Unisys Plant Closing Will Compound Developer’s Woes

Computer maker Unisys Corp. said it will close its Rancho Santa Margarita computer plant later this year and move its work--but probably not many of its 250 workers--to another of its manufacturing plants.

Unisys, a computer and networking systems manufacturer, has two other Orange County facilities with about 1,100 employees. Neither has yet been targeted in a corporate cutback that will claim 7,900 jobs this year, but plans are still being developed. “Anything I say now would be pure speculation,” said company spokesman Stephen Holzman.

In addition to the impact on workers at the Rancho Santa Margarita plant, the closure there is another problem for the financially strapped developer of the planned community.

Like many Southern California developers in the weak economy of the past five years, Santa Margarita Co. has been slow in attracting business as part of the community’s “live-here, work-here” promise.

Existing industrial buildings in Rancho Santa Margarita are almost all leased, said Steve Case, managing officer of real estate broker CB Commercial’s South County office. “But they have land there that hasn’t sold for several years.”

About 250 acres of a 450-acre business park remain vacant, although a spokeswoman for the developer said there are two “major” land sales in the works.

“This will be one of only four buildings on the south Orange County market now that are over 100,000 square feet, so it should lease pretty quickly,” said Mark Zubich, a broker and vice president at CB Commercial.

But the loss of a top tenant and a lot of jobs casts a shadow that makes it more difficult for any developer to market its properties, said commercial broker Bob Campbell, president of CT Realty Corp. in Newport Beach.

Santa Margarita Co. already has been hit with financial difficulties caused by slow housing sales, falling land values and a heavy debt load.

And the future of defense contractor Loral Corp.’s 1,100-employee plant there remains clouded. Lockheed Martin Corp. plans to acquire Loral later this year. A site-by-site evaluation of operations after the merger could lead to plant closings and layoffs. Add to that the departure of Unisys and, in a competitive market, “none of that helps,” Campbell said.

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Unisys’ departure is part of the Pennsylvania-based company’s previously announced decision to cut its payroll by 21% in a restructuring designed to improve a spotty performance history.

The company took a $581.9-million write-off to cover the costs of the massive firings, boosting its 1995 loss to $676.8 million. While total revenue rose, the gains came from sales of service and equipment maintenance contracts. Sales of Unisys’ mainframe computers and equipment dropped by 8%.

Unisys has ordered manufacturing cutbacks because the company has more than four times the manufacturing space it needs.

The Rancho Santa Margarita plant shutdown coincides with the end of Unisys’ lease for the plant, which it opened in 1987. Holzman said the closure will save Unisys the cost of terminating a lease elsewhere earlier than scheduled.

The company owns a 280,000-square-foot plant in Rancho Bernardo in San Diego County, but it has not yet decided whether to move any of the Orange County production there. Other Unisys manufacturing plants are in Roseville, Minn., and near Pittsburg.

Unisys’ Mission Viejo facility is largely devoted to the development of computer software and add-on equipment and is not considered part of the manufacturing operation. Its Santa Ana office houses regional sales and marketing staffs.

“We have much more manufacturing floor space than we need now because technology has changed and there are smaller and fewer components” in the type of mainframe computers and computer networking processors Unisys makes in Orange County, Holzman said.

“We needed fewer people and less machinery,” he said.