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Dataproducts Closing Plant in San Jose : 250 to Be Laid Off as Cost-Cutting Measures Continue

July 23, 1985|DANIEL AKST and STUART SILVERSTEIN | Times Staff Writers

Dataproducts Corp., a Woodland Hills-based company that makes computer printers, said Monday that it will close its San Jose plant in December and lay off the 250 workers there as part of its continuing restructuring to shrink the company.

"We hope this is going to do it," said company spokesman David Rosenbloom. "We're still waiting to see a recovery in the marketplace."

Dataproducts began a series of cutbacks and consolidations this spring to cope with the weak market for its products. The San Jose layoffs will bring the company close to its goal of cutting employment to 4,000 by the year's end, from a peak of 5,700 in February.

Rosenbloom said the immediate cause of the shutdown is the expiration this November of a major contract to make printers for IBM. But, he said, Dataproducts also has decided to save money by making a new dot-matrix printer in Hong Kong instead of San Jose.

More Cuts May Be Needed

"This is all expected," said Bob Grandhi, who follows Dataproducts for E. F. Hutton in New York. In the months ahead, he said, "they may have to let some R&D and marketing people go."

Dataproducts last week announced a loss of $19.4 million, or 93 cents a share, for the fiscal first quarter ended June 29, largely because of the consolidation and soft sales. The loss came on revenue of $86.3 million.

During the same period a year ago, Dataproducts had net income of $8.8 million, or 42 cents a share, on revenue of $121.5 million. Dataproducts President Graham Tyson said in a news release that about $17 million of the loss resulted from the cost of scaling down the company.

The cutbacks included consolidating some manufacturing operations and canceling some new products. Dataproducts closed its Irvine plant earlier this month, laying off about 300 workers, and also boosted its inventory-valuation reserve provisions.

Order Backlog $115 Million

Company officials cautioned that a return to normal profitability depends on whether the market stabilizes. The company said its order backlog as of June 29 was $115 million, down $15 million from March 31, the beginning of its fiscal year, and down $65 million from a year ago. "Our customers are hurting, and therefore we're hurting," Rosenbloom said.

Grandhi predicted losses of $1 million to $2 million for the current quarter ended Sept. 28, and $12 million on the fiscal year.

Besides the market slump, Grandhi said, Dataproducts has been hurt by its own slowness in adopting new printer technologies. Rosenbloom said the company will try to find other jobs for the displaced employees, who were told of the layoffs on Friday.

Besides printers, Dataproducts makes data communications and aerospace equipment, and has manufacturing facilities in California, Connecticut, New Hampshire, Ireland, Hong Kong and Puerto Rico. The company has 1,325 workers in Woodland Hills, Canoga Park, and Chatsworth, the only facilities remaining in Southern California.

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