Apple Computer on Wednesday said it would close its only factory in the Silicon Valley area and lay off 345 employees as part of a worldwide reorganization of its manufacturing and distribution operations.
The unexpected shuttering of the facility in Fremont, Calif.--which Apple had touted just two years ago as a showpiece of automated production--is the latest setback for recession-ravaged Silicon Valley.
Layoffs and plant closings have become commonplace over the last year as struggling technology companies cut payrolls and seek out low-cost locations.
Apple said the personal computer assembly operations in Fremont would be shifted to Sacramento, while the circuit board fabrication would be moved to Apple sites in Singapore, Cork, Ireland, and Fountain, Colo.
A total of 700 jobs will be lost in Fremont, but 380 positions will be added in Sacramento.
Together with the reshuffling in Ireland, Singapore, and Colorado, a total of 345 jobs will be eliminated, Apple said, resulting in a $20-million charge against earnings in the current quarter.
Apple said the changes were the result of a worldwide operations study, which concluded that manufacturing and distribution operations should be in the same place. A spokeswoman noted that Apple already had its distribution operations at a company-owned site in Sacramento, while the Fremont factory was leased.
PC companies, including Apple, now customize their machines more, which creates additional incentives to have production and distribution in the same location.
Although Apple is doing much better than most computer companies financially, it is continuing to cut costs. The company laid off 1,500 people last year and is in the process of moving much of its U.S. sales and support operations from Silicon Valley to Austin, Tex.
Analysts said Apple has made no secret of its desire to keep trimming expenses, but on the heels of a $224-million pretax charge for restructuring in the fiscal 1991 third quarter, the charge announced Wednesday will generate some surprise. However, the cost-reduction effort is likely to be viewed as positive, analysts say.
"I was expecting Fremont to be phased down, but not phased out," said Bruce Lupatkin, an analyst at Hambrecht & Quist. However, "what they're doing seems to make some sense," he added.