Citing a softening demand within the IT industry, Ingram Micro Inc., a global distributor of computer products, will lay off 1,000 workers, or about six per cent of its workforce, in an effort to save US$30 million to $40 million annually.
In a statement Thursday, the Santa Ana, Calif.-based company also said it will close its Newark, Calif.-based distribution center and its Santa Ana and Rancho Cucamonga returns processing centres in California. In addition, the company also said it will cut back on its Miami distribution centre. The company has a workforce of 16,000.
Ingram Micro will also reduce its product management division from six categories to four (systems, networking and high-end storage, peripherals and software), reorganize its IT resources and restructure its U.S. sales force.
“Through the business process improvement initiative, which was implemented several months ago, we continue to identify ways to create a more efficient operation and capture new growth opportunities, while maintaining the highest levels of customer service,” said Guy Abramo, chief strategy and information officer, in a statement. “The actions we take today will create a more competitive cost structure, making Ingram Micro even more resilient in the IT marketplace.”
Larry Lapide, an analyst at AMR Research Inc. in Boston, said it was no surprise that Ingram Micro was affected by the softening demand in the IT industry.
“We’re seeing a lot of layoffs in high tech [like at Compaq Computer Corp. and Dell Computer Corp.], so the man in the middle gets hit, too,” he said.
However, Lapide said Ingram Micro shouldn’t be put in the same category as the dot-coms that some thought would replace distributors.
Unlike the dot-coms, “Ingram Micro has made good use of the Internet to control the supply chain,” he said.