Pemstar To Downsize, Shed Up to 150,000 SF

ROCHESTER, MN-Pemstar, an electronics manufacturing services company, plans to shed up to 150,000 sf in manufacturing space in the next six months as part of a restructuring program to eliminate about $5 million in annual costs. Pemstar’s three Midwest sites will be integrated into one virtual operational entity with shared general management and support services, the company says.

Management wouldn’t spell out how the restructuring would affect Minnesota except to say that the consolidation includes integrating Pemstar sites in Rochester, MN; Chaska, MN; and Duneith, ND. Pemstar has 359,000 sf in offices and manufacturing facilities in Rochester and a 100,000 sf plant in Duneith. The company also will reduce its 141,000 sf San Jose, CA development and manufacturing operations.

The eliminated space would range from 100,000 sf to 150,000 sf of manufacturing space, or 14% of capacity of about one million sf spread out over 16 locations worldwide. It will be eliminated during the next two fiscal quarters. The move will likely mean from 75 to 100 workers being laid off in the US.

As a result of this capacity reduction, Pemstar plans to take total restructuring charges in the range of $2 million to $4 million in the December 2004 and March 2005 quarters. “Removing at least 100,000 sf of excess capacity in the Americas over the next six months should enhance future,” says Al Berning, Pemstar’s chairman, president and chief executive officer. Berning says that like its competitors, Pemstar has experienced recent “sluggishness” in sales.