Eau Claire (WQOW) – A real estate listing sparks a lot of questions. Hutchinson Technology has listed part of its facility in Eau Claire for sale. Eau Claire’s economic development director says this does not come as a surprise.
Two years ago, HTI announced plans to consolidate 30 to 40 percent of its workforce, and move some operations overseas. Since then, more than 200 Eau Claire employees have been laid off. HTI is currently one of Eau Claire’s top 10 largest employers. Employment numbers were not available Tuesday night, but at last check, about 1,000 people worked at the Eau Claire facility.
As far as we know, there will be no more layoffs in the immediate future. The City of Eau Claire learned over a year ago that HTI would be moving some work to Thailand in preparation for this sale. The city’s economic development director says any jobs that would have been lost from the building closing have already been cut.
During Hutchinson Technology’s quarterly earnings conference call last week, the company announced it was ready to shut down one of its three buildings in Eau Claire. “We are also planning to further consolidate and streamline our U.S. operations. In Eau Claire, Wisconsin, we will wind down assembly operations there in fiscal 2013, as we shift more of their production to our Thailand operation. The portion of our Eau Claire facility currently used for assembly operations will be offered for lease,” said CEO Rick Penn.
According to a listing on this real estate website, only the front portion of the building is for sale.
“What type of cash flow are you assuming at some point you may get from leasing activities in Eau Claire and how much do you think you could receive for a sale in Hutchinson,” asked Christian Schwab, an investment banker on the conference call. “I think it’s preliminary to disclose that because those are all going to be negotiation things. So I think we’ll wait and see what the market will bear and then we will make it note,” replied Penn.
It’s all being done to save money, and the company says they’re expecting savings in the millions.
“Can you quantify what that means kind of exiting fiscal year ’13 kind of the cost savings you will see,” asked Schwab. “The $2.3 million that we mentioned as the cost of being in the U.S. versus Thailand because we really expected all of the assembly more or less to be in Thailand at this point in time. So that’s the savings from that and then the other savings that we have alluded to is some of the consolidation of the facilities and when those are all concluded, that’s about a $2 million annual cash savings and about a $4 million, because of the depreciation and other things, with P and L savings,” the company’s CFO, Dave Radloff replied.
HTI will keep some operations in Eau Claire including manufacturing.
A quick check of the real estate company’s website shows no price listed for the Eau Claire building. The city says it can’t talk about any potential buyers right now.
HTI also plans to sell part of its facility in Hutchinson, Minnesota as they continue to consolidate operations.