Xerox Will Cut 2,000 Jobs, Phase Out Its Imaging Unit in Pasadena
Xerox Corp. announced Tuesday that it will streamline operations by cutting its work force by 2,000 employees, phasing out its Pasadena-based medical-imaging business and scaling back its electronic typewriter operations.
The cost of the restructuring will be covered in a special $275-million pretax charge, forcing Xerox to report a fourth-quarter loss of $77 million, officials said.
‘Mixed Picture’
At a news conference in New York, Xerox Chairman and Chief Executive David T. Kearns said the company needed to cut overhead and eliminate “non-strategic” businesses to improve its financial performance. “We are not moving as rapidly toward our objectives as we feel we must,” Kearns said.
In recent years, some have hailed Xerox as a great American success story, as it battled back against Japanese manufacturers that had cut into its mainstay copier business in the 1970s. The company has increased the quality and lowered the costs of some key products, analysts say; recently it has won praise for a new copier line, the Series 50.
Yet it has struggled against fierce competition and last year lost money in electronic typewriters, medical-imaging equipment and document-generating computer systems. “These days, it’s a mixed picture,” said William H. Gorman, analyst with Provident National Bank.
Elimination of the medical-imaging business means that Xerox will trim the work force of its medical-imaging manufacturing plant in Monrovia and medical systems headquarters in Pasadena to about 230 employees from the current 390. The plant will cease manufacturing the breast-cancer detection equipment it has made there since 1980 but will continue to service the products.
In seven years, when all service contracts for the medical equipment have lapsed, it will probably close that facility and the Pasadena headquarters, spokesman Barry Sulpor said. Xerox has run the medical-imaging division from Pasadena since the company introduced the unique “xeroradiography” technology in 1969.
Xerox officials have not decided which jobs will be eliminated at other Southern California operations, although the cuts will be spread throughout, officials said.
8,800 Local Employees
Kearns said Xerox has also not decided how many of the cuts would be accomplished through attrition and how many through early retirement programs or layoffs. He said most cuts would come in “staff” positions, rather than in sales or manufacturing jobs.
Xerox has about 8,800 employees in a variety of Southern California operations. The largest is Xerox’s laser printer manufacturing operations in El Segundo.
The 2,000 jobs that Xerox intends to cut represent about 2% of its total work force. All the positions will be eliminated this year, Xerox said.
About $140 million of the $275-million charge will used to cover the writeoff of manufacturing capacity at Monrovia and of excess capacity at Fremont, Calif., where Xerox makes electronic typewriters.
An additional $100 million of the charge will cover severance and other costs associated with the job cuts.
Expects Big Savings
The company doesn’t specify the size of its typewriter and medical-imaging systems, but each accounts for less than 5% of total sales.
Xerox said it expects the streamlining to save $100 million to $120 million on a pretax basis each year. Officials expect to see about one-half of that this year and the full amount in 1990.
Xerox said that, without the charge, profit for the fourth quarter ended Dec. 31 would have been $167 million. Quarterly sales rose 6% to $4.4 billion.
For the full year, Xerox’s profit fell 33% to $388 million; revenue was up 9% to $16.4 billion.
The company posted its last money-losing quarter in the third period of 1985.
In trading on the New York Stock Exchange, Xerox closed at $62.375, up 37.5 cents.
Xerox has recently taken other steps to shed units that aren’t related to its core business. Last summer, it put its commercial real estate unit up for sale; in recent years it has also sold off the pieces of its publishing division.
