Mitsubishi Will Close TV Plant in Santa Ana

SANTA ANA — In another defection of manufacturing jobs to Mexico, Mitsubishi Consumer Electronics said Thursday that it will transfer its television assembly operations from Santa Ana to Mexicali by the end of the year, idling 380 workers.

Mitsubishi said it is closing the plant because it can no longer compete in the North American market without cutting costs. The company has assembled its line of big-screen televisions in Santa Ana since 1978, but employment there has dwindled from 645 workers in 1991.

Grim-faced workers learned of the closing during a meeting in a loading dock area at the end of their shifts. Several seemed resigned to more bad news in an industry where production and assembly have been gravitating toward lower-cost locations.

Still, the timing came as a shock.

“Last year we delivered 1,200 units, all very good products,” said Victor Diego, a 16-year employee. “We all thought that we were going in a good direction.”

City officials were also disappointed by the news.

“This is a tremendous blow to the city,” said Patti Nunn, Santa Ana’s economic development manager.

Nunn said the city has worked hard over the years to keep the Mitsubishi plant. For example, Santa Ana helped Mitsubishi receive tax credits available in federally designated enterprise zones designed to make the U.S. more competitive with low-cost countries.

“I believe this is global economics,” she said. “There’s only so much we can do.”

However, Nunn said she doubted the four-building manufacturing site would stand empty for long. “We have a big demand for buildings that size from manufacturing companies that wish to be in the enterprise zone or wish to be in Orange County,” she said.

The vacancy rate for industrial buildings in the area is less than 8% and is even lower for large facilities like Mitsubishi’s, said Jeff Shaw, a real estate broker at Professional Real Estate Service in Irvine.

“The way conditions are right now, there will be a lot of activity for that space,” he said.

Mitsubishi said the closure was driven by economic necessity.

“In order to survive in today’s competitive audio/video marketplace, electronics manufacturers are forced to cut costs wherever possible,” said Suketaka Tachibana, chairman and chief executive of the Consumer Electronics Group, a unit of the Japanese electronics giant Mitsubishi Electric Corp.

Over the years, Mitsubishi has stepped up production at its Mexicali facility. In 1995, it announced plans to add 1,000 jobs at what was then a small operation in the border town, to make components for its large-screen televisions.

At the time, Mitsubishi said the move was prompted by lower labor costs and the duty-free status afforded to televisions made in Mexico under the North American Free Trade Agreement.

But Mitsubishi officials also said then that they planned to keep the Santa Ana assembly plant open.

“Up until the end of last year, we did not anticipate this,” said Allan Slovin, corporate vice president of manufacturing for the consumer electronics group. “But [industrywide] sales have been horrible.”

Slovin said sales of Mitsubishi’s big-screen televisions dropped about 10% in 1996 from the year before and that losses widened by 50%.

While operations at the Santa Ana complex were reorganized and streamlined three years ago, Slovin said, the company’s costs were still too high to remain competitive and turn a profit. Of the total layoffs, 207 are manufacturing jobs that pay an average of $12 to $13 an hour. The remaining 173 are administrative positions. Slovin said the layoffs would begin in March or April, with the bulk of job cuts taking place in September. Three manufacturing buildings will be closed by the end of the year, while a nearby warehouse might stay open a little longer.

Slovin said that no employees will be transferred to Mexicali--bad news for some employees who had hoped to move to the sister plant. After the general meeting outdoors, small groups of employees drifted back to their stations to learn about their fates.

Longtime employees, including Bob Wolf, a 17-year Mitsubishi veteran, described the closing as “not really a big surprise,” given the fact that production has slowed over the years in Santa Ana and only a handful of televisions are still manufactured or assembled in the U.S.

“It was very expedient,” Wolf said. “During the past four to five years, we’ve done everything possible to protect our jobs here.”

Dennis Cramer, a 19-year Mitsubishi veteran, suggested that employee teams in Santa Ana might have “made it more easy to ship assembly down there” by streamlining the assembly process. Now, Cramer said, production lines incorporate labor-saving practices that make it easier for less-skilled workers to do the job.

Diego said that executives at companies that are shifting good-paying jobs to cheaper countries should be concerned by the exodus: “All the big companies are making these reductions. I don’t know what’s going to happen. Who’s going to be left here to pay the taxes?”

The 150 workers at the Mitsubishi Consumer Electronics Engineering Center in Costa Mesa will be unaffected by the consolidation. The company said it plans to hire more employees at that facility this year. Another television plant in Braselton, Ga., will remain open.