MagneTek to Shift Corporate Headquarters to Nashville : Manufacturing: The electrical equipment maker says restructuring is behind the move, not unhappiness with California.
This time, don’t blame California’s business climate.
Los Angeles-based MagneTek, a fast-growing maker and distributor of electrical equipment, said Tuesday that it is moving its corporate headquarters to Nashville, Tenn.
But MagneTek officials took pains to point out that they really do like California--so much so that Andrew G. Galef, MagneTek chairman and chief executive, plans to stay in Los Angeles and run the firm long-distance with frequent visits to Tennessee. It’s just that MagneTek is going through a corporate restructuring and plans to sell most of its operations in California.
“It just makes good sense for the business,” spokeswoman Susan Halberstadt said, adding that most of MagneTek’s factories and other facilities will be clustered in the Midwest and Southeast after the divestitures, which were announced in January.
“It would be inaccurate to attribute this to the so-called negative business environment of California,” Halberstadt said. “California is a wonderful state.”
In all, MagneTek will be sending about 50 administrative jobs to Nashville. In fact, 30 of those employees have already made the move, Halberstadt said. MagneTek expects to complete the transfer by next June.
Before the restructuring, the company employed 15,500 people, including 500 in California. After the divestitures, MagneTek will employ about 12,000, with very few in California.
“We chose Nashville as our new home both because of its location at the geographic heart of the restructured company and the excellent business climate in the city and the state,” Galef said at a news conference there. “We employ nearly 3,000 people in Tennessee--almost a quarter of our total work force. . . . Moving our headquarters here should smooth operations and simplify business transactions at every level.”
Economic development officials in Los Angeles and Sacramento were surprised by MagneTek’s announcement, saying the company had given no hint of its plans. Still, they added, not much can be done to retain a firm that is leaving for internal business reasons.
“We’ve been out aggressively assisting companies where we can have an impact,” said Mike Marando, spokesman for the California Trade and Commerce Agency. “Corporate restructurings are, by their very nature, confidential.
“While we are sad to see them go, in this case we’re delighted that this is not a business climate issue,” Marando said. “A lot of companies are giving California a second look because of changes that have been made in the business climate in the last several months.”
Those changes include last year’s cleanup of the state’s fraud-ridden workers’ compensation system and tax incentives for companies that expand or modernize their plants. Also helpful have been an improving economy and lower real estate prices.
MagneTek has grown at a fast clip in the last decade, with revenue hitting $1.5 billion in 1993. But much of that growth came from the acquisition of smaller electrical equipment firms, which led to a sizable debt. In addition, the company overestimated demand for its energy-efficient ballasts for fluorescent lighting, which resulted in excess inventory in 1993.
MagneTek is undertaking the corporate overhaul to reduce debt, simplify its product mix and reduce administrative costs. The company intends to unload product lines that accounted for almost a third of the company’s fiscal 1993 sales.
MagneTek at a Glance * Headquarters: Santa Monica, now relocating to Nashville, TN * Chief Executive: Andrew G. Galef * Employees: 14,000 * Major products: Motors, generators, transformers, lighting ballasts and commercial power supplies * 1993 revenue: $1.5 billion * 1993 loss: -$21.7 million *Loss per share: -$0.87 * Tuesday stock price: $14, down 12.5 cents
Quarterly PROFIT AND LOSS In Millions of dollars: 1992: -41.98, Includes charges for post-retirement medical benefits; 1993: -42.50, Includes charge for restructuring; 1994: 1.68 Source: DataTimes; Standard & Poor’s Corp. Researched by ADAM S. BAUMAN / Los Angeles Times
