Thomson to slash 1,500 jobs, shut world's largest TV plant
Feb. 13, 1997
INDIANAPOLIS (AP) _ Thomson Consumer Electronics, the largest maker of television sets in the United States, plans to close its only U.S. assembly plant and shift production to Mexico, slashing more than 1,500 jobs.
Thomson's exit from the U.S. TV-making business is just the latest in an industry struggling to cut costs. Like Zenith, Mitsubishi and other electronics companies before it, Thomson cited fierce competition that has driven down prices of color TV sets, weakening profit margins at a time of lower-than-expected sales.
Thomson, a French-owned company that makes the RCA, GE and ProScan TV brands, will close its Bloomington, Ind. TV assembly factory, the world's largest with 1,100 workers, in April 1998. An additional 420 jobs will be lost when it stops making plastic TV cabinets at an Indianapolis factory at the same time.
The company plans to move the Bloomington work to a new factory in Juarez, Mexico, where labor costs of about $2.10 an hour are a fraction of the $19 per hour in wages and benefits Thomson pays its workers in Bloomington and Indianapolis.
Thomson said the Bloomington and Indianapolis shutdowns will save it $350 million over five to seven years, even after costs of severance, building the Juarez plant and leasing additional factory space in Torreon, Mexico.
With the factory closings, the electronics company will effectively get out of the U.S. TV assembly business. It still makes TV parts here.
With electronics makers cutting the costs of parts as much as possible, reduced labor costs are all that remain to bring down television prices, said Dale Ford, a consumer electronics analyst for Dataquest in San Jose, Calif.
An increasingly savvy consumer is also to blame, Ford said. ``If they get the same color TV that were were getting 10 years ago, they expect that price to come down.''
David Hakala, Thomson's vice president for American manufacturing, cited the changing tastes of Americans as they spend more of their electronics dollar on computers and other multimedia products.
Factory sales of traditional color TVs dropped 5 percent to $6.4 billion last year, according to the Consumer Electronics Manufacturers Association.
Thomson has made televisions in Mexico for 25 years but kept production of the more profitable models with screens 30 inches and larger in Bloomington, about 60 miles south of Indianapolis. The Juarez plant will be Thomson's third in Mexico.
Mitsubishi earlier this year said it would move production to Mexico from California, and JVC and Phillips last year said they would close U.S. television plants. Zenith in December said it would eliminate 1,100 jobs, or a quarter of its U.S. work force.
Thomson announced last week it was closing a television assembly plant in Prescott, Ontario, costing 115 workers their jobs, and would move its production to Bloomington and Juarez.
The end of television production in Bloomington and of cabinets in Indianapolis 13 1/2 months from now is linked to the expiration of Thomson's contract with the International Brotherhood of Electrical Workers, the company said.
IBEW members in the two cities agreed three years ago to $210 million in concessions, including a wage freeze, in return for job guarantees.
Mayor John Fernandez said the television plant represented 5 percent of Bloomington's tax base.
``This is terrible news, especially for the people that work there, and it presents a huge challenge for Bloomington and Monroe County,'' he told reporters in his city.
The Bloomington plant employed as many as 8,600 workers during the 1960s. As the largest TV assembly plant in the world, it turns out about 9,000 units daily and nearly 2.1 million in 1996.
The job losses in Bloomington and Indianapolis leaves Thomson with more than 7,400 U.S. workers in Indiana, Ohio, North Carolina and Pennsylvania. The Indianapolis factory will retain 125 workers making circuit boards.
Thomson bought the RCA/GE television business from General Electric 10 years ago.
Thomson's announcement comes as the French government tries to sell its parent, the state-owned defense and electronics company Thomson SA. The government last year had picked a French company to take it over but the deal fell apart.
Hakala said Thursday's announcement was unrelated to the French government's effort to sell the electronics group.