July 17, 2013 Updated: July 18, 2013 at 6:43 am
Quantum Corp. will lay off 170 of its 305 employees in Colorado Springs as the California-based maker of computer storage devices outsources its remaining manufacturing operations to a contractor in Alabama.
Brad Cohen, a Quantum spokesman in San Jose, said the company will complete the layoff and shift its manufacturing to Texas-based Benchmark Electronics during the next six months,. with most of the cuts coming after Jan. 1. Employees who are laid off will receive severance packages and outplacement assistance, he said.
The cuts will leave the company with 135 employees in operations, engineering, information technology, finance and human resources at its facility on 10125 Federal Drive in the InterQuest business park.
Quantum told stockholders July 3 that company officials approved a plan June 28 to "consolidate manufacturing activities" with Benchmark, to include "the termination of employees currently supporting these activities" by the end of its fiscal year ending March 31. The company estimates it will spend $13 million to $16 million on severance, benefits and remaining lease payments.
Fred Crowley, senior economist for the Southern Colorado Economic Forum, called the layoff "most unfortunate" and estimated it could result in up to 600 jobs losses among suppliers and vendors, as well as retailers, restaurants and service providers used by the laid-off employees.
David White, chief business development officer for the Colorado Springs Regional Business Alliance, said the group is "always concerned when we lose any kind of jobs."
"In an economy where profit margins are slim, companies are looking for ways to become more competitive," White said. "We will work with Quantum to make sure its experience in Colorado Springs is good so they can build a strong operation here in the future."
The move comes as Quantum's losses grew nearly sixfold in the fiscal year ended March 31 to $52.4 million, or 22 cents a share, from $8.81 million, or 4 cents a share, during the previous fiscal year. The company has lost money every fiscal year but two since 2002, and its revenue has declined more than 40 percent since peaking in 2007.
Quantum has had an up-and-down history in Colorado Springs. Its roots here go back to its 1994, acquisition of Digital Equipment Corp.'s disk-drive manufacturing operations, which employed 1,400 people. A year later, the company shut down its manufacturing operations here, but kept 125 employees in other operations. Surging demand prompted the company to erect a three-building manufacturing plant that had 1,700 employees by 2000. A series of layoffs and attrition during the past decade or so reduced the company's local work force to 305 before the latest announcement.
The Quantum layoffs will further shrink an already struggling manufacturing sector in the Colorado Springs area. Manufacturing employment has declined by more than half since peaking at 26,700 in 2001 to 12,400 in May, the most recent data available. That is the fewest manufacturing workers in the area since July 1978.
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