Hutchinson rocked by more layoffs

  • Article by: DEE DEPASS and WENDY LEE , Star Tribune staff writers
  • Updated: March 9, 2011 - 10:02 AM

Hutchinson Technology will reduce its U.S. workforce by 30 to 40 percent. Some jobs are moving to Wisconsin, others to Thailand.

HUTCHINSON, MINN. -- As word spread through town Tuesday that Hutchinson Technology is cutting yet another 600 local jobs, it marked the latest blow to a community that has seen its namesake employer wither in recent years.

The company said it is scaling back its 2,275-person U.S. workforce by 30 to 40 percent, with manufacturing work the Hutchinson plant has done since the 1960s moving to Eau Claire, Wis., and overseas.

Not long ago, Hutchinson Technology had a solid niche as the maker of a key component in computer disk drive storage units. But the looming layoffs mark the third major downsizing of the plant since December 2008, when 1,100 job cuts were announced.

Revenue that exceeded $700 million a few years ago has fallen to half that.

Today, "HTI is known for layoffs. ... It's unstable," said Kay Runke, a photo etch operator who fears that she'll lose her job and end a 14-year career. Selling her house is an option, but "No one would buy it in this town, because no one has a job."

The impact of the ongoing cuts is evident along Hutchinson's brick-lined main street. Restaurateurs, barbers and store owners say they are not sure they can sustain another hit to their business as Hutchinson Technology issues fewer pay checks.

"It will be devastating to Hutchinson," said Jill Springer, the manager of Zellas Restaurant. She said the business relies on a steady stream of customers from the plant and has already lowered its prices during the recession.

Liz Painschab, owner of hair-cutting place Hairy Edge, had already seen three clients who work at HTI by Tuesday afternoon. "Everybody's worried about finding a job," said Painschab, who cut her prices 20 percent last year in light of the tough economy.

Hutchinson Technology spokesman Connie Pautz said employees got the word in numerous staff meetings that started at 6 a.m. Tuesday. The Hutchinson plant's 600 manufacturing jobs will move to other locations, mostly Eau Claire, with workers in Hutchinson phased out over the next year.

Chief executive Wayne Fortun said he has worked there 35 years and grew up with many of the people affected. "These are not things one chooses to do arbitrarily," Fortun said. "My heart goes out to those [affected]."

The company, which employs 1,125 in Hutchinson, will keep its headquarters, research and development and some other operations there. The cuts will save the company $45 million to $60 million a year.

Photo etch operator Angela Gores "grew up" at Hutchinson Technology. She started 24 years ago, when she was 18 years old. She spent her first paycheck on new clothes. She'll spend her last paycheck on bills and liquor, she quipped.

Gores is already looking for a new job. Her husband already quit his job at HTI to work for 3M. "I'm thankful he got out in time," Gores said.

Economic ripple effects

The layoffs also come at a critical time for Hutchinson's ailing housing market. Last year the median sale price in the city was $128,900, down more than 60 percent from the peak.

Randy Redman, the associate broker at Remax Today's Realty in Hutchinson, said foreclosures are already a big problem in the city. He fears that the situation could get much worse if workers who get laid off can't sell their houses and decide to walk away from their mortgages.

The lack of jobs also means fewer prospective buyers for a market that is already soft. "We're very concerned about it," he said. "You put another even 30 homes on the market when you have 136 active listings and that's a huge impact."

The state Department of Employment and Economic Development (DEED) received more than $3 million in state and federal grants to help 900 local workers Hutchinson Technology let go in 2009. Some 360 of them are still unemployed and taking part in the state's Dislocated Workers "Ready Response" Program.

The program matches laid-off workers with job counselors and ushers them into re-training programs and school.

"We didn't need another layoff notice in Minnesota. But they are in a tough industry," said Mark Phillips, the new commissioner of the Minnesota Department of Employment and Economic Development (DEED). "We will be talking to them [at HTI] obviously to see what we can do to help with the new layoffs and to see if there is anything we can do in the bigger picture to help them."

The latest round of cuts is the seventh at Hutchinson Technology since 1999, and the company has laid off half of its U.S. workforce since December 2008. The job losses helped jolt McLeod County's unemployment rate to 13.1 percent by June 2009.

Despite stability at the local 3M Scotch Tape plant and recent growth from food, cabinet and metal fabrication manufacturers, the area is still recovering. The city of Hutchinson had a 9.6 percent jobless rate as recently as January. McLeod County's rate was 9.9 percent.

"Now, we are expecting that it will go higher in the face of this layoff [news]," said Cameron Macht, a DEED regional labor market analyst in Wilmar. "What is important to know is that manufacturing is very important to the county."

Star Tribune staff writers Steve Alexander, Jim Buchta and Paul Walsh contributed to this report.

Dee DePass • 612-673-7725

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