Dell Investors:
The following article is clipped from the yokel paper The Sacramento Bee. Some employees of this division are telling friends it is competition from Dell that caused this action:
sacbee.com
HP to cut Roseville assembly: Move will elminate up to 750 local jobs
By Clint Swett
Bee Staff Writer
(Published April 15, 1999)
Hewlett-Packard Co. will eliminate up to 750 permanent and temporary jobs in Roseville over the next 18 months by contracting out the assembly of some of its computers, the company said.
Such a move would reduce the company's Sacramento-area work force of temporary and permanent people from 5,500 to about 4,750.
HP's move continues a trend in the Sacramento area that has seen elimination of hundreds of computer assembly jobs over the past year. In February, Apple Computer said it would phase out production of the iMac at its Elk Grove facility, though it declined to say who would be taking over the job of building that popular computer. It was estimated at the time that move would result in the loss of 300 temporary and 50 full-time jobs.
Packard Bell NEC also has laid off at least 600 production workers as it shrinks its work force.
In HP's case, about 250 permanent workers either will be offered a severance package of between six and 12 months pay or will be placed in other positions within the company, said company spokesman Dave Hargarten. About 500 temporary workers will lose their jobs.
Some workers may have the choice of moving to Nashville, Tenn., and working for Celestica, the contract manufacturer that will take over assembly of the computers.
The shift in production will begin late this summer and conclude by October 2000. The move is not related to the recent announcement that HP is splitting into two companies -- one that concentrates on computers and another focusing on scientific measurement and testing equipment. That restructuring eventually will eliminate about 200 jobs in Roseville.
Hargarten said the decision to contract out to Celestica was based on increasing competition in the desktop and notebook computer market.
"It's a cost-competitive thing we had to do in this particular market," he said, adding that two-thirds of the customers for the computers were east of the Rocky Mountains, making Nashville a more central site from which to build and distribute the machines.
Computers that no longer will be assembled in Roseville are the NetServer PC servers, Kayak PC workstations and OmniBook notebook computers.
While assembly of those machines will no longer occur in Roseville, marketing, planning, buying and other support functions for those lines will remain at the campus.
This is not the first nor the largest outsourcing that HP has implemented recently.
The company last year eliminated about 1,000 jobs at a Vancouver, Wash., plant when it contracted out the assembly of its inkjet printers. While those printers are low-price items sold to the price-sensitive consumer market, the computers being outsourced from Roseville are higher-end, and the move surprised Matt Sargent, analyst with ZD Market Intelligence in La Jolla.
"What we've seen is some companies outsourcing their lower-priced computers," said Sargent. More sophisticated PCs generally have higher profit margins, which makes them less likely to be targeted for assembly by contract companies specializing in low-cost assembly.
But Al Gianini, executive director of the Sacramento Area Commerce and Trade Organization (SACTO), said outsourcing the assembly of computers is the wave of the future: "Computer assembly jobs are largely going offshore or to third parties you've never heard of."
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