End of floppy disk forces Imation job cuts
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Imation says it will eliminate about 675 jobs overall. Hardest hit will be Imation's plant in Wahpeton, N.D. Some 390 workers there stand to lose their jobs.
In about two years, Imation will end the Wahpeton plant's assembly of "floppy" disks and shut down all other manufacturing operations at the plant.
Imation spokesman Brad Allen says floppy disks are a rapidly declining part of the data storage market and the disks are nearing the end of their life.
"Floppy disks have been declining 20 to 30 percent annually for the past four or five years. Floppy diskettes are declining at such a rate that it's no longer viable for us to continue to manufacture disks here," Allen said.
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These days, thumb drives, compact flash cards and other devices can store gigabytes of information, while a floppy can store only a few megabytes.
Imation's restructuring will also cut about 40 jobs at the company's Oakdale research and development center. Those operations will be left with about 130 workers.
Allen says the company wants to concentrate R&D efforts on fast-growing data-storage products, from corporate backup tapes to variations on optical technology like the CD-ROM.
"We're focusing our R&D efforts on advanced tape formats going forward, as well as supporting existing tape formats that are growing, as well as some new and emerging consumer technologies, such as advanced optical. We also will be working on rapid prototyping and product development for more consumer-oriented technologies," Allen said.
Other job cuts will be spread thoughout the company's operations in the U.S.
Imation expects its restructuring will result in $25 to $30 million in expenses over the next two years. That includes severance pay and lease buyouts.
The company says employees who are let go will be eligible for one week's pay for every year of service, up to a maximum of 26 weeks.
Eventually, the company expects the job cuts and decision to outsource the manufacturing of more products will reduce its annual costs by $25 to $30 million.
Imation also announced that it will acquire some assets of Memcorp, a U.S.-based consumer electronics marketing and distribution company.
Memcorp owned Memorex, and the deal complements Imation's recent acquisition of the Memorex brand. Memcorp had about $190 million in Memorex-branded sales last year.
