertyville to the Merchandise Mart.

Google shares rose $7, or 1.1 percent, to $649 in morning trading.

Contributing: AP

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