Hutch Tech cuts 600 jobs to help return to profitability
Susan E. Peterson
Star Tribune
Published 08/22/01
Hutchinson Technology, hurt by the slump in computer sales,
said Tuesday that it is cutting up to 600 more jobs and taking
other cost-cutting actions so it can return to profitability in its
next fiscal year.
The manufacturer, which makes components called suspension
assemblies for computer disk drives, said the layoffs would
affect administrative, managerial and production employees at
plants in Plymouth and Hutchinson, Minn., Eau Claire, Wis.,
and Sioux Falls, S.D.
The layoffs, expected to be completed by Sept. 30, are in
addition to about 900 job cuts since June 2000 and more than
3,600 in the past two years. The company employed 4,037
workers this June, compared with 7,700 in September 1999.
CEO Wayne Fortun said the latest moves will reduce expenses
by $45 million to $50 million a year. The company said it will
take a pretax charge related to severance costs of $4.5 million
to $5.5 million, or about 15 to 20 cents a share, in the fourth
quarter ending Sept. 30.
Hutch Tech said it still expects fourth-quarter net sales of $90
million to $105 million and a net loss of $9 million to $13
million, or 35 to 50 cents a share, not counting the pretax
charge. The consensus analysts' estimate for the quarter is a
loss of 38 cents, according to First Call.
Fortun said demand for Hutch Tech's assemblies has been
stable for the past two quarters. 'We are making structural
changes primarily in our administrative support areas in order
to position the company to operate profitably at these levels of
demand,' he said. 'In addition, we continue to improve our
manufacturing efficiency and productivity and as a result are
able to achieve these levels of production with fewer
manufacturing employees.'
He also said that the company is working with several
customers on prototype suspensions for new disk drives and that
the cuts won't hurt the firm's ability to handle any increased
customer demand.
The announcement came after the stock market closed; Hutch
Tech shares closed Tuesday at $19.16, down 39 cents.
Chad Bennett, an analyst with Miller Johnson Steichen
Kinnard of Minneapolis, said the company's announcement
'indicates that business is stabilizing, which, all things
considered, is a positive in this market.' He said the company's
latest round of cost-cutting means that it is prepared for 'a
worst-case scenario -- these are the costs they need to take
out to get profitability on current demand.'
-- Susan E. Peterson is at sepeterson@startribune.com .
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