Staff at Drill Bit Facility Will Dwindle to 300 : Smith Laying Off 150 More at Irvine Plant
Responding to a continued decline in oil drilling activity, Smith International will lay off 150 more employees today at its Irvine tool division, reducing the unit’s hourly work force by a third.
“It hurts dramatically, “ said Jim Hauke, Smith’s vice president of human resources, in confirming reports of the layoff at Smith Tool--the latest in a series of deep employment slashes that the company has taken in recent years to adjust to a shrinking market for its drill bits. Smith is now operating under Chapter 11 of the federal Bankruptcy Code in an attempt to restructure its finances and pay off creditors.
Hauke said that the layoff will affect only “a handful” of salaried employees and mostly machinists and other highly skilled production workers who are paid by the hour. Some of the workers losing their jobs, he said, have “upwards of 20 years” of seniority with Smith. He said he believed that most of the workers will have no trouble finding jobs in aerospace and other local manufacturing firms.
While Hauke, contacted at his home late Wednesday afternoon, did not immediately know the size of the Smith Tool work force, a source close to the company said that there are 450 hourly employees and about 300 salaried workers at the Irvine headquarters facility. By contrast, in 1981 Smith Tool employed more than 3,000 hourly workers in Irvine.
Hauke said the purpose of the layoff is to reduce Smith’s drill bit production by a third. He could not guarantee that it would be the last job cut at Smith Tool this year. “I wish I could say that,” he said. “It all depends on what the market does.”
As another production-cutting measure, Hauke said, Smith Tool plans to shut down its Irvine manufacturing plant for the first two weeks in July, requiring all employees to take paid vacations during that time. “It allows us to have time to work down inventory,” Hauke said.
The new layoff follows a reduction at the Irvine plant of about 700 jobs in late February and an earlier layoff of 357 employees Feb. 14 in what company insiders called “the Valentine’s Day massacre.”
Smith Tool’s parent, Newport Beach-based Smith International, filed for bankruptcy protection in early March after being ordered by a federal judge to pay $205 million in damages to its archrival, Houston-based Hughes Tool Co., in a patent infringement suit. Smith is appealing the judgment.
Hauke said that about a week ago, a notice was posted on Smith Tool’s employee bulletin board warning that another layoff was imminent. In the notice, Hauke said, Smith Tool President Doug Rock observed that drilling activity in the United States is at its lowest ebb since World War II.
Smith Tool is not alone among Smith International divisions to suffer layoffs. Hauke said that Smith International’s domestic employment has declined from a peak of 12,000 in late 1981 to less than 3,000 workers.
As reported, Smith International lost $24.8 million in the first quarter of this year, compared to a loss of $10.3 million a year earlier. Revenue fell 19% in the three-month period to $141.4 million from $174.9 million. The first-quarter results were hurt by $12 million in expenses related to employee layoffs, relocations and division consolidations.
