Computer Memories Fires 177 in Chatsworth
Computer Memories Inc. announced Friday that it fired 177 production workers at its Chatsworth disk-drive plant because it is shifting more of its manufacturing to its operation in Singapore.
The company, whose production and headquarters staff in Chatsworth was reduced to 425 by the dismissals, had said in early June that it had no plans to lay off any local personnel.
Irwin Rubin, the company’s chairman and chief executive, said Computer Memories reversed itself because of fatter profit margins at its recently expanded Singapore plant.
“We have to go where it’s cheaper to do things,” he said, adding that the company’s manufacturing costs in Singapore are one-third lower than in Chatsworth.
With the firings announced Friday, which took effect immediately, Computer Memories’ worldwide employment stands at 1,355, down 245 from early June. A company spokesman said the additional 68 jobs lost represented “normal attrition.”
Rubin said the cutbacks do not mean that there have been declining orders for Computer Memories’ disk drives, which store information on computer disks.
He said that orders were stable and that Computer Memories, which bounced back from a $8.9-million loss during the last three months of 1984 with a profit of $2.6 million in the first three months of 1985, was profitable again in the quarter ended June 30.
But Michael Murphy, editor of the California Technology Stock Letter in San Francisco, said the company probably has been hurt by a sharp drop in demand for the IBM-PC AT computer since early June. The computer is by far the largest user of Computer Memories’ disk drives.
Murphy said Computer Memories’ business with IBM has been a continuing problem for the company.
He said Computer Memories lost money last year largely because of its efforts to quickly boost production to satisfy IBM’s orders.
“It must be an awful pain in the neck for them because they’ve been getting jerked around by the product,” Murphy said.
“IBM is not about to set them adrift, but CMI needs some kind of stable production.”
Computer Memories’ stock, which is traded over the counter, closed Friday at $5.625, up 25 cents, on volume of 142,900 shares.
