A Sony Corp. home entertainment unit in Terre Haute, Ind., is outsourcing its customers' music and video manufacturing to competitor Technicolor SA.
Sony DADC US Inc. will reduce staff in the Terre Haute factory, a Bolingbrook, Ill., distribution facility and an Agoura Hills, Calif., transportation site.
The change in Indiana will result in layoffs of 375 employees from March 23 through August, according to a worker adjustment and retraining notification that Sony filed Jan. 17 with the Indiana Department of Workforce Development.
Another 300 employees in Terre Haute will continue production of Blue-ray discs for the Sony PlayStation business, support for new formats such as UHD-100 for mini video projection and provision for logistic services for digital media renter Redbox Automated Retail LLC.
“The home entertainment packaged media market has faced significant decline over the past several years,” Dave Rubenstein, president of Sony DADC Americas, said in a memo to employees. “Until now, we have managed to stay just ahead of the decline curve by aggressively pursuing cost take out and creative operational efficiencies across all our product lines.”
Growth of streaming services such as those from Netflix Inc., Amazon.com Inc. and Hulu LLC has led retailers to gradually decrease emphasis on packaged media resulting “in reductions in allocated retail floor space,” Rubinstein noted.
Global operations of Sony Digital Audio Disc Corp. manufacture compact, digital video, Universal Media and Blu-ray discs in 13 locations including Terre Haute.
During 2011, the Sony DADC US Inc. unit closed its Pitman, N.J. plant, and Sony DADC Canada Inc. shuttered a Toronto site. Sony DADC México SA de CV ceased Mexico City operations in 2015.
Terre Haute will outsource CD manufacturing for Sony Music Entertainment to another competitor, the Sonopress operation of Gütersloh, Germany-based Bertelsmann SE & Co. KGaA.
Originally, the Terre Haute plant opened in 1953 in a former furniture factory to manufacture vinyl records for Columbia Records, then a division of the Columbia Broadcasting System. CD manufacturing in Terre Haute started in 1984.
The site operated as a subsidiary of the CBS/Sony Group. Sony acquired CBS's portion of the venture in 1985 and, then in 1988, bought CBS Records including numerous manufacturing facilities that later became part of Sony DADC.
The Terre Haute plant under Sony DADC management produced more than 11 billion discs over 33 years.
Parent firm Sony Corp. is based in the Minato special ward of Tokyo.
Technicolor is based in the Paris commune of Issy-les-Moulineaux and is major provider in the media and entertainment sector with operations in multiple countries.
In its six-month financials released on July 26, publicly traded Technicolor reported, “The technology segment revenues declined compared to a very strong first half 2016 performance and due to the expiry of digital TV agreements in anticipation of the ramp up of the joint licensing program with Sony.”