Three years ago, El Segundo chip maker International Rectifier Corp. had slumping sales and announced plans to shut down its manufacturing plant in that city.
Sales rebounded, but that only delayed the inevitable. The company last week again announced plans to shutter the El Segundo production line; the plant will close by March. Executives said the shutdown will save $10 million a year.
The company would not disclose how many employees work at the plant today, but executives told the Business Journal a year ago that the facility had 210 workers.
The announcement came at the same time the company reported annual results for the year ended June 30. It had a loss of $55 million, compared with net income of $167 million the previous year.
International Rectifier makes tiny chips that convert electricity into power for electronics in mobile devices, computers, appliances and cars. Chief Executive Oleg Khaykin told investors during an Aug. 22 conference call that weak demand in Europe and in some Asian markets is hurting sales.
“We saw (manufacturers) focused on burning off inventory and distributors hesitant to restock,” he said. “We expect this environment to persist for several quarters.”
As a result, the company is dusting off parts of the restructuring plan it came up with in 2009. That includes the plant closure and downsizing another facility in Newport, Wales. Production from El Segundo will move to the company’s plant in Temecula.
Last week’s announcement is bad news for workers, but some investors want additional cuts, saying International Rectifier’s margins are lower than those of similar firms.
“While cost reductions are a good first step, they do no go far enough,” Craig Berger, an analyst at FBR Capital Markets & Co. in New York, wrote in an Aug. 23 report.
Most analysts who follow the company maintain a “buy” rating, but shares fell 12 percent to $16.29 the day after the earnings announcement.
Bentley Prince Street is coming to town. The carpet manufacturer has always been in City of Industry, but corporate headquarters won’t be in Atlanta anymore.
Company management, backed by New York private-equity firm Dominus Capital LP, this month finalized a $35 million cash deal to purchase the 33-year-old company from corporate parent Interface Inc. of Atlanta, taking it private for the first time since 1993.
Interface, which acquired the company that year, reported losing $1.6 million on sales of $104 million at its Bentley segment last year. Bentley makes carpet tiles and rolls, while Interface’s other business makes only tiles.
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