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Harman Cuts Northridge Force

Restructuring of the Harman International Inc. automotive audio products division will result in the loss of more than 300 manufacturing jobs in the San Fernando Valley over the next year. The elimination of manufacturing and some office functions in Northridge slashes the workforce at what was once the largest of Harman’s worldwide plants. The jobs will be phased out through June 2009. Harman, area colleges, and the state Employment Development Department have already started to provide employees losing their jobs with information on retraining and education opportunities. Other manufacturers in the Valley have expressed an interest in hiring the workers after they leave Harman and receive retraining. “We are going to encourage that,” said Lennie Ciufo, director of job training at Valley College. “They have something that is hard to find experience.” Harman/Becker Automotive Systems has operated out of the building in the 8500 block of Balboa Boulevard since 1993. Administrative, sales and marketing functions will remain in the Valley although Harman spokesman Brad Hoffman could not speculate on the number of employees. Harman leases a series of building in Northridge totaling about 589,000 square feet. Eliminating the manufacturing operations means the company no longer needs all the space but it was not known how much it will continue to occupy. “I am not aware of any plans to relocate,” Hoffman said. According to the Harman website, along with the Automotive Group a number of other Harman divisions Revel, JBL Professional, Soundcraft, Harman Multimedia, and Harman Pro Group are located in Northridge. With the industrial vacancy rate in the Valley below 1 percent, the free space is in a desirable location. Building owner Trammell Crow has a great reputation for finding tenants that fit in the neighborhood and doing excellent community outreach, said Councilman Greig Smith. “That gives us confidence that the Harman location will be taken by a good tenant that will create many new jobs,” Smith said. Having the unused portion of the site go on the market can be seen as a silver lining to otherwise bad news. “We hear from a lot of companies looking for large space, so when this happens there will be interest in this space for sure,” said Elan Shore, regional manager with the Economic Alliance of the San Fernando Valley. The Northridge cuts and other facility consolidations by Harman are expected to produce $50 million of savings annually, within 18 months, for the company. The manufacturing jobs are being transferred to other plants in the U.S. and Asia. Of the 325 employees notified of their layoffs, more than 100 are assemblers; along with 20 engineers, 26 repair assemblers and 24 technicians. Harman is also relocating a number of administrative positions from Northridge to its new corporate headquarters in Stamford, Conn. Harman is giving severance packages to the laid-off employees and is picking up the costs for retraining. Representatives from the Valley College job training program were at the Harman campus on March 26 for an education fair. The college will return to the company, offering computer skills training and language skills assessment to affected workers. Retraining will make the employees more attractive to other manufacturing companies in the Valley. Administrative or frontline positions with gas or electric utilities are also a possibility, said Kenn Phillips, director of education and workforce investment for the Economic Alliance. “They are not all going out the door at once so we have some time to work with them,” Phillips said. Ending manufacturing of high-end audio systems was a decision made last year by the company and is not reflective of the current economic downturn. Harman executives refused to discuss the closure but in a conference call with analysts in February, CEO Dinesh Paliwal said the restructuring was the result of the company underestimating what was needed to launch multiple “infotainment” platforms for major automakers. Designing and making multiple platforms revealed “holes in business processes and inefficiencies built into the system” not evident when the company was releasing only one or two platforms, Paliwal said. “The organization at Harman did not comprehend the reality, did not perhaps plan earlier and that’s a lesson learned,” Paliwal said during the call. Harman has a $550 million multiyear agreement with Chrysler, and this year expects to start production for Hyundai, Audi, Porsche, and BMW among other carmakers. SPOTLIGHT – Harman International, Inc. Location: HQ-Stamford, Conn.; Northridge Fiscal Year Net Sales: $3.6 billion Fiscal Year Net Income: $314 million Founder: Sidney Harman CEO: Dinesh Paliwal What They Do: Develop and manufacture consumer, automotive and professional audio systems.

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