Shape Inc. will close an Illinois division in early 1998 and develop a Chinese manufacturing capability.
Under pressure is Shape's product line of videocassette cases that contain the leads to which tapes are attached, but no tapes themselves. Such products are known in the industry as V-0s.
``We have to respond to foreign competition,'' Peter W. Ciriello, president and chief executive officer since April, said in a recent telephone interview from his Fitchburg, Mass., office. ``The layoff puts us in a position to be healthier [and] gives us cash to invest in new products and other market sectors. We were losing cash on every video [cassette] we made.''
The closing will idle about 100 Midwest division employees at a leased 100,000-square-foot facility in Northbrook, Ill. Shape acquired the V-0 production facility in mid-1996 and expects to relocate the equipment. The site has existed for about a decade.
Ciriello said the firm is working on developing alliances in China to mold the videocassette V-0s there. But, he noted, it is too soon for details.
In addition to the Illinois plant closure, Shape will cut back V-0 production at its Kennebunk, Maine, plant, axing 40 jobs. Another 320 will continue in Kennebunk positions, including some making V-0 made-in-USA product for certain domestic customers. Elsewhere, Shape employs about 320 in Massachusetts and Alabama.
``We regret the hardship these layoffs will create,'' Ciriello said.
Low-priced foreign product has impacted Shape. ``We were not able to keep pace with cost reductions,'' Ciriello said. ``We have accepted that videocassettes are a commodity product.''
A more aggressive Shape is ``much healthier than in a long time'' and taking a proactive stance, he said. ``We want to be like we used to be,'' providing proprietary products, value-added services, delivery flexibility and short lead times.
``The market is here in North America, not in China,'' he said. ``We're in a strategically located place, better than the Chinese.'' Shape is ``not getting out of any business line'' and intends to ``use the V-0 shell to open more doors.''
Shape makes optical and tape products for the electronic media, data storage and computer industries using plastics molding, assembly, packaging and distribution processes. In October and November, Shape relocated its headquarters to the Fitchburg plant site from a New Hampshire office building.
The firm's parent holding company is Shape Global Technology Inc.