Hutchinson Tech. to Cut Up to 910 Workers

The company plans to move some manufacturing operations from its Hutchinson offices to Eau Claire, Wisconsin, and some to Thailand.

Hutchinson Technology, Inc., plans to cut its U.S. work force by 30 to 40 percent, or between 683 and 910 employees.

The Hutchinson-based disk-drive component maker will move some of its component manufacturing-which now takes place in its namesake city and in Eau Claire, Wisconsin-to Thailand, spokeswoman Connie Pautz told Twin Cities Business on Tuesday morning. The remaining manufacturing will be performed at the company's existing Eau Claire facility, which is large enough to handle the current demand for its products.

Hutchinson now employs about 2,275. Pautz said that approximately 600 of the 1,125 employees who work in the city of Hutchinson will lose their jobs as the component manufacturing operations performed there are moved to Thailand and Eau Claire. A yet-unknown number of additional Minnesota employees will also lose their jobs as part of a broader restructuring effort, Pautz added.

In a news release, the company said that it has been working on moving some of its assembly operations to Thailand in order to reduce operating costs and to be in closer proximity to its customers, many of which are overseas. With a “faster-than-expected” transition from Hutchinson's current component manufacturing process in Hutchinson and Eau Claire to a more automated one in Thailand, “we need fewer employees to meet customers' volume requirements,” company President and CEO Wayne M. Fortun said in a statement.

Hutchinson will keep its headquarters, along with research and development and other specialized operations, in its namesake city.

The consolidation is expected to take place over the next year and will reduce the company's costs by $45 million to $60 million annually.

Over the past few years, Hutchinson has struggled amid weak demand for its products. In December 2008, the company announced plans to cut up to 1,125 jobs, or as much as quarter of its work force at the time.

Then in April 2009, Hutchinson announced that it would lose one of its major clients over the next 18 to 24 months. Scotts Valley, California-based Seagate Technology, LLC-which once represented about one-fifth of Hutchinson's net sales-phased out procurement of suspension assemblies from Hutchinson.

A suspension assembly holds a computer chip that reads data above a spinning hard disk in desktop computers, PCs, and enterprise server systems.

Suspension assembly sales have tumbled in recent quarters. In the company's 2011 fiscal first quarter, which ended December 26, it shipped 106.5 million suspension assemblies-down from 155.2 million in the 2010 fiscal first quarter. The company said Tuesday that it expects second-quarter assembly shipments to decline 5 percent from the first fiscal quarter of 2011.

Hutchinson reported a net loss of $58.7 million on net sales of $347.2 million for the fiscal year that ended in September 2010. For the fiscal first quarter of 2011, the company reported a net loss of $17 million on net sales of $68.2 million.

The company said that its financial results over the next year will include $8 million to $10 million of severance and other costs and $50 million to $10 million of asset impairment charges and depreciation related to its planned consolidation.