Corning to lay off 825 workers

Corning will lay off 825 workers at two facilities in Pennsylvania and New York, where the company manufactures optical components for telecommunications networks.

The affected facilities are in Benton Park, Pa., and Erwin Park, N.Y. Corning indicated that its optical fiber business has remained strong in the first quarter and is unaffected by this maneuver.

The company blamed the layoff on a softening in the telecommunications sector, which resulted in decreased demand for the company’s products. In response to the downturn, the company announced two weeks ago that it was changing the 2001 guidance for its technologies businesses, reducing its revenue growth projection from 75% or 90% to about 50%. At the time, the company indicated it would evaluate the need for work force reductions.

The layoffs will take effect at the end of next week and—at least for the moment—are considered permanent.

“We will continue to monitor the market and react accordingly,” said a Corning spokesman. “We’re hoping the softness is short-lived, like everyone else. We’ll staff up as needed.”

In light of JDS Uniphase’s announcement earlier this week that it is laying off 3000 workers, Elizabeth Bruce--a research analyst at Aberdeen Group--wasn’t surprised by Corning’s jobs cut.

“It’s a response to the slowdown they are seeing from their major customers, such as Nortel and Lucent, which in the past have built up inventory but are now seeing that they don’t need to buy as many of certain components,” she said.

The reason is that there currently is no shortage of optical components suppliers, according to Bruce.

“There has been a components shortage in the past, and the larger companies may have been trying to buy as many components [as possible] to secure their supply,” she explained. “Now, you have a lot more people supplying components, so there’s not as much of a shortage in certain areas. Consequently, they’re easing up on that inventory building.”

Bruce further suggests that this might not be the end of the job slashing in the optical components sector. However, should more cuts occur, it might not be because of a further softening of demand.

“The forecast for growth in optical components is still very strong, but automation may become a factor,” she predicted. “In the past, they’ve relied so much on manual processes [to put] these components together. Now, they’re getting a little smarter and automating some of these processes. So, they’ll be able to reduce their work force in a more positive way.”