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Summa Industries to Cut Jobs in Wake of 60% Earnings Drop

March 22, 2001|SARAH HALE | TIMES STAFF WRITER

Summa Industries said Wednesday that it will cut about 13% of its work force, nearly 130 jobs, in hopes of reducing costs after a significant drop in fiscal second-quarter earnings as sales slowed for its molded plastic parts.

Torrance-based Summa, which employs about 1,000 people, said the general economic downturn coupled with slowing demand for its products caused a 60% drop in profit for its fiscal second quarter ended Feb. 28. It posted net income of $657,000, or 15 cents per share, compared with $1.6 million, or 36 cents, a year ago. Sales rose 5% to $31.4 million.

Since August, the company has consolidated several plants, including three in Southern California, to reduce costs. Chief Executive James Swartwout said many of the job cuts were a result of the plant closings. Because of the work force reduction, Summa took a $500,000 pretax charge that reduced earnings by 7 cents a share.

"The consolidations and cuts give us more resilience should the economy continue to weaken," Swartwout said. "However, we're optimistic.

The slowing economy probably will pose problems for other Southern California manufacturers, particularly those in plastics, metal or electrical components and specialty foods.

"If you produce disposable items, watch out," said Jack Kyser, chief economist at Los Angeles County Economic Development Corp.

Kyser said several local companies had been hammered by increased natural gas costs, which also could trigger layoffs.

Matt Desmond, a senior analyst at Red Chip Review, said he wasn't surprised by the Summa layoffs given the troubled economy and a number of problems outside the company's control.

Summa shares were unchanged Wednesday, closing at $8.94 on Nasdaq.

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