Hutchinson Technology closing Sioux Falls plant

(AP) - Ten days after cutting its Sioux Falls work force in half, Hutchinson Technology Inc. said Friday it is closing the plant and laying off the remaining 300 employees over the next three months.

The Hutchinson, Minn.-based company makes suspension assemblies for disk drives in computers and other electronic products.

The closure is part of an effort to restructure the company and reduce costs.

"Our demand is down and we need to lower our costs," said Connie Pautz, communications director.

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The company will shift its Sioux Falls assembly operation into its facilities in Eau Claire, Wis., and Hutchinson, Minn., both of which are more than twice the size of the Sioux Falls building.

"It really was a matter of using the space more effectively, and we have more space at the two locations," Pautz said.

Hutchinson's Sioux Falls work force has risen and fallen since it expanded to the city in 1988. Employment peaked in 1999 at 1,800 employees, making it one of the city's largest employers at the time.

"It is important to note that this closure is not a reflection on the employees or the performance of the Sioux Falls operation," Kathleen Skarvan, president of the company's Disk Drive Components Division said in a release.

Hutchinson is developing a plan to transfer operations to the other plants, which will determine how long each employee stays, Pautz said.

Workers with up to four years of service will receive a severance of 180 hours of base pay. Those with more than four years will get 60 hours of pay for every year of service. Health and dental benefits will continue for two months.

Hutchinson announced last week it was cutting 1,380 jobs companywide, or about 30 percent of its total, including about 275 in Sioux Falls, and reducing the salaries of its remaining employees by 5 percent. The 300 positions are in addition to that reduction.

Pautz said it's not clear how the consolidation will affect the Hutchinson and Eau Claire plants.

Details of the expected cost savings from the closing and other information will be released Tuesday when first quarter results are released. Closing the plant is expected to cost $5 million to $13 million, the company said.

South Dakota's unemployment rate was 3.4 percent in November, half the national jobless rate, but the state Labor Department last week expanded the hours of its Unemployment Insurance Call Center.

Labor Secretary Pam Roberts said then that it's usually busy this time of year, but the center has been taking a higher than usual number of calls over the past few weeks because of layoffs across the state.

(Copyright 2009 by The Associated Press. All Rights Reserved.)