Imation to Close Camarillo, CA PlantAfter announcing the exit of its Wahpeton, ND facility, the company will concentrate all its tape coating in Weatherford, OK.
This is a Press Release edited by StorageNewsletter.com on 2008.07.23
Imation Corp. announced additional steps to optimize its magnetic tape manufacturing by focusing all tape coating in its state-of-the-art Weatherford, OK plant as a further implementation of the Company's manufacturing strategy. This will result in the exit from its Camarillo, CA plant by the end of this year. This follows the announcement in May 2007 of the consolidation and outsourcing of tape converting operations, resulting in the exit of its Wahpeton, ND plant by year end 2008. Imation's manufacturing plant in Weatherford, OK will remain dedicated to magnetic tape coating operations.
Employees from Imation's Camarillo, CA plant
Key elements of today's announcements include the following:
- Imation will focus all tape coating operations in its Weatherford plant and cease manufacturing operations at its Camarillo plant, which it plans to exit by year-end 2008. This will result in approximately 140 positions out of a current worldwide total of 1,950 being eliminated by year- end.
- The Company anticipates it will incur up to $20 million in restructuring and related charges associated with the Camarillo closure, the majority of which will occur in the second half of 2008. Approximately half of the charges are anticipated to be cash payments associated with severance benefits and costs of exiting the site. The remaining charges will be non-cash asset write-offs.
- These actions are expected to result in approximately $15 million to $20 million in annualized cost eliminations intended to mitigate projected declines in tape gross profits in future years. However, these benefits will not be completely realized until the program is fully implemented.
Commenting on today's announcement, Imation's President and Chief Executive Officer, Frank Russomanno said:
"Imation remains committed to maintaining our leadership position in the removable data storage industry serving commercial customers. As we said in the past, this management team will take all steps necessary to maintain our competitive advantage.
"At last year's analyst strategy briefing, we announced steps to optimize our magnetic business with the consolidation and outsourcing of our tape converting operations and our planned exit from our Wahpeton plant by the end of 2008. This morning we accelerated our optimization strategy as we announced our plan to focus coating in Weatherford and the exit of our Camarillo operation by year-end.
"The tape industry has consistently addressed the growth in demand for storage capacity with higher capacity cartridges resulting in lower cost per gigabyte. In addition, open format LTO tape continues to gain share with legacy formats declining at an increasing rate. In the current economic environment we have seen this trend accelerate, especially among some of our enterprise class customers. Finally, lower cost disk and optimization strategies such as virtual tape and de-duplication remain a factor in certain sectors of the market. As a result, we expect tape revenue and margins to continue to be under pressure.
"Given these trends, we recognize that excess manufacturing capacity exists, so we are taking aggressive actions as part of our strategy to optimize our tape business and maintain our leadership position.
"Several years ago, we invested $55 million in the most modern coater in the industry, our TeraAngstrom coater in Weatherford. At that time, we said we would deliver a Terabyte (TB) of capacity in a cartridge before the end of the decade. Last week, we passed that milestone. Our Weatherford plant will be the manufacturing site for all our coating operations going forward.
"Imation is well known and trusted as a leading developer and manufacturer of magnetic tape formats. That will not change. We expect the tape business to be an important market for us in the future and we intend to remain a leader," Russomanno concluded.