Eroding profitability and a softening optical retail market have motivated Sola International Inc. to cut its North American headquarters work force by 220 as it consolidates worldwide manufacturing facilities.
The restructuring at Sola Optical USA Inc. in Petaluma, Calif., is part of a larger plan the company will unveil in January, said Jeff Cartwright, director of finance and investor relations. The company touts itself as the largest manufacturer of spectacle lenses in North America.
The company is consolidating manufacturing and moving production to lower-cost locations such as Mexico, Brazil and China. Sola operates 20 manufacturing facilities worldwide, according to information on its Web site.
"Ultimately, what will remain is a commercial selling operation," Cartwright said of the Petaluma facility, which he said is the firm's highest cost facility. One line will remain for polycarbonate lenses through which research and development will be conducted. The facility also will be charged with manufacturing metal molds and maintaining a reflective coating operation.
Sola will eliminate staff positions during the next nine to 12 months.
"The staff reductions are part of a program to significantly reduce our cost structure globally and to manufacture products in those locations that ensure a sustainable competitive position for our products," said Jeremy C. Bishop, president and chief executive officer, in a news release.
"Other reductions are a result of the company's decision to suspend further development and manufacturing activities associated with the commercialization of polycarbonate Matrix products."
The laminating system that made a finished lens in an hour is being mothballed, Cartwright said.
"We didn't get all the way there," he said. "It still has very strong commercial appeal."
Sola experienced rapid growth up through the mid-1990s, with $387.7 million in sales in 1996. In 1997, the company saw sales explode to $488.7 million, said Cartwright. But after 1997, there was a dramatic slowdown.
"People weren't replacing glasses as frequently," he said. Also, the rising popularity of laser eye surgery is choking growth, Cartwright said.
"Top line growth is harder and harder to come by," he said.
Just last month, Sola acquired Oracle Lens Manufacturing Corp. in a $17.4 million deal, as it seeks to gain market share in the PC prescription lens market.
"Oracle has three manufacturing lines today," said Cartwright. "We're adding one more within two months and another in the spring."
Sola trades on the New York Stock Exchange with sales of $538.7 million for fiscal year 2000.