CCTC Heads to San Diego and Tijuana

Undaunted by a failed leveraged buyout plan by management and seeking cheaper labor costs, Santa Barbara-based Computer & Communications Technology Corp. next month will relocate its magnetic recording heads manufacturing to its Tijuana plant and move its corporate headquarters to San Diego.

The moves will save “millions of dollars” per year, according to Everett Bahre, who is chairman, chief executive and president.

Only about 75 of CCTC’s 300 employees in Santa Barbara will move to San Diego--all of them from the headquarters operation, Bahre said.

The company has had a 60,000-square-foot plant in Tijuana, employing 1,200 people, since 1972. The small manufacturing facility in Santa Barbara will be transferred south because the company has been “forced to reduce costs in every way we can,” Bahre said.

“We compete in a worldwide market, and we can’t compete effectively with these labor costs,” he said.

The corporate headquarters move--which will begin next month and end in March--will allow “better utilization of support personnel by providing closer access to Tijuana,” he said.

The new facility--35,000 square feet of leased space in Kearny Mesa near Montgomery Field--will “cut down travel and redundancy,” Bahre said. “We’ll be able to do the job with fewer people more efficiently.”

The company’s main competitors are National Micronetics in San Diego and Applied Magnetics in Santa Barbara.

Like its competitors, CCTC is suffering from an industrywide slowdown. For the nine months ended Sept. 28, CCTC reported earnings of $417,000, down sharply from $8.4 million in the previous year’s comparable period. Revenues dropped 21% to nearly $70 million.

Included in this year’s nine-month income was $3.1 million from the sale of 14% of the common stock of Zeta Laboratories, a subsidiary that makes microwave communications equipment. Last month, Bahre and some of his management colleagues withdrew their leveraged buyout offer for CCTC, after the company’s board of directors decided that selling the company during a depressed computer market would not be in shareholders’ best interests.