He said strong competition in Britain's information technology market reached a frenzy in 1992. Prices for some personal computers have fallen by 75 per cent in the past two years, far outstripping any downward trend in costs.
The devaluation of sterling also had an adverse effect as many components for the UK plants at Greenock on Clydeside and Havant, Hampshire, are imported.
Nick Temple, who became chief executive last year, said he was confident that there would be no compulsory redundancies among the British workforce.
He said that the plants at Havant and Greenock are now as competitive as rivals in the Far East. He is hopeful that they will not be casualties of IBM's worldwide restructuring. 'IBM UK should return to modest profitability by the end of 1993,' he said.
IBM said that for several months last year the personal computer market stalled completely as customers waited for suppliers to realign prices and products. The competitive pressures, however, have hit many computer product sectors. Mr Cruttenden said: 'That competitive pressure is right across the market place.'
The company's problems were compounded by a weakening in other European economies, which form the export market for products manufactured in Britain.
Mr Cruttenden said that IBM UK would continue to cut costs. The company is switching to software and services, which accounted for about half of a total of pounds 3.8bn in turnover last year. He said: 'Our expectations for the economy are modest. However, I hope that by the end of 1993 we will be able to look back on the maelstrom of 1992 as not only extraordinary but unique.'
He added that a recent revamp of the personal computer line has already resulted in a surge in output from the Greenock plant. This will be a significant factor in bringing costs into line with the situation in the market place, Mr Cruttenden said.Reuse content