With shipments at one-third of last year's level, Kemet Corp. has announced another series of cost-cutting moves, including workforce reductions, that are expected to save $10 million in the December quarter and $30 million annually.
The Greenville, SC., capacitor supplier will lay off 600 employees in the U.S. and 1,000 in Mexico. In addition, the company will further consolidate its manufacturing facilities.
Kemet will take a $25 million restructuring charge in the December quarter as a result of the actions.
For Kemet, this is the company's second major workforce reduction in 2001. In June, the company cut 675 workers in the U.S. and 1,130 in Mexico. Further headcount reductions have been made through attrition, special leaves, and early retirement programs.
Before the most recent workforce reductions, the company had 9,200 employees.
The company's previous cost-cutting moves have reduced annual operating costs by $80 million, according to David Maguire, chairman and chief executive in a statement.
However, like other passive suppliers, Kemet continues to be plagued by a combination of excess inventory, low order rates, and falling part prices, forcing the company to further cut its operating costs.
"Even though order rates have stabilized, pricing continues to be weak and there's a long way for pricing to recover," said David Macgregor, an analyst with Midwest Research/STSC, Cleveland.
Among other passive suppliers, AVX Corp. and Vishay Intertechnology Inc., have also instituted cost cutting programs that included headcount reductions earlier this year.