PHILIPS TO CLOSE TUBE PLANT
LG.Philips Displays, battling to reduce costs, will shut Ottawa, O., TV tube plant by Dec., full year ahead of schedule, as it completes move of production to Mexico. In unveiling plans in May 2000 to shift production of 25-27” tubes to Mexico over period of 3 years, Philips said it would keep 32” and other specialty products at Ohio plant.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
However, Philips formed CRT joint venture with LG Electronics in late 2000, hastening need to consolidate operations. Ottawa facility, which Philips purchased from GTE Sylvania in 1981, has 1,217 hourly employees, most of whom are covered by severance package negotiated with IBEW Local 1654. Terms of severance package weren’t available, but under contract that took effect in 2000, in event that factory closed, workers were to receive 2 weeks of severance pay -- at regular hourly rates -- for each year of service. Contract also had clause that was to make it difficult to drop work force below 800 jobs during life of agreement. Philips spokesman said company was “conscious” of clause and would “comply with the contract provisions,” spokesman said.
With closing of factory, LG.Philips will move tube making equipment to new plant in Gomez Palacio, Mexico, and existing facility in Hranice, Czech Republic. In addition to Ottawa, LG.Philips closed CRT production lines in Taiwan and moved equipment to China last year. It has 36,000 employees in 34 factories and 14 countries, 24,000 of them in CRT production and 12,000 in components sector. Factory in Mexico started production in Dec. with 27” flat screen and eventually will be expanded to add 36”. At outset, it will have one million unit annual capacity and 800 employees, growing to 4.5 million and 2,000 employees by 2003. LG and Philips maintained separate lines in 2001, but now are shifting to combining operations, move that’s projected to yield $300 million annual savings on combined sales of $5.2 billion, Philips officials have said. Ottawa plant was tagged as “nonperforming asset facility” by Philips in 1997 and put on notice that it had to reach 25% return on net assets by 1998, an increase from 4% in 1996. It achieved 27% return, but that amount wasn’t enough to save the factory, sources said.