By Starrla Cray
McLEOD COUNTY, MN It’s been a rough ride for Hutchinson Technology Incorporated (HTI) and its employees the past few years.
The latest blow was announced Tuesday morning that the global supplier of hard drive suspension assemblies is cutting 30 to 40 percent of its workforce in the next 12 months.
The bulk of the reduction at least 600 lost jobs is expected to come from the Hutchinson plant.
“I expect additional staff reductions beyond that due to restructuring, but we haven’t determined those numbers yet,” said company spokesperson Connie Pautz.
Chuck Tuman has been working as a measurement specialist at HTI since he graduated from Dassel-Cokato High School nearly 17 years ago.
“I think I’ll be laid off for sure,” he said, explaining that his position is one that will no longer be needed at the Hutchinson site.
Tuman, who has a wife, three children, and a house in Cosmos, said he isn’t sure where he’ll work after the layoff.
“I don’t plan on moving,” he said. “My home’s here; my family’s here.”
Tuman said he really enjoyed his job, and will miss his coworkers.
“The people at HTI really made the job that much more worthwhile,” he said.
Throughout the years, Tuman has witnessed a number of layoffs at HTI.
“It doesn’t get any easier,” he said.
Former HTI employee Jason Kiecker has seen a few layoffs, as well.
“I was there about three-and-a-half years, and the only bad part of the job was the fear of layoffs. I really liked the people there, and I enjoyed my job,” said Kiecker, an electrical engineer.
Shortly before a previous HTI layoff in early 2009, Kiecker applied for a different job in Dassel. He was technically laid off from HTI, but started his new job about a week later.
“It actually worked out OK,” he said. “I lucked out.”
Kiecker, who has a house in Hutchinson, said the layoffs have definitely impacted the demand for housing in the community.
“We live in a newer area, and some of the houses are vacant from the last layoff,” he said.
Kiecker and his wife, Michelle, have been thinking about selling their home so that they won’t have as far to commute to work, but there aren’t a whole lot of buyers in Hutchinson lately.
“We haven’t even put ours on the market yet,” Kiecker said. “I think our value dropped around $20,000 in the past year.”
One of Kiecker’s neighbors has been trying to sell his home since last summer, and he’s already dropped his asking price by about $30,000.
“And, that was before this last layoff,” Kiecker said.
Both Kiecker and Tuman said that although it’s hard to see people being laid off at HTI, they understand the company’s need to reduce costs.
“Hopefully they’ll get more business back,” Kiecker said. “Hutch has been lucky to have 3M and HTI. People kind of take it for granted.”
The layoffs and other measures are projected to lower HTI’s costs by $45 million to $60 million a year.
Under the plan, the company will consolidate its Hutchinson components operations into its operations in Eau Claire, WI.
The company’s Hutchinson site will continue to serve as its corporate headquarters and its center for research and development and other specialized operations.
“The decision to consolidate our operations and reduce our workforce was a difficult one, and we understand the impact it will have on our employees, their families and the communities we live and work in,” Wayne Fortun, Hutchinson Technology’s president and chief executive officer, stated in the press release. “The consolidation of our Hutchinson components operations into Eau Claire is by no means a reflection on the employees or performance of the Hutchinson operation.
“This is a strong team of employees who have a variety of skills in manufacturing, technical and support functions. Their experience in producing quality products would be an asset to any employer, and we will work with the Minnesota Department of Employment and Economic Development in providing job search and other assistance to our employees during this difficult time.”
Notices to employees who will be laid off will start going out the week of March 21. Because the workforce reduction in Hutchinson is more than 33 percent, the Worker Adjustment & Retraining Notification (WARN) act requires HTI to give employees a 60-day notice before being laid off.
“Because we’re consolidating over the next 12 months, we’ll be able to help employees plan for and transition to other employment,” Pautz said.
Currently, HTI has a US workforce of 2,275 people, including 1,125 Hutchinson employees.
Not long ago, that number was significantly higher.
About 2,300 people were employed at the Hutchinson plant in January 2009, before layoffs slashed 950 jobs.
During that layoff, Hutchinson was again affected the most, followed by 275 jobs lost in Sioux Falls, 100 in Eau Claire, and 55 in Plymouth.
In March 2009, HTI hired about 90 people at its Hutchinson location.
However, a few months later, a decline in sales and the loss of Seagate, a major customer, prompted the company to eliminate some of those positions, as well.
By May 2009, HTI had laid off another 300 people, including 200 in Hutchinson.
McLeod County’s unemployment rate was at 11 percent in June 2009, according to the Department of Employment and Economic Development (DEED).
Minnesota’s DEED received more than $3 million in state and federal grants to help the HTI workers let go in 2009, Wednesday’s Star Tribune reported. The article also stated that about 360 of those workers are still unemployed and taking part in the state’s Dislocated Workers “Ready Response” Program.
According to a MinnPost article, HTI ranks second in mass layoff events in Minnesota over the last three fiscal years.
In the Minnesota Dislocated Worker Program report, the only company that had laid off more people was Delta Airlines.
Other companies that made the list included Macy’s, BAE Systems, Celestica, Snyder Stores, Seagate Technology, Target Headquarters, North Memorial, and Denny Hecker Auto Group.
HTI’s workforce reductions were made in an attempt to keep costs down, in order to help achieve the goal of being the lowest cost manufacturer of suspension assemblies.
Cutting back also has a cost, however.
Over the next 12 months, HTI estimates it will pay $8 million to $10 million of severance and other costs, as well as $5 million to $10 million of asset impairment charges and accelerated depreciation related to the consolidation of operations.
To learn more about Hutchinson Technology, go to www.htch.com.