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Friday, Aug 12, 2022
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Plant and Shift Closures Hit Valley Manufacturers

Two major manufacturers in the San Fernando Valley have announced layoffs that could affect more than 600 employees – and cost concerns appear to have played major roles in each decision. St. Jude Medical Inc. eliminated its second shift at its Sylmar facility that makes implantable defibrillators and pacemaker products. The move affects about 274 employees. Meanwhile, Nestle USA announced last week that it would shut down its Chatsworth plant that manufactures Hot Pockets and move that work to an expanding facility in Mt. Sterling, Ky., where it plans to invest $13 million. Up to 360 workers could lose their jobs. Nestle USA, headquartered in Glendale, acquired the Hot Pockets and Lean Pockets brands in 2002. Nestle spokeswoman Roz O’Hearn said the company has continued to grow them at a pace that the 184,000-quare-foot Chatsworth location could not sustain. “Because of its placement in an industrial park surrounded by other businesses, that placed physical constraints on our opportunity to grow it for the future,” she said. However, Nestle laid off more than 100 workers at the plant in 2012 amid slower sales of the product. The Chatsworth facility will likely halt production in early October, if not sooner. The company said it will help the employees in Chatsworth transition, which might include some relocating to Kentucky, a lower wage state. John DeGrinis, senior executive vice president at the Encino office of real estate brokerage Colliers International, said running out of room is a legitimate explanation for the move, but he wouldn’t rule out the company being “politically correct” and not willing to admit its real reasons. “There just aren’t that many big buildings. Additionally, there isn’t a lot of available land to expand,” DeGrinis said. “At the same time, the anti-California sentiment is coming out more and more when I talk to users. It’s about the regulations and the costs.” Nestle owns the Chatsworth building but has not disclosed if it will sell the property. DeGrinis believes that there would be no problem finding a new owner. “It’s very functional, with tall ceilings and good loading,” he said. In the case of St. Jude, headquartered in St. Paul, Minn., the market for the devices made in Sylmar has softened amid a challenging environment in health care that encourages cost cutting. Debbie Wang, a senior analyst who follows the medical device industry for Morningstar Inc. in Chicago, said pacemaker use grows at about 2 percent annually, while there have been concerns raised about overuse of implantable defibrillators. “In the last three years the number of procedures has fallen off,” Wang said. The St. Jude layoffs were scheduled to go into effect as of July 28, according to a Worker Adjustment and Retraining Notification with the state Employment Development Department. Second shift employees will be able to apply for open positions in the first shift, offsetting some of the job losses, said Micki Sievwright, a company spokeswoman. “We are working to ensure a smooth and respectful process for all employees and to support them during their employment transition,” Sievwright said. The company previously laid off 200 Sylmar workers following a corporate restructuring in 2012. Staff Reporters Stephanie Forshee and Elliot Golan contributed to this story.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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