One of Maine's largest employers and major exporters of goods is laying off 120 people--more than an eighth of its workforce in the state. Electronic chipmaker Fairchild Semiconductor says that it will close one of its manufacturing lines in South Portland and move production to a line with more modern equipment at the same facility.
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One of Maine's largest employers and major exporters of goods is laying off 120 people--more than an eighth of its workforce in the state. Electronic chipmaker Fairchild Semiconductor says that it will close one of its manufacturing lines in South Portland and move production to a line with more modern equipment at the same facility.
Doing so, says Fairchild, will lower operating costs and improve productivity without affecting productivity. "I think investors would look at that as being a favorable move by the company," says analyst Craig Ellis.
Ellis follows the semiconductor industry as a business analyst with Caris and Company in San Francisco. He says that in recent years, the Fairchild management team has been sharply focused on improving its operating margin. "So as we look at the move to trim down staff at a manufacturing facility, we would view it in the light of trying to enhance the company's gross margins and augment profitability in the business."
Fairchild in a written statement maintains that it's financially healthy and that orders for the mobile phone parts it produces out of South Portland are actually up. But the company says that it has to find efficiencies where it can because "this market is extremely cost-sensitive with double-digit percentage declines in price expected every year."
"The bottom line is the bottom line and if the company is getting stronger and taking on more market share, the governor's all for it," says Dan Demeritt, spokesman for Gov. Paul LePage. The governor, in his inaugural speech, said he wanted to encourage industries such as semiconductors to come to Maine.
"You know, we need to be concerned for the people who are losing their jobs," Demeritt says. "But if the company has got a better opportunity of moving in the right direction, that's certainly good news and the governor wants to do all he can to make sure that Fairchild can compete and there are other opportunties for the people that are being transitioned out of those positions currently."
What those jobs may be is unclear. Maine has only one other semiconductor company--National Semiconductor has a facility that's also in South Portland.
"One of the things we are still struggling to improve is to build larger sector clusters so that maybe there are three or four companies in Maine doing a similar kind of work. Right now there's really only one," says Chris Hall, who represents southern Maine businesses for the Portland Regional Chamber.
Hall was at a so-called "Red Tape Audit" meeting Tuesday, one of several called for by LePage and sponsored by state chambers of commerce, where Fairchild representatives mentioned that loosening certain environmental regulations could save the company hundreds of thousands of dollars a year on chemicals and other materials that he says could be reused.
"Unfortunately those materials are being disposed of as hazardous waste when they are in fact, they're actually still usable stuff," Hall says.
Hall says the LePage administration appears to recognize the industry's concerns. Spokesman Dan Demeritt says he was also at that meeting with Fairchild, and company officials made no mention of the impending job cuts.
"Busineses need to do things that best fit their operation and needs. They don't need to pay any proper respects or anything like that to Gov. LePage. He understands that," Demeritt says.
Fairchild says it will cut the jobs over nine months. But it may be able to get more business over that period. Semiconductor analyst Ellis says that the industry appears to be on the upswing, thanks to emerging overseas markets for electronics, as well as rebounding sales in the U.S.
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