ECI Telecom

(Nasdaq:ECIL) is gearing up for another major wave of dismissals, surmise sources near the company. Meanwhile, ECI is stil embroiled in the labor dispute that its last wave of dismissals sparked.

ECI management declined to comment.

The latest layoffs would evidently be a reaction to dwindling sales and difficulties encountered by some of the baby ECIs created by the company's demerger this year into five independent firms, say the sources.

A hint of additional dismissals at ECI could be gleaned from comments

Koor Industries

(Nasdaq:KOR) CEO Jonathan Kolber made to


this week. Koor owns a chunk of ECI. Kolber said that Koor's strategy in these times is to be conservative, to slow down investments, and to ensure that the financial management of Koor group companies is tough. Koor will continue to focus on technology, he said, but by way of conservative financial management.

Diminishing sales and a deterioration of its business environment forced ECI to hand out letters of dismissal to 400 people at the beginning of the year. Most of the workers have already left. But some of the workers targeted for dismissal belong to the Histadrut labor federation, with which ECI is negotiating severance terms.

At first ECI said it would be firing 149 organized workers, but agreed settled on 120 people after tense, and sometimes violent, negotiations with labor reps, during which workers barricaded themselves in a plant slated for closure, among other things. Not that an accord has been finalized: Histadrut rep Haim Shlush said today that the negotiations over dismissals are continuing.

Only a few hundred of ECI's 4,200 workers in Israel are organized. The company employs some 5,600 people altogether around the world.

ECI's financial statements reveal that the company estimates compensation for 365 dismissed workers will total $16.3 million, or an average of $44,000 per worker. Going by the low sum, the workers ECI fired were evidently in low-ranking positions.

ECI has also taken other steps to cut back, including abolishing the annual bonus and freezing pay raises until July 2001. Investment bank Piper Jaffray reported that ECI understands it will not be able to float the baby ECIs this year, and may seek to create value for shareholders by other means, such as selling them. But if it does, ECI will have to settle for smaller amounts than it originally intended.