Commodore Closing Plant in Costa Mesa
Orange County’s first major layoff of 1986 came Thursday as beleaguered personal computer maker Commodore International Ltd. said it will close its semiconductor manufacturing plant in Costa Mesa and lay off nearly 200 workers in a bid to reduce operating costs.
The West Chester, Pa.-based company, perhaps best known for its low-cost home computers, said that the layoffs are to be completed at the end of the month, when the plant will close. The layoffs bring to nearly 1,200 the number of Commodore employees whose jobs have been eliminated in the past six months.
Workers at the factory manufactured the silicon chips used in all of Commodore’s computers, including the relatively new Amiga. That manufacturing will now be handled solely by the company’s other chip-making plant in Norristown, Pa.
Announcement of the Costa Mesa plant layoffs comes just a week after Commodore said it would close its computer assembly facility in Corby, England, and lay off all 250 employees there. About six months ago, the company laid off 700 employees worldwide in an effort to stem its mounting losses.
“These moves are exactly what the company has to do . . . in order to return to profitability,” said Charles Wolf, an industry analyst who follows the company for First Boston Corp. in New York. “The company has to consolidate and cut its costs.”
From Jan. 1 through Sept. 30 of 1985 Commodore lost $184 million and fell out of compliance with the terms of some of its loans. A company spokesman said that although Commodore posted an operating profit in the second fiscal quarter ended Dec. 31, the gains were eliminated by write-offs associated with the two recent plant closures. He said the company would release its quarterly report early next month.
Although Commodore officials have pledged to help the company’s newly displaced workers find jobs with local electronics manufacturing, the effort could prove difficult under current tight conditions in the industry. Orange County’s two other chip makers, Silicon Systems Inc. in Tustin and Western Digital Corp. in Irvine, have recently been trimming their work forces to adjust to slowing orders.
Like most of the rest of the companies in the personal computer industry, Commodore’s fortunes have been suffering since late 1984, when the then-soaring demand for personal computers abruptly tapered off. Commodore tried to break out of the home market with the introduction late last year of the Amiga, its first product aimed at the office market. However, Amiga sales have been disappointing, a fact the company blames on the lack of software programs designed for the machine.
Despite the company’s cost-cutting steps, analysts say they are unsure whether the Commodore will survive the industry’s continuing sales problems.
