RadioShack Corp. will close an injection molding facility in Swannanoa, N.C., a move that will affect nearly 140 employees at that site. According to the state's Division of Employment and Training in Raleigh, the site will close by Oct. 10.
The fate of RadioShack's extrusion operations in its hometown of Fort Worth, Texas, is not clear. Last month the publicly held consumer electronics company announced it would lay off 195 employees in Forth Worth. The firm operates 14 extrusion lines there, using about 630,000 pounds of resin per month to coat wire and cable. Officials did confirm that operations will be consolidated into one site there.
It's a complete about-face from the sentiment officials conveyed just a few months ago in an interview with Plastics News. In that May 19 story, officials maintained that company-owned domestic manufacturing helped RadioShack stay ``nimble and quick'' - although it did say it still would source some products globally. At that time, the firm operated seven manufacturing facilities in the United States and one in China.
RadioShack has handled its own domestic plastics manufacturing in several sectors for years, including wire and cable production and housings for items like amplifiers, modulators and antennae. Its Swannanoa site houses eight Van Dorn injection presses, operating as TDP Electronics since the 1970s.
But the challenging retail environment and demanding global economy have made change inevitable, sources said. RadioShack has not been competitive in the market for a few years, said Gary Farber, a partner with Nightingale & Farber Capital LLC, an investment management firm in Seattle.
``They're going to have to outsource to be price-competitive,'' Farber said in a Sept. 25 telephone interview.
Top executives began alluding to pending cuts in July, when the firm reported second-quarter results.
``RadioShack's senior management is not satisfied with the likely 3.5-4 percent increase in [sales, general and administrative] dollars this year,'' Mike Newman, chief financial officer, told shareholders and analysts in a July 22 conference call. ``We're focusing daily on doing even better than that.''
Newman said then that the firm would target three areas: staff reduction, insurance cost reduction and re-evaluation of corporate assets. The firm laid off an undisclosed number of employees in the second quarter, which ended June 30.
RadioShack reported sales of $1 billion in the second quarter, an increase from $998 million for the same period a year earlier. Its profit was $57.5 million, an 11 percent increase from 2002's second quarter.
``We remain grounded and humble about our financial results, knowing that we did pretty well and we're executing our strategies, but much work still lies ahead to replicate this performance consistently,'' Leonard Roberts, RadioShack's chairman and chief executive officer, told analysts and shareholders. ``We are becoming more confident that we can sustain earnings growth for years to come because we have the right strategy to remain competitive long-term.''
The company will report its third-quarter results Oct. 21.