Spansion relocating manufacturing ops to Bangkok

In a statement, Spansion said about 660 employees at the facility would lose their jobs due to the closure, which should result in cost savings of US$30mil (RM92mil) per year.

The company's test and assembly operations would be consolidated at a facility near Bangkok, Thailand.

However, Spansion plans to maintain a presence in Malaysia via its existing support services facility in Penang.

 
“With macroeconomic weakness expected to continue in the near term, we are taking proactive measures to reduce operating expenses while strengthening customer relationships and accelerating adoption of new products to position Spansion for long-term market leadership,” said president and chief executive officer John Kispert.

Spansion, listed on the New York Stock Exchange, had emerged from bankruptcy on May 10, 2010.

For its third quarter ended Sept 25, 2011, Spansion posted a net profit of US$7.3mil (RM22.4mil) compared with a net loss of US$64.9mil (RM198.9mil) in the same period last year. However, net profit was 71 per cent lower quarter-on-quarter.

Spansion also suffered a 16 per cent year-on-year dip in net sales to US$258.2mil (RM791.3mil). Net sales was 13.6 per cent lower quarter-on-quarter.

Spansion is expecting a further drop in net sales, to between US$205mil (RM628.2mil) and US$225mil (RM689.5mil), for the fourth quarter of 2011.

Meanwhile, Spansion senior vice-president of worldwide human resources Carmine Renzulli said the company would assist affected employees in Malaysia in finding new jobs and offer them severance packages.

Renzulli added that the move to close the Shah Alam facility was regrettable but unavoidable.

“We plan to consolidate our test and assembly operations in the region to reduce costs and enhance the overall efficiency of our manufacturing operations,” he told StarBizWeek in an interview.

The Shah Alam facility would be closed in phases over three financial quarters.

Renzulli pointed out that including the Shah Alam facility, Spansion would be cutting 20 per cent of its global workforce of about 3,600 employees in Malaysia, Thailand, China, the United States, Europe and Japan. The Shah Alam facility is the worst hit by the job cuts.

On the company's decision to consolidate its test and assembly operations in Thailand, which is presently suffering from severe floods that have shut down businesses and plants, Renzulli said a main consideration was the level and type of machinery at the Bangkok facility.

“Our facility in Thailand has not been affected by the floods so far. It was more efficient for us to consolidate operations in Thailand based on an analysis of the workflow, the types of equipment and machinery, as well as the sort of future workload from our customer base. For example, there is significantly higher amount of machinery at the Thai facility compared with Shah Alam.”

Renzulli pointed out that both the Shah Alam and Thai facilities had been under-utilised in recent times.

“The Shah Alam facility was running at 50 per cent capacity while the Thai facility was running only slightly higher.”