Post by Moses on Apr 12, 2005 19:41:05 GMT -5
Tuesday, April 12, 2005
Ingram to move 550 jobs overseas
Nearly half of the affected workers are in the firm's Santa Ana headquarters.
By TAMARA CHUANG
The Orange County Register
Some 550 Ingram Micro employees, including about 225 in Santa Ana, learned Monday that they will lose their job to workers in India and the Philippines.
Ingram, which distributes computers and other technology products worldwide, will outsource a chunk of its U.S. customer-service and technical-support jobs to lower-paid workers overseas.
The cuts, which reduce Ingram's North American work force by 17 percent, will cost Ingram $26 million. The company expects to save $10 million this year and up to $25 million annually starting with the first quarter of 2006. Most of the 550 workers will stay until August or the end of the year as replacements are trained, said Keith Bradley, who became president of Ingram North America in January.
"For any company today to continue to generate the profits to allow themselves to invest in their growth, they need to be as efficient as possible in their core business," said Bradley, who has focused on improving market share, maintaining profit margins and increasing productivity.
The decision to outsource the mostly entry-level jobs in Santa Ana, Canada and Buffalo, N.Y., has nothing to do with last week's announcement that Kent Foster, Ingram's chief executive, will retire in June. Discussion began six months ago, nearly a year after Ingram wrapped up a lengthy reorganization. Called a "profit enhancement program," the reorganization eliminated 2,000 jobs, closed several facilities around the globe and saved Ingram $160 million a year.
But at the time, Ingram wasn't ready to think about outsourcing, Bradley said. In 2000, sales plunged 18 percent in one year to $25 billion. Ingram was too busy reeling from the dramatic downturn to think about outsourcing.
"Nobody was ready for this type of initiative. It was more about how to consolidate facilities," Bradley said. "We would not have been able to execute it without affecting the company, the associates. Today, we're in a different environment. We're growing."
Ingram's sales were back to $25 billion last year, up from the prior year's $22.6 billion. The company has also made a profit for the past two years, last year posting $219 million in net income.
Ingram probably had to outsource those lower-level jobs because the whole distribution industry is changing, said Roger Kay, a technology analyst for market researcher International Data Corp. The competition isn't just other distributors who act as middlemen between a computer maker and a retailer. Rather, competition is now from product makers, such as Hewlett- Packard, who are bypassing third-party distributors to sell directly to customers.
"There's a lot of extra fingers in the pie," Kay said. "I don't know if it spells an end to the two-tier distribution, but it calls into question the business mode. In order to survive, (Ingram) has got to do things in a different way, and that might be outsourcing."
Bradley said Ingram tends to look to high school graduates for customer service and technical support jobs. But in India and the Philippines, college graduates are standing in line for those jobs – at lower pay. According to the National Statistics Office of the Philippines, the average Filipino family income was $2,736 in2003.
Employees in sales and management positions who deal directly with customers in North America were barely touched; after the cuts, Ingram will employ about 13,000 people worldwide, including 850 in Santa Ana.
Ingram's stock closed Monday at $15.82, down 25 cents for the day.