Pioneer-Standard Closing Fountain Valley Plant
By ANDREW SIMONS
Pioneer-Standard Electronics Inc. plans to shutter its 40-person Fountain Valley plant as part of a bid to stay profitable in a tough market for electronics.
“We’re going to be closing it because there just isn’t enough business for the type of stuff we did there,” company spokeswoman Marsha Palmer said.
Pioneer-Standard’s Fountain Valley plant still was open as of last week but is set to close soon. The company has leased the facility on Newhope Street for two years.
The Cleveland-based electronics distributor assembled a variety of modules in Fountain Valley, where it also packed components into shipping containers.
The company isn’t planning to keep any workers in Orange County, Palmer said. It also isn’t likely to offer any of the current workers positions elsewhere in the company.
“We’re phasing that (assembly) business out,” she said.
Pioneer-Standard sells electronic gear to resellers, manufacturers and corporations. Sales, which were $2.9 billion last year, are split between computer products and peripherals and electronic components such as the chips and passive components assembled and packed in Fountain Valley.
The Fountain Valley closure comes after the company warned its first-quarter profits wouldn’t be as high as expected.
In the March quarter, Pioneer-Standard reported a $1.1 million profit before restructuring and other charges. Revenue fell 30% to $505.4 million from a year earlier. The company said it expects sales in the current quarter to be off by as much as 20% from a year ago.
“The market environment remained difficult during the quarter and our operating results were primarily driven by our aggressive expense reduction program initiated last October,” Chief Executive Arthur Rhein said.
“Additional expense reductions were initiated through a restructuring and elimination of marginal businesses late in the quarter to improve future financial performance,” he said.
Pioneer-Standard shelled out $12.4 million in the recently ended quarter for restructuring, which included some layoffs in addition to the planned Fountain Valley closing.
Electronics distributors saw their business slow as customers put off spending during the downturn. While the economy is showing signs of rebounding, corporate buying still is on hold.
“Fiscal 2003 is shaping up to be another challenging year due to the protracted downturn in electronic markets, the uncertainty of the U.S. economy and its impact on information technology spending,” Rhein said.
The demand falloff has led others in the industry to cutback. Santa Ana-based Ingram Micro Inc., the largest distributor of technology products, closed its Fullerton plant last year.
