HALIFAX -- Embattled tech giant BlackBerry announced the closure Thursday of its offices in the Halifax area, eliminating more than 300 high-paying jobs as part of a global push to cut costs.
The smartphone maker (TSX:BB) issued a statement saying the location in suburban Bedford would be shut down as of Jan. 10, affecting more than 350 employees. Most of them work as technical support representatives.
But the Nova Scotia operation was supposed to be much more than just a support centre. In February, the company announced the location would be the home for a new so-called centre of excellence to promote the BlackBerry 10 smartphone.
However, the company is now in the process of cutting its global workforce by 4,500 as it struggles to deal with a shrinking market share and disappointing sales of that device.
BlackBerry, based in Waterloo, Ont., said about 35 workers in Halifax will be offered continued employment, but they will have to work from home.
"We know that our employees in the Halifax area have worked hard on behalf of our company," the company said in a statement.
"This is difficult news for them and for the Halifax community. However, these changes are necessary ... to drive the company towards profitability."
The company announced in November 2005 that it would set up shop in Nova Scotia, thanks in part to financial assistance offered by the provincial government.
The province offered $19 million in subsidies, including $14 million in payroll rebates and $5 million for training and recruitment. The company was told it had to create 1,200 jobs over five years to get the full rebate.
The Bedford operation has been in operation since 2006.
BlackBerry drew almost $11 million from the payroll rebate program over a six-year period ending in February 2012, according to Nova Scotia Business Inc., the province's business lending agency.
In February, when the centre of excellence was announced, the province said the company could get up to $10 million over five years if it kept at least 400 jobs in Nova Scotia at an average salary of at least $60,000 a year.
More recently, the NDP government has refused to release figures on the number of jobs created.
The company said Thursday it would repay $2 million in government contributions.
The layoffs in Halifax come at an awkward time for the province, which witnessed the defeat of its NDP government in a provincial election Tuesday. The province's stagnant economy and lack of job growth figured prominently in the 31-day campaign.
Nova Scotia's Liberal party was elected to govern with a large majority, but premier-designate Stephen McNeil has yet to assume power because the transition to a new government has just started.
A spokeswoman for NDP Premier Darrell Dexter, who lost his seat in the Liberal sweep, wouldn't comment on the closure. She referred all calls to McNeil and his team.
Kelly Regan, the re-elected Liberal who represents the Halifax-area riding where BlackBerry is located, said the New Democrats must have known the local operation was in jeopardy.
"I am sure that the province will have some kind of a program ready," she said in an interview. "They had to have known this was coming. All you had to do was listen to the news."
Regan said the shutdown will have a big impact on Halifax because virtually all of the jobs are relatively high-paying positions.
"I feel terrible for these families who are losing a major source of employment today," she said.
McNeil later issued a statement saying he understands the NDP government will contact BlackBerry to identify services it can offer jobless workers.
"It is my sincere hope that assistance will help provide a smooth transition to new employment opportunities in the Nova Scotia economy," he said.
BlackBerry workers leaving the company's Bedford offices Thursday declined comment.
Fred Morley, executive vice-president of the Greater Halifax Partnership, said despite the dire news, these workers have a good chance of finding jobs at other information technology firms in the Halifax area.
"It's not a completely dark story," he said in an interview. "This kind of talent is the hottest commodity in the current labour market."
Halifax Mayor Mike Savage said he was worried for the 300 families hit by the layoffs, but he insisted the cuts are not a reflection on the city's economic outlook.
"For that community it's going to be a big hole," he said. "But the outlook here in Halifax is pretty optimistic. ... This has to do with a global struggle for BlackBerry. And I'm sure that Waterloo is going to be affected worse than us. I don't know that this is any particular indication of where the market in Halifax is."
Sameet Kanade, an equity analyst at Jacob Securities in Toronto, said the job cuts are aimed at reducing costs in advance of the company's sale.
"It's ... to make the company more palatable to potential acquirers," he said from Toronto. "They have to get everything bare bones so that it looks profitable."
However, Kanade said he was surprised the company continues to eliminate jobs.
"If it's not over and they keep cutting, there will be no one working at BlackBerry. ... There can't be more fat to trim. They're actually cutting the prime meat."
The company had already announced 300 people were being laid off at its head office in Waterloo this week as part of a broader plan that will reduce its global workforce by about 40 per cent. Once the cuts are complete, BlackBerry will have cut more than 7,000 employees since 2011, a steep decline from a total staff that once neared 20,000.
In September, BlackBerry received a conditional takeover offer from Fairfax Financial (TSX:FFH), BlackBerry's largest shareholder, worth $9 per share. The offer values the company at $4.7 billion, but it does not constitute a formal bid.
BlackBerry co-founders Mike Lazaridis and Douglas Fregin are looking at making a takeover bid, according to documents filed Thursday with the U.S. Securities and Exchange Commission. The pair have an eight per cent stake in the company while Fairfax holds about 10 per cent.
