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http://www.tradingmarkets.com/.site/news/Stock%20News/1777697/
Imation shutting down facility: 140 jobs to be cut as Camarillo site closes this year
The
company announced Tuesday that it would move all of its magnetic tape
coating operations to its plant in Oklahoma, cutting about 140
positions.About a year ago, Imation announced it would cut back
operations in Camarillo, shrinking the work force at that plant by
half, from 230 to about 110, by the end of this year. The new
announcement came along with the company’s second-quarter earnings
report.Imation anticipates the restructuring will cost the company
about $20 million related to the Camarillo closure, with about half of
that stemming from severance benefits and the costs of leaving the
site.Imation is offering severance packages based on years of service,
giving one week’s pay for each year, with a minimum of four weeks and
maximum of 26 weeks of pay, said Brad Allen, Imation’s vice president
of corporate communications and investor relations. He said employees
also are being offered help with healthcare costs and outplacement
counseling.A small number of people will be offered jobs elsewhere
within the company, but most of the positions are being eliminated, he
said.The company expects to eventually save $15 million to $20 million
a year from closing the plant, which should help offset projected
declines in the company’s magnetic tape profits.Plant older than the city
The
Camarillo plant was originally built by 3M in the early 1960s. In 1996,
Imation was formed as a spinoff from 3M to handle data
storage.Camarillo Mayor Charlotte Craven said the plant has been around
longer than the incorporated city and used to be the largest employer
in town, although employee numbers have dwindled over the years.”I was
really disheartened this morning to hear they’re closing and exiting,”
she said. “They’ve been a vital part of the city all along.”3M
and Imation have not only been big employers in Camarillo, but the
company and its employees have also been active donors and volunteers.
It’s tough for the community, which also has watched Technicolor’s
local presence shrink, Craven said.Allen said it is never easy to close
a plant, much less one that has been around for so long. “But it’s part
of being in a very competitive industry where you’ve got to optimize
your business to maintain your competitiveness,” he said.Imation’s main
business was originally magnetic tape, but the product has been adding
higher capacity at lower prices in recent years, driving down profits.
Growing areas of business for the company include optical storage, such
as CDs, and flash memory.Magnetic tape represented about 34 percent of
the company’s revenue in 2007, down from almost 56 percent two years
earlier.Shift to Oklahoma
In the second quarter of this
year, the company had $547 million in revenue, up 32.5 percent from a
year ago, with growth driven by optical and consumer electronic
products. Net income was $7.2 million, compared with a $1.4 million
loss a year ago.The company continues to forecast 2008 revenue at
around $2.4 billion, about a 16 percent increase over last year.A year
ago, company officials said they were trying to work more efficiently
to offset the lower cost of magnetic tape, launching a program that
included the closure of a North Dakota manufacturing plant and
outsourcing some of the operations in Camarillo and Weatherford, Okla.The
company also decided all of its coating operations could be done out of
the Weatherford plant, which has $55 million worth of the latest
coating equipment.Imation owns part of the Camarillo facility and
leases part of another building that the company sold in 2003. Allen
said it is too soon to say what will happen with the site.Craven hopes
another company will move into that location, but she’s not confident,
because a nearby building has been sitting on the market. “I don’t know
if anything is going to come in or not,” she said.
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