Motorola to suspend production in Scotland

(Telephony) Citing lackluster customer demand, the world’s second-leading mobile phone maker Motorola plans to temporarily suspend cell phone operations for two weeks in its only United Kingdom-based factory.

As one of Scotland’s largest employers with more than 6500 workers, Motorola said would discontinue handset manufacturing from April 9 to April 20 at its Bathgate, Scotland location to address over-capacity.

A company spokesman said all employees would be paid full wages and the suspension would level off mobile-phone volumes after heavy production prior to the Christmas holiday. Motorola also said it was in the process of phasing out older models and introducing new ones.

“Traditionally, this time of year is slow for us on production of handsets,” said a spokesman for Motorola in the U.K. and Ireland. “Whilst we expect demand to ramp up as we introduce new products, at the moment, we simply have a bit too much production capacity for what we need to produce this quarter.”

Although a significant number of mobile phones would be taken out of production, idling inventory is a standard business practice and should not be cause for alarm, said Matthew Hoffman an analyst at Wit SoundView.

“It’s not surprising,” Hoffman said. “You do this when demand for your product simply isn’t there, and their current prospects with GSM are not as promising as their prospects look in GPRS.”

Motorola announced two weeks ago that it did not expect to meet the first-quarter sales guidance of $8.8 billion that it reported in January.