General Semiconductor Announces Restructuring Plan
General Semiconductor Inc. (Melville, NY) announced details of the restructuring plan outlined in its July 19, 2001, press release. The company expects total annualized cost savings of approximately $25.0 million and expects to take pre-tax charges in the third quarter of up to $60.0 million, including severance, non-cash asset impairment, exit costs and other expenses.
In response to the weak economic environment and unprecedented declines in end-market demand, the company has decided to close its facility in Macroom, Ireland, which manufactures transient voltage-suppression diodes and rectifiers. General Semiconductor will transfer the majority of these product lines to its Taiwan and China facilities, while outsourcing production of certain other products to subcontractors. The Macroom facility employs 670 people, or 13 percent of the company's workforce.
In addition, General Semiconductor has instituted cost-reduction programs at all of its facilities and offices worldwide. The company will outsource certain mature product lines to subcontractors and make additional headcount reductions totaling approximately three percent of General Semiconductor's workforce. The announced programs, combined with actions taken in the first half of the year, are expected to reduce the company's workforce by approximately 23 percent from the 5,700 employed as of December 31, 2000.
Ronald A. Ostertag, chairman and CEO, stated, "This has been a very difficult decision for the corporation and I am personally disappointed that our business in Macroom will be closed after 20 years. Today's actions will make us a stronger, more profitable company by aligning cost structure with demand, ensuring the long-term viability of the product lines currently manufactured at our Macroom facility, and creating a more efficient order through delivery process. The semiconductor market's unprecedented downturn made the steps taken today a necessary business decision. Nevertheless, these choices are difficult for everyone involved, and all of us at General Semiconductor want to thank all our employees from Macroom and around the world for their contributions and talented service over the years."