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Thomson Workers Offered Buyout

9/15/2003 02:00:00 AM Eastern

With an eye toward trimming $25 million to $30 million in operating costs from its North American headquarters, Thomson Consumer Electronics offered some 1,100 employees a buyout opportunity to stave off a new round of layoffs.

The buyout is part of a broader Thomson strategy to clear the books for 2004, as it repositions itself in the consumer products market, said Dave Arland, Thomson spokesperson. That effort, which included the purchase of Recoton's accessories business, also includes the company's ongoing pursuit of a Chinese manufacturing partner, with which Thomson plans to establish a new joint venture company to handle its global television manufacturing and sales.

"We have to reflect the new reality of the consumer products market," Arland said. "We are looking to put together a separate company that would develop and manufacture television products. This would give us the worldwide scale that we need to be competitive, it would give us access to the China market, which is something we don't enjoy today, and it would give the Chinese partner access to the U.S. market in a way they can't get today."

Arland said the Chinese partner "would have access to the RCA brand and to our wealth of knowledge regarding the DTV transition."

Arland said negotiations with potential partners "are underway as we speak."

He said the voluntary reduction program announced in Carmel is in part to "make the company leaner and better positioned" for the joint venture proposal.

He said the buyout offer would remain on the table for a month, after which time, if the financial target has not been met, involuntary layoffs could be imposed.

"We ran a similar buy-out program six years ago, and a couple of hundred people took the offer," the Arland said. "We hope to see a similar thing this time around."

Employees were offered eight to 78 weeks of severance depending on tenure.

Thomson offered the buyout to all levels of employees in a number of business units. Employees in the company's Atlinks joint venture with Alcatel, as well as those working in the broadband products, sales, marketing, information technology, research and innovation, corporate HR and finance divisions were all included in the buyout offer.

One of the few segments of the company that was spared the offer was the consumer solutions/accessories business, which the company recently purchased from Recoton in bankruptcy proceedings for $60 million. Other protected divisions include the company's TV product development team, legal department, patent and licensing and Technicolor employees.

Arland said the new television joint venture company it is pursuing would "develop and manufacture television products, and then Thomson would sell those products in the United States."

"That doesn't mean that suddenly we close every factory and moving everything to China," Arland said. "We have some wonderful resources on the border in Juarez, Mexico, that would be part of this arrangement. Likewise we have engineering staff and product management people in [Carmel] that likely would be part of the new company."

Terms for ownership percentages and Thomson's patent portfolio "are being discussed," he said. — Additional reporting by Greg Tarr

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