HP Plans to Outsource European Server Production

Hewlett-Packard plans to outsource the production of enterprise storage and servers in Europe in order to cut costs, it said Thursday.

The company aims to transfer existing manufacturing operations in Germany and in Erskine, Scotland, to a Czech partner some time next year to optimize its cost structure, it said.

However, it can't yet name the partner as it is still in discussions with a number of Czech manufacturing partners, said HP spokeswoman Anette Nachbar.

In addition to the transfer of the manufacturing jobs, HP is also moving ahead with other plans to cut its workforce in Europe.

After months of discussion with employee representatives, it has now proposed a restructuring plan to its European Works Council.

That plan is to cut 5,700 of the 80,000 people it employs in Europe, the Middle East and Africa, the company said.

The cuts, to be phased in over two years, will affect all business units, job functions and countries, said Nachbar.

No decision has yet been made about exactly how many jobs will be cut in each country or division, she said.

Before the company can announce more details, it must first discuss the matter with staff representatives to comply with local laws in some countries, she said.

Those discussions are likely to begin in late June, with details of the job cuts announced in the following weeks, the company said.

Over the next year, HP will lay off 6,000 employees, or around 2 percent of its worldwide workforce, it said last week.

Despite a 3 percent drop in revenue, the company is still profitable, reporting a profit of US$1.7 billion on revenue of $27.4 billion for the three months ending April 30.

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