Symbol Will Close O.C. Plant, Lay Off About 500 : Announcement: The Costa Mesa maker of bar-code scanners will move operations to Long Island.
Symbol Technologies Inc., which makes bar-code scanners, said Wednesday that it will close its Costa Mesa factory and offices and lay off most of its 500 employees here over the next year.
Symbol said that shutting down the Costa Mesa operation and combining it with the company’s headquarters on Long Island will cost the company $34 million this quarter. But after threatening to move from New York, Symbol lined up as much as $14 million worth of financial aid from state and local governments to stay and expand in New York.
That aid includes breaks on property taxes, cheaper electricity and low-interest loans to build a new headquarters and buy equipment. The aid package also includes grants to train employees.
The move will save $16 million a year, said the company, which had sales of $319 million last year.
Symbol will hire as many as 350 people on Long Island. Costa Mesa employees will be offered some of those jobs, the company said, but added that it doesn’t know how many.
The move is another blow to Southern California’s economy, long dependent on real estate booms and military contracting. But the real estate market is ailing, and government is no longer spending as much on defense. In the past year alone, Orange County has lost 34,000 jobs out of a total of 1.1 million.
The move also pushes along the transition of Costa Mesa, a central Orange County city of 96,000, from a manufacturing area to an office and retailing center.
And that worries local officials. “It’s an unfortunate sign of the times,” said Richard Luehrs, president of the nearby Newport Harbor Area Chamber of Commerce, which has its own worries about big employers like Loral Aeronutronic that may be forced to move.
“It’s another indication we’ve got to solve some of these problems soon.”
A stock analyst said Wednesday that the move “is a good one for the company in the long run.” But the change will probably cost Symbol more than the $34 million it is planning to write down this quarter, said Richard W. Davis of the brokerage L.H. Alton & Co. in San Francisco.
Symbol bought the Costa Mesa operation--on Fischer Avenue at the northeastern edge of the city--in 1988 when it acquired MSI Data Corp., a local company about its own size, for $135 million.
Ironically, that part of the business is doing fairly well, Davis said. The former MSI plant in Costa Mesa makes hand-held computers with scanners that people in warehouses or stores use to keep track of inventory.
It’s the scanner business--the scanners are made on Long Island--that is hurting, Davis said.
The company would not discuss its businesses in detail.
Sales clerks use the small scanners at checkout counters in stores to read bar codes on merchandise. Because the recession has limited retail expansion, Symbol’s scanner sales are off.
The company lost $3.4 million on sales of $78 million for its latest fiscal quarter, which ended in September. Even before, the company had been looking for ways to trim costs and had already laid off 45 people in Costa Mesa, most of them white-collar workers.
The rest will be laid off over the next year, the company said. Half of the 500 are factory workers, and the others are in clerical, sales, management and other non-manufacturing jobs.
The layoff is one the largest announced in Orange County this year. The only bigger one in recent months was the layoff of 800 Orange County employees by Bank of America after it acquired Security Pacific Bank, according to state figures.
Because factory jobs are vanishing rapidly, finding new positions will probably be especially difficult for the Symbol factory’s workers, said Esperanza Estavillo, manager of the Santa Ana office of the state Employment Development Department.
“And we may have other big layoffs pending,” she said.
Symbol had been considering for a year whether to move from the Long Island hamlet of Bohemia. It looked at more rural areas of the Northeast as well as the South, the company said.
It never seriously considered moving the rest of the company from New York to Southern California, so it never asked for tax breaks or other government incentives to remain here.
Businesses have long complained about what they say are high taxes, intrusive regulations and the high cost of operating in California. But critics say that those complaints are sometimes merely an attempt to use the hard times brought on by the recession to justify lowering taxes and gutting environment and worker safety regulations.
Symbol wouldn’t say whether any of the common business complaints about California influenced its decision. The company was clearly seeking less-expensive alternatives to metropolitan New York and Los Angeles.
The company’s board, lured by the generous offer to stay in New York, made the decision Monday night to remain. Once that was done, the company said, the board then decided to close the Costa Mesa operation.
Symbol will get a low-interest government loan to build a $30-million factory and headquarters in the nearby town of Islip. The company now sprawls inconveniently over five buildings in Bohemia that it wants to consolidate.
State and local governments will help with building roads and laying water lines on the new 40-acre site.
Symbol put out a press release Wednesday quoting New York Gov. Mario M. Cuomo as saying that “Symbol’s decision to grow on Long Island proves once again that New York State is a great place to do business.”
“Firms like Symbol will help the Empire State inaugurate a new era of national leadership in advanced technology,” Cuomo added.
Also quoted in the press release was Jerome Swartz, Symbol’s chairman and CEO, who said: “This ‘win-win’ partnership with the state and local governments creates the kind of positive business environment in which high-technology companies like Symbol can flourish.”
The company clearly foresees better times ahead: It said it expects to grow from 850 employees on Long Island now to 1,750 within three to five years.
