Disk-Drive Manufacturer Fires 177 : Computer Memories Shifts Some Work to Singapore
Computer Memories Inc. announced Friday the firing of 177 production workers at its Chatsworth disk-drive plant because of a decision to shift more manufacturing to its disk-drive operation in Singapore.
The company, whose production and headquarters staff in Chatsworth was cut to 425 by the dismissals, said in early June that it had no plans to lay off any local personnel.
But Irwin Rubin, the company’s chairman and chief executive, said Computer Memories later reversed itself because of fatter profit margins at its recently expanded Singapore plant.
“We have to go where it’s cheaper to do things,” Rubin said, explaining that the company’s manufacturing costs in Singapore are one-third lower than in Chatsworth.
Worldwide Employment Down
With Friday’s announcement of the firings, which took effect immediately, Computer Memories’ worldwide employment stands at 1,355, down 245 from early June. A company spokesman said the employment reduction beyond the 177 jobs slashed Friday represented “normal attrition.”
Rubin said the cutbacks do not reflect declining orders for Computer Memories’ disk drives, which store information on computer disks. He said orders were stable and that Computer Memories, which bounced back from a $8.9-million loss during the last quarter 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 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 increase production to satisfy IBM’s orders.
‘Getting Jerked Around’
“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 at $5.625 Friday on a trading volume of 142,900 shares, up from a close of $5.375 Thursday.
