By Starrla Cray
HUTCHINSON, MN It’s been a tough year for Hutchinson Technology, Inc.
After laying off 950 employees three months ago, the disk drive suspension assembly company once again cut several positions Tuesday, this time affecting about 300 workers, including 200 from the Hutchinson site.
Thirty-nine were from the Plymouth location, and 51 were from the Eau Claire, WI plant, HTI spokesperson Connie Pautz said.
With the January layoffs, as well as the recent 300-person reduction and the 275 previously planned layoffs in Sioux Falls, SD, the company will have lost about 45 percent of its workforce.
The impact of the HTI layoffs has rippled through the surrounding communities, as well.
Jim Rorah, who owns Wildbird Specialties with his wife, Kristi, said it is hard to tell how much the HTI layoffs are affecting his business, but “it’s always a worry, especially with a new business.”
“It’s got to impact the local economy,” Rorah added.
The Rorahs started their shop in Dassel about a year ago, and opened a Hutchinson store in February. Rorah said his sales are decent, but because his business is new, he can’t compare it to before the layoffs.
According to an article from KSTP, Angie Jergens, owner of Hutch Café, had to cut staff after HTI’s first major layoff of the year.
The difficult decision to reduce the HTI workforce for the second time this year was made to ensure the long-term success of the company, Pautz said.
“That doesn’t make it any easier to say goodbye to the people who have been our coworkers, as well as our friends,” she said.
The company reported a $57.7 million loss for the second fiscal quarter, which ended March 29.
By the end of June, HTI plans to have employment down to 2,500, paying out about $25 million in severance and asset impairment charges. The company restructuring should save HTI about $50 million, president and CEO Wayne Fortun said in a press release.
Combined with the previous layoff, costs will be reduced by roughly $175 million on an annual basis.
“We remain confident that we can emerge successfully from these unprecedented times,” Pautz said.
However, the outlook for the near future is still uncertain. In order to break even, HTI will need to have quarterly sales of $110 million to $115 million, Pautz said.
“There’s not a lot of visibility ahead,” she said. “We’re living in an economy that is very uncertain right now.”
In March, HTI hired about 90 people at its Hutchinson location, but the decline in sales and the recent loss of Seagate, a major customer, prompted the company to eliminate some of these positions, as well.
“We ended up not needing as many people as we thought,” Pautz said.
Sales in the disk drive components division are down, with the company shipping about 48 million fewer suspension assemblies in the first part of 2009, compared to the end of 2008.
“We’ve been hit by changes in an industry that has a pretty small customer base,” Pautz said, “and the economy has not settled down completely yet.”
In the BioMeasurement division, however, sales are up, Pautz said. In 2009, 19 new customers have been added, and the company anticipates net sales to reach between $3 million and $5 million for the year.
In an effort to retain top executives, HTI changed the severance benefit policy. Instead of receiving severance under the same formula as other employees, company leaders would be paid “1.5 times annual base pay plus an ‘average bonus’ based on the previous three years,” the Star Tribune reported.
“Now it is aligned more with what other companies are doing,” Pautz said. HTI does not have many people in those positions, Pautz said, and it is important to keep leaders who have been in the company for many years.