By BRIAN WOMACK
Essex Electric Inc. plans to shutter its Anaheim operation and lay off more than 100 workers as the company copes with slowing demand for its electrical products.
East Rutherford, N.J.-based Essex, which makes electrical wire, plans to shift work in the next few months from Anaheim to its Alabama plant.
Essex sells to contractors installing wires and cables at industrial and office buildings, along with homes. Home Depot Inc. makes up about 25% of the company’s sales, according to its 2004 annual report.
The company leases 143,000 square feet in a four-building, 181,752-square-foot industrial complex near Angel Stadium of Anaheim at 1075 N. Patt St.
Essex leased back the buildings after selling them to Costa Mesa-based bkm Development Co. two years ago. Officials with bkm couldn’t be reached for comment.
Essex President Harold Karp said the company’s lease was up this year. Rather than pay a higher rent at the Anaheim facility, or look for another one in the area, Essex decided to move work to Alabama, Karp said.
Despite growth in some regions, Essex has seen sales to its crucial commercial real estate users remain slow coming out of the recession. Sales of its wiring products fell by more than 5% last year, Karp said.
“When you’re in a difficult commercial market, you have to consolidate in the interest of cost reductions,” he said.
The decision to close the Anaheim operation is part of the company’s ongoing cost-cutting effort started a few years ago after prices for low-voltage wiring hit historic lows. The company has shuttered several U.S. plants, pushing more production to its biggest facility in Florence, Ala.
The cost of doing business in California was a small factor in the decision to close in Orange County, Karp said.
The electrical wiring industry has consolidated in the past few decades. In the 1980s there were 30 makers of electrical wiring in the U.S. There are seven today, Essex said in its 2004 annual report.
“The wire and cable industry is a real low margin, really cutthroat type of business,” said Jim Lucy, editor in chief of trade publication Electrical Wholesaling in Overland Park, Kan.
Rising copper prices have proved a challenge, too. Copper is a key material in low-voltage cabling. In the past few months, copper prices are up more than 50%, Lucy said.
“I think in general it’s been a lot of turmoil,” he said.
The 1990s were the boom years for the industry, when telecommunications providers were laying thousands of miles of cables. By the latter part of the decade, Essex’s Anaheim site had grown to about 150 employees, Karp said.
But that dwindled to around 110 in early April, according to Essex’s layoff notice with the state Employment Development Department. Essex has about 500 workers in all.
The company said it planned to stop operations at the site last week and permanently close June 30.
The closing of the local facility will cost the company between $1.5 million and $2 million, Essex’s parent company, The Alpine Group Inc., said in a filing with the Securities and Exchange Commission in late March.
Alpine owns 83% of Essex. It had sales of $316 million last year.
Essex will keep a distribution site open in Ontario for its West Coast operations. It also had distributions centers in Indiana and Georgia.
