Xidex Closes Irvine Plant, Discharges 825 Employees

Xidex Corp., a leading manufacturer of computer storage disks that was acquired by an Indiana technology firm just six weeks ago, is closing its Irvine plant and discharging 825 workers in one of the largest layoffs in Orange County history.

The layoffs are expected to be completed today.

Xidex decided to consolidate the disk business at its Santa Clara headquarters after Seagate Technology--its biggest customer--canceled millions of dollars worth of orders, a spokesman for Xidex’s parent company, Anacomp Inc., said Thursday.

About 30 to 40 Xidex employees may be offered transfers to Santa Clara, the spokesman said.

“I got here at 3 p.m., and my boss said I should clean out my desk and locker, everything,” said Hai V. Phan, an electronic engineer technician who has been with the company for four years. Phan was among those employees who were laid off Thursday.

The layoffs come only six weeks after Xidex was acquired for $400 million by Anacomp, another of its big customers. Anacomp is an Indianapolis manufacturer of computer systems and software and a leading manufacturer of computer graphics systems.

Anacomp said it is more interested in Xidex’s other businesses and expects the sale of computer disks to decline in importance to the company.

The layoffs underscore a continuing slump in the market for computer hard disks. The devices, which are permanently mounted in personal computers, are used to store information electronically on the magnetic coating on their surfaces.

The combination of Anacomp and the much-larger Xidex had been projected to produce annual sales of more than $1 billion, enough to land it on the Fortune 500 list of the nation’s largest industrial companies.

But Anacomp, which borrowed heavily to acquire Xidex, wants to prune back some operations at Xidex, which had 6,900 employees a year ago.

Xidex laid off 180 of its Irvine employees last week, handing out paychecks and sending workers away as they showed up for work. Another group was laid off Thursday and the rest are to be discharged today.

Of the company’s 825 Orange County workers, about 725 were blue-collar workers and 100 were administrators and engineers.

The workers will receive a package of benefits based on their length of employment, Anacomp said.

The layoffs left some employees stunned.

Sunshine Barcindebar, 37, a chemical technician who worked for Xidex for six years, said: “I feel lost. When you’ve worked at a place as long as I’ve worked here, it feels like home.”

The plant at 1 Marconi had been in operation for seven years. It was first operated by another manufacturer, Charlton Associates, and was acquired by Xidex in 1986.

Seagate cut back its orders because demand for disk drives--devices that enable computers to read the electronic data on hard disks--has been far less than the company expected.

Seagate, the nation’s largest manufacturer of such drives for personal computer manufacturers, spent millions of dollars on expanding its production facilities, only to meet lukewarm demand.

That left Seagate with “a hell of a lot of drives in inventory,” said Jack McLaughlin, president of Business Research Consultants, a San Jose research firm.

The company laid off 1,000 of its own workers last summer in Scotts Valley, Calif., and Singapore. Seagate’s Orange County manufacturing operation, however, recently expanded and moved from Brea to Anaheim.

Anacomp, meanwhile, seems far more interested in Xidex’s other high-technology products, among them microfilm used to reproduce original documents.

Xidex’s disk operations in Irvine and Santa Clara make rigid oxide disks. Sales of that type of disk are expected to drop sharply in coming years as it is replaced by a new type of disk, called thin-film technology, that can store more information.

Xidex had already been struggling, losing $47 million in its last fiscal year.

In fact, even before the Anacomp acquisition, Xidex had planned to consolidate the Irvine plant at some point, said Jo McKee, an Anacomp spokesman in Indianapolis. Xidex executives declined to comment.

“Xidex had already put aside a reserve to use for consolidation,” McKee said. “Rigid oxide disks have no long-term future, although we’re counting on them to provide a good cash flow for some time to come.”

Xidex is developing its own thin-film disks in Santa Clara, McKee said, but it is uncertain whether Anacomp wants to stay in the disk business.

Like Xidex, Anacomp has had some difficult years but, unlike Xidex, has done well recently, reporting sales of $301 million for the nine months ended June 30, compared to $167 million in the same period last year.

The jump reflects the acquisition of DatagraphiX, which Anacomp bought from General Dynamics Corp. for $128 million in 1987. Anacomp had recently paid off most of its debt on the purchase before the acquisition of Xidex burdened it with another heavy debt load.

DatagraphiX has a large plant in San Diego, is doing well and is in no danger of being hit with layoffs, an Anacomp spokesman said.

The most recent large layoff in Orange County came in August when Weiser Lock Co. said it would phase out its Huntington Beach plant and lay off 1,100 workers over the next 18 months.

Times staff writers Leslie Berkman and David Olmos contributed to this report.