Conference 7.286::digital

Worldwide News                      LIVE WIRE

    Facilities in Springfield, Mass. and Burlington, Vt., slated to close 
 
  Employees at Digital's Springfield, Massachusetts and Burlington, Vermont, 
  facilities were informed today that those sites will be closed.  Workforces 
  will be reduced over the next six months, and the process will be complete 
  by April.  The plant closings will affect approximately 320 employees in 
  Springfield and 350 in Burlington.  Sales and Services facilities will 
  remain open in both cities.

  Ed McDonough, vice president, Manufacturing and Logistics, explained that 
  the decision to close a facility is based on a careful review of many 
  factors including current production activity, capability and capacity, 
  geographic location and access to market demand, and the requirements 
  anticipated for the future. 

  "The computer industry has been going through a period in which technology 
  has advanced by orders of magnitude, increasing the efficiency with which 
  products can be manufactured," Ed said. "The movement of computing power to 
  semiconductors; the shift in demand to high-volume, low-margin commodity 
  products; and the decreased demand caused by a soft worldwide economy has 
  left Digital and other companies in the industry with excess manufacturing 
  capacity.  The corporation has been restructuring worldwide to adjust to 
  the new capacity needs by eliminating redundancies and divesting in areas 
  where we cannot clearly differentiate ourselves in the market. 

  "Our goal is to position capacity to best serve our customers and to 
  optimize the utilization of our assets.  It is on the basis of this 
  strategic intent -- and not an issue of quality of work -- that the 
  decision was made to close the Springfield and Burlington plants.  Both 
  plants and their employees have held an important place in Digital's 
  history," Ed continued.  "Manufacturing will remain a core competency for 
  Digital." 

  The details for closing the plants were outlined today to employees in 
  group meetings.  The affected employees will be offered a number of benefits 
  including a financial support package based on years of service to the 
  corporation; continuation of medical, dental and life insurance for a 
  specified period; and professional outplacement assistance.

  The company is currently working with state and local governments, as well 
  as outside organizations, to find external alternatives for the plants.  The 
  disposition of the two sites has not yet been determined. 

  Springfield performs systems integration work to support PCs and produces 
  storage tape products.  The Springfield PC work will be relocated to the 
  Kanata facility in Canada.  Kanata presently produces a variety of products 
  and components used in the manufacture of PCs, and it is the only plant in 
  North America, other than Springfield, that is currently engaged in PC 
  integration.  Tapes will be absorbed by another Digital storage plant, the 
  location of which is yet to be determined. 

  Burlington is a service-oriented business that includes repairs, consulting 
  and services engineering support.  The Burlington services support work will 
  be distributed among several sites in the U.S., primarily Salem, New 
  Hampshire; Sunnyvale, California; and either Andover or Billerica, 
  Massachusetts.

Copyright � 1992 Dow Jones & Co. from DJ International Economic News Wire
Digital Equipment - Plants -2-: To Cut 6% Of Work Force


  MAYNARD, Mass. -(AP-DJ)-- Digital Equipment Corp. (DEC) said it plans to 
close its manufacturing facilities in Springfield, Mass., and Burlington, Vt., 
reducing its overall work force by about 6%, or 670 positions. 

  Sales and service facilties at both cities will continue operations, the 
company said in a press release. 

  The closures and staff cuts, to take place over the next six months, will 
not result in a charge, a company spokeswoman said.  In July, Digital 
Equipment set aside 1.5 billion dlrs to pay for such restructuring measures. 

  More cuts are expected to come as the company continues to trim operations, 
she added. Advancing technology, a switch from computer power to 
semi-conductors and a preference for low-margin products in a soft worldwide 
economy has left Digital, like other companies, with excess manufacturing 
capacity, the company said. 

  Digital said its most recent decision will affect 320 workers in Springfield 
and 350 in Burlington. 
 
-0- 1824GMT
---

    RE: .-1
    
>> reducing its overall work force by about 6%, or 670 positions. 
    
    They'd better check their math.  If 670 positions is 6% of our
    workforce then we've only got 11,167 people left.

    looks like someone left out a decimal point, I get .6%
    
    Ogre.

    Real sorry to hear about the BTOVT site closure.  I've been working
    with and coordinating a group of BTO folks for about 1.5 years now on a
    Government contract.  They are "tops", "get it done", totally dedicated and
    professional employees.  Good luck to all.....
    
    Steve  

    
    re: -1
    
    	That's part of the problem.  Both plants were closed not because
    of performance, but because of a business decision.  To my knowledge,
    both plants performed really well.  It just comes down to the fact
    that we have to many manufacturing sites.  
    
    	So, at least in SPO' case, performance wasn't an issue.  At least
    that is the word we got.
    
    bill
    

    re .6
    
    Bill,
            Who came to SPO to make the announcement and at what time?
    Bob Nealon came to BTO and he along with the plant manager announced
    the closings at 9:00.  At 11:00, the plant manager invited in the
    local press.  This is the first time that we didn't "read it in the
    paper first".  Unfortunately, it'll also be the last time.  I've heard
    that shortly after 9 EST it was on livewire.  Does anyone know if it
    was there prior to 9?
    
    BTO was transitioning from manufacturing to a services business over 
    the last year or two.  So, there's more to it than just eliminating
    manufacturing sites.  Some of the groups here will possibly be
    relocating their operations to another location in this area.
    
    Don

	RE: .7 Right after I read the basenote I looked in LIVEWIRE. There was nothing
	there. By about 10:30 or so it was there. That's when I took the copy I posted
	in .1.

			Alfred

    re .8
    
    Alfred,
            I know of one person who saw it "somewhere" around 9 am.  He
    thinks it may have been before 9.  So, BTO and SPO may not have heard
    it first.  No matter, it doesn't change the outcome!  At least the press
    didn't get it first.
    
    Don

    
    re: .7
    
    	Don, we heard from the Plant Manager at 9:00 just about on the 
    dot which looking back is pretty amazing since in the 16 years I've
    been here, that's about the first meeting that was ever on time.
    The other person was Dan Jennings.
    
    	Likewise, they held a press conference shortly after the
    announcement.  It all seemed pretty planned out... In fact, the mayor
    stated in the paper that he wasn't notified until late Wednesday night
    that we were closing.
    
    	Actually, I had an idea something was up for a couple of days and
    then when I saw an area in the plant that had 300+ chairs set up with
    a PA system, I knew it was going to be bad news.. I figured, heck, they
    could tell us good news anywhere, but bad news needs to be communicated
    in one place where they can control the presentation and answer 
    questions.
    
    	As to your plant changing, how do you figure that we had the
    Tiger II PC's which are doing incredibly well and we were making money
    but we still got shut down.  Like they said, performance had nothing
    to do with it.
    
    	bill..g.

I don't work there, but I was surprised. I had thought that we
couldn't build the Tiger pc's fast enough, and now we close one
of the 2 plants in North America that are building them.

Go figure.

    
    re: -1
    
    	Actually, SPO was the only site doing Tiger II's (386/33-40,
    486/25/33/50/66).  And you are correct, we simply cannot build enough.
    Demand is outstripping the supply side.  I mean, we're talking about
    thousands of 'orders'.  Note, 1 order does not equal 1 PC.  Many 
    orders are between 1-40.  Up until the announcement, we were working
    around the clock and on most weekends.  
    
    	I guess it all goes back to what Mr. Palmer has said about sites
    doing redundant work.  I guess they thought Kanata was in a better 
    position to do the Tiger II's.  
    
    
    	bill..g.

    Canada, and also other countries that we sell products in, require us
    to base a certain amount of engineering and manufacturing in their
    country in turn for the right to sell our products.  They want us to
    invest in their economy.  This could have been and influencing factor.
    

    re.13 Absolutely. they simply can't shut down the *only* manufacturing
    facility in a given country without repercussions. 

    DEC is not immune to NAFTA; it's only feasible that we, too, would move
    our manf out of country.  Hopefully HLO will stay.
    
    Ogre.

    
    SPO wasn't building tiger II's. They are all built in taiwan. I
    believe that SPO was doing order aministration for SPO's. Shipping
    boxes 
    to the customer's address, but that's different that building them. 
    
    Can someone from SPO correct this? 

re .16:

From what I've read, PCs are *configured* locally from parts that are
manufactured in Taiwan, etc.  I believe SPO has been one of the places
where they are configured.

    .17 is correct.
    
    Dave

    Re: -.10
    
    There was one other "higher-up" at the SPO Plant Closure Annoucement,on
    10/29/92 @ 9:00 A.M.  That person was Miguel Nazario,Manufacturing
    Manager for the Americas. Miguel reports to Dan Jennings.
    Miguel is/was the manager of COM (Carribean Operations Management)
    which encompasses the AGO and SGO Mfg.Plants. We all know that those
    two plants were annouced tobe "going the way of not",last March (
    approx.date). I believe that the SPO Plant Manager,now, reports to 
    Miguel, as opposed to Dan Jennings.
    
    
    There were other assorted DEC "Help Type" folks present also,to help
    answer preliminary questions at the "break-out" small(er) group
    sessions that were held after the "big annoucement".
    
    We also had DEC Spokesperson,Nikki Richardson, here on both 10/28 &
    29/92. Now if having her here, the day before the annoucement, did not
    tell one something,then one would probably have to be hit over the head
    with a podium,to get the message as to what was in store for SPO,on
    10/29/92. Special Meetings and telephone calls were the order to the
    day on Weds. 10/28/92, for certain people in SPO.
    
    To go even further, Nikki was in SPO during the week of 10/19-23/92,for
    some or a preliminary meeting(s) with at least one member of SPO's
    Plant Staff. A number of us "commoners" knew that she was not here to
    pay a social visit. Some folks then knew that the "prophesy" was indeed
    at hand.
    
     Good luck to the rest of you good folks out there in DEC Land.
    Unfortunately, SPO and BTO are merely the first, of more to come,
    relative to Plant Closings, in the near and more distant future.
    
                                                                    

    
    
    	re .15
    
    	If closing SPO were due to the proposed NAFTA agreement, then
    	it would make more sense to move the operation to Mexico, where
    	wages are much lower than US or Canada.
    
    	I've heard for several years now that DEC wanted to consolidate
    	all of it's manufacturing into a handful (4 or 5) of 'super-
    	plants'. The last number I heard (last spring) was that DEC
    	had about 30 manufacturing sites that it "would admit to". Now
    	it's true that not all of these sites are full blown manufacturing
    	sites, but I think that what you are seeing is a consolidation
    	of efforts and resources. 
    
    	As for HLO staying, my guess is that it is safe till 1997 - 1998,
    	when we'll need to build smaller, faster chips than can be built
    	in the new building. Of course, this may be showing my gross
    	ignorance about chip build techniques.
    
    	John

    The ABO stage I operation is being moved to Mexico....
    	/john

    In one of the first pages of the Digital Financial report booklets sent
    to me in the mail, it states that the goal is to eventualy have only
    one manufacturing plant that would build everything we make....

    	That should be easy as we quickly approach the point where we're
    not building anything anymore!

    Of course, by the time we get down to 3-4 plants, management will
    decide we have too many of our eggs in one basket.  Time for additional
    plants to get be built.
    
    --- Gavin

    No, no, no, we'll lease back our old plants from their new owners.

    re .25
    
    >        -< at substantially more than current cost-to-operate >-

    >No, no, no, we'll lease back our old plants from their new owners.
    
    The cost of operating plants is not in the plants.  Can you say
    "Greater Maynard Area Overhead"?  It would be cheaper to buy the
    services from *anyone* who doesn't have the overhead burden.  In a
    sense, divesting ourselves of manufacturing is just a way of
    highlighting the overhead.  If sales can't support it, it has to die. 
    Unfortunately, the company may die with it.
    
    Dick
    

    One theory about the Tiger IIs, just my own speculation:
    
    Last month, the Bush administration slapped a high import duty on RAM
    modules.  This substantially raises the cost of building a PC in the
    US, since PC RAMs are all imported (save a very few made by a handful
    of well-connected small companies, and maybe IBM's own). In case you
    haven't looked, the market price for memory is way, way up.
    
    By shifting manufacture to Canada, we don't pay that duty.  This can
    make the difference between a profit and a loss on each unit.

    
    Get your facts straight. The duty is on DRAMS built in Korea, not 
    all imported RAMS.  The involvement of Kanata in Tiger happened before the 
    DRAM anti-dumping levy was imposed. The price of DRAMS everywhere is
    going up because of the duty levied on the Koreans, so building in 
    Canada has nothing to do with it. 
    
    "Done in by Bush"?  

    re:.28
    How does the price of DRAMs go up in Canada because the USA imposes a
    duty?
    
    Since Korea is the dominant supplier of DRAMs, the price of DRAMs
    BUILT everywhere has gone up in the USA.
    
    The SPO announcement was made after the DRAM levy.  Of course, Kanata's
    been in the PC-buiding business for some time.  SOme other noter might
    wish to announce publicly (I don't knof if it is meant to be told even
    internally) what PCs have been built there for some time.

    I just read on livewire this morning that the Boston plant is going to
    be phased out by April 93. We here in Tempe Arizona were also informed
    on Monday that our Manufacturing operations will be phased out by the 
    end of June 93. The phase-out will be in three phases with the first
    ocurring February 26th, and the final phase will be a close down of 
    the production processs sometime after the end of June. 
    
    This will not affect the other businesses that reside in the facility,
    which are the Southwest FMC, and our Sales group. 

According to this morning's Globe, Boston Mayor Ray Flynn has asked Commerce
Secretary-designate Ron Brown to investigate the Boston closing. Flynn is 
questioning whether Digital lived up to the agreement under which the plant
was built. Considering the amount of training that was done in that plant 
I think old Raybo's blowing smoke.

    Stride-Rite (did I spell that right?) has also announced the closing of
    a plant in Boston.  I believe the Digital and the Stride-Rite plants are
    side-by-side.  Pretty hefty economic hit for one small area.
    
    Chet

    
    Does anyone know where the latest listing of closed plants is located?
    It came out around July?
    
    Thanks,
    
    /Andy