Perlos Corp. has announced a major shake-up of its high-cost operations in Europe and the United States, including plans to close a money-losing telecommunications and auto-components plant in Fort Worth, Texas, and to cut up to 600 jobs in Finland.
Perlos also unveiled plans to launch a new manufacturing plant in Chennai, India, early in 2007, reflecting its aim to meet rising demand in growing markets, especially from the telecommunications sector.
It is also building new capacity in China, with additional plants due to be completed in Beijing and Guangzhou before the end of this year.
In the United States, production is being wound down immediately at the 181,000-square-foot Fort Worth facility, which employs 1,250. Its work will be transferred to the injection molder's new low-cost plant in Reynosa, Mexico, by June, saving the firm around 15 million euros ($18 million) per year, according to NurmijÃ¤rvi, Finland-based Perlos.
In 2004, Perlos said that its planned Reynosa plant would serve some existing cell phone customers, chiefly Nokia, but aimed to target new business in Latin America. It stressed then that no work production would be switched to Mexico from the Fort Worth facility.
There was disappointment, but little surprise, at the Perlos closure plan in the plastics industry locally.
``This is another severe blow for north Texas plastics, in that we recently have seen plant closures including Cornerstone [Products Inc.], downsizing of Motorola operations here in Fort Worth, continuing pressure on the telecom corridor in north Dallas, etc.,'' said Barbara Arnold-Feret, president of Prototyping and Rapid Tooling Services of Keller, Texas.
``These moves signal more and more jobs are moving overseas,'' she said.
She said the North Texas Section of the Society of Plastics Engineers, Alliance Workforce and Southlake/KellerCareer Management Group are offering help to local Perlos workers.
The Fort Worth closure follows radical reorganization by Perlos' main customer, Nokia. The global cell phone manufacturer has converted its plant in Fort Worth into a distribution center, slashing its workforce from around 3,500 in 2000 to just 600 at the end of 2004, according to local industry sources.
The latest cutbacks reflect Perlos' determination to retain its position as the world's largest supplier of cell phone components by adapting capacity to match changing demand.
In Finland, where the firm will close its YlÃ¶jÃ¤rvi plant in March, Perlos plans to launch a rationalization program to save around 25 million euros ($30 million) annually through improved efficiency and labor reductions.
Negotiations with employee representatives on the cuts are planned, Perlos said. Currently the company employs 3,000 in Finland, including 2,700 permanent staff.
Perlos pointed to ``sweeping structural changes'' since early 2005 in manufacturing for the telecommunications industry. Demand for cell phone components now is centering on low-cost countries close to the fastest-growing markets in Asia and Central America, it said.
Last year, Perlos made moves to meet changing demand by expanding its operations in Hungary and China, and beginning construction of the plant in Reynosa, which began operating last month. Meantime, Perlos started the latest phase of downscaling in Finland.
In its drive to supply the mushrooming cell phone market in Asia, Perlos expects to launch its 216,000-square-foot facility in Beijing by September and a 178,000-square-foot plant in Guangzhou by the end of 2006, according to Isto Hantila, the firm's chief executive officer.
Perlos opened its first facility in Guangzhou in 2000, followed by a 115,000-square-foot plant in Beijing in 2003, which it later expanded.
The initial phase of the company's first production unit in India will have 162,000 square feet of floor space.
Following the company's 2005 purchase of a majority share in Hong Kong-based mold producer CIM Precision Molds (HK) Ltd., Perlos consolidated its Chinese mold manufacturing in Shenzhen.
CIM formally ran two plants in Shenzhen and Dongguan, China, but Perlos built a main full-service mold center in Shenzhen, which began operating in December. The operation is called Perlos Precision Moulds and Moulding (Shenzhen) Co. Ltd. and CIM's Hong Kong operation acts as a service center for existing customers including Hewlett-Packard, Gillette, Compaq, Microsoft, Kodak and TRW.
Perlos reported its 2005 sales were 666.8 million euros ($807 million), up 19 percent from 2004, but profit plunged from 87 million euros in 2004 to 13.3 million euros ($16 million) last year.
``Profitability was burdened by the low capacity-utilization ratio in the first part of the year, severe price competition, nonrecurring write-downs due to winding down the YlÃ¶jÃ¤rvi plant, and the loss-making operations of the Texas plant during the last quarter of the year,'' Hantila said.
Telecommunications and electronics components, which delivered 615 million euros ($744 million) in 2005 sales, represent around 92 percent of Perlos' total.