Kemet to Cut Jobs, Record Charge - TheStreet

Kemet to Cut Jobs, Record Charge

The moves are part of a reorganization designed to lower the company's costs.
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Electrical-parts supplier

Kemet

(KEM) - Get Report

said Wednesday that it will take a $35 million charge in order to complete a worldwide, two-year reorganization plan that includes 650 job cuts and the relocation of certain facilities.

The company said it hopes to build its presence in Asia and broaden its product portfolio. Preliminary cost savings are estimated at $50 million to $60 million, and the company expects a volume recovery by fiscal year 2006, when the restructuring is done.

"The last several years have seen profound changes in the competitive landscape of the electronics industry. We have listened closely to our customers describe their future directions, and we are aligning Kemet's future plans closely with them," said Dr. Jeffrey Graves, chief executive.

Kemet said facilities will be relocated based on access to key customers, access to important technical resources and knowledge and availability of low-cost resources. The Simpsonville, S.C., company said its commodity manufacturing operations currently in the U.S. will be relocated to its lower-cost manufacturing facilities in Mexico and China. About 650 production-related jobs in the U.S. will be cut in the next two years.

Kemet also expects to take a $15 million impairment charge to reflect the change in the status of the facilities that will be vacated in the reorganization. In order to increase its presence in Asia, the company said its initial China production facilities in Suzhou, which is near Shanghai, will be operational by the last quarter of 2003.

Shares of Kemet closed up 41 cents, or 4%, at $10.39.