Faced with continuing losses, Smith Corona Corp. will consolidate manufacturing operations in a new Tijuana, Mexico, facility during the next 14 months, relocating work now done in Southeast Asia. ``Continuing competitive price pressure and declines in unit volume of our personal word processors and typewriters contributed to a substantial decline in sales in domestic and international markets,'' Robert Van Buren, Smith Corona's new chairman and chief executive officer, said May 8 in the third-quarter report.
Sales fell 48 percent to $31.4 million from $60.5 million for the comparable 1994 quarter. Smith Corona competes principally with Brother Industries Ltd. of Nagoya, Japan.
``We will transfer manufacturing from Singapore and Batam, Indonesia, to Mexico,'' Eric Cleveland, corporate vice president and general manager of the subsidiary Smith Corona de Mexico SA de CV, said in an interview.
The company began operating in Singapore in 1973 and, in recent years, has assembled machines in Indonesia.
Smith Corona's 820 Tijuana employees assemble printed circuit boards, stamp and form metal parts and use plastic molding technologies. Work is done in a 19-month-old facility in Grupo Bustamante's Tijuana Industrial Park.
The plant has dozens of Van Dorn Demag, Cincinnati Milacron, Reed Prentice and Arburg injection molding machines with clamping forces of 30-1,000 tons, along with resin delivery and robotic systems.
Beginning in early 1993, Smith Corona relocated operations from Cortland, N.Y., bringingalong some plastics tool makers and also hiring in southern California. Some tool makers became available when toy maker Mattel Inc. acquired Fisher-Price Inc. in late 1993 and consolidated Tijuana operations.
The existing 252,000-square-foot plant can accommodate additional equipment from Asia, but the volume of materials will require added space in Tijuana.
New Canaan, Conn.-based Smith Corona reported a third-quarter loss of $12.1 million, or 40 cents per share, compared with profit from continuing operations of $100,000, or 1 cent per share, in the same 1994 period.
Pretax charges of about $22 million are planned for the fourth quarter. About 750 jobs will be eliminated through retirement and layoffs, and the quarterly dividend will be omitted.
``I'm looking for continued losses in the fourth quarter,'' said Carol P. Neves, first vice president with Merrill Lynch & Co.'s global securities research and economics group. ``It's too early to know how quickly they can eliminate losses.''
She added: ``Even after the writeoff and anticipated loss, the balance sheet is solid. They need to get inventories down.''
Smith Corona reported an improvement in sales of new products including fax machines.
Hanson plc of London owns 47.9 percent of Smith Corona's common stock but plans to spin off Smith Corona and more than 30 other companies into a new company. David Clarke, chief executive officer of Hanson North America, heads the new firm, U.S. Industries Inc., which begins trading June 1 on the New York Stock Exchange and intends to sell some of the businesses it is acquiring.