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LSI Logic to shut down Colorado plant

Wed, 04/11/2001 - 8:00pm
Anne Kerven

Consider the third-shift workers at LSI Logic's Colorado Springs location. Because of full-disclosure rules at the SEC, the shift found out on the news their plant was closing — before they heard from the company at 6 a.m. today. Other shifts found out yesterday.

LSI is shutting the plant down, effective in August, citing an adverse economic climate and a "widespread inventory correction," the company said in a statement.

The company produced products at that location that include those connected with ADSL, DSL and network switching, spokesman Kevin Brett told CEDaily.

"It's really a question of the age of the facility and the technology used here," Brett says. The company's manufactured there since 1983, and the industry has turned to more mature technology, which that facility doesn't support, he adds.

"The bottom line is this," he says. "This industry is notoriously cyclical. It's had a sharp downturn, and it will come back. Not if, when, but it won't be soon. When it comes back, it will be driven by communications and storage." By then, he says, the "useful" life of the present technology will have passed.

The company will continue work on customer orders at that plant through August, he said. Anything not done by then will be transferred to one of two locations in Tsukuba (pronounced "scuba"), Japan, and Gresham, Ore. The company will do the work, Brett says, but the question is where?

The closure will affect about 500 jobs. About 50 to 100 will be offered relocation to Gresham, and the rest will received severance and relocation help, he says.

The company will take restructuring and other charges of about $120 million to $150 million for fixed asset write-downs, severance and other costs of the closure, it reports. New SEC rules say anytime a material change is announced publicly, it must be released to the public as a whole, Brett says. Thus, third-shift workers were caught in a time gap.

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