Corning cancels plant

Corning has cancelled plans to build a US$ 400 million optical fibre manufacturing plant in Oklahoma City due to market conditions in the telecommunications industry.
The New York-based optical fibre…

Corning has cancelled plans to build a US$ 400 million optical fibre manufacturing plant in Oklahoma City due to market conditions in the telecommunications industry. The New York-based optical fibre and cable manufacturer said Wednesday it has written off the cost of the unfinished plant as part of what it termed aggressive cost-cutting measures throughout the company. The company also will cancel its second phase of expansion at its Concord, N.C., facility. Once hailed by city leaders here as a business development coup for the metro that promised to create hundreds of new high-paying jobs, construction of the plant on Reno Avenue between Morgan and Sara roads never made much progress. The company said it completed less than 10% of the plant, including two administrative buildings and the steel frame of the manufacturing facility, before halting construction in June 2001. Corning said a downturn in the market for optical fibre products was to blame for the delay. Corning officials as recently as January said they supported the Oklahoma City plant“s development and would resume construction “when market conditions improved.” At the same time, Oklahoma City and state officials moved ahead with plans to provide as much as US$ 26 million in tax abatement to Corning, if it completed the facility. Plans to resume construction were put to an end in July, when Corning managers concluded the downturn in the fibre optics market would last longer than initially expected. In efforts by management to cut costs, Corning disclosed it had decided to cancel the Oklahoma City plant and write down the cost of the development as an impairment charge. The decision to cancel the Oklahoma City project was not the only cost-cutting measure by the company. In documents filed with the Securities and Exchange Commission, Corning said it sold some noncore businesses and closed minor manufacturing facilities. The company also is in the process of laying off 4,400 positions worldwide. With the latest round of layoffs, Corning“s worldwide payroll will have fallen to about 27,000 from a high of 42,000 in January 2001. The Corning plant would have employed about 800 people and generated an annual payroll of US$ 45 million, according to an Oklahoma City review committee study. Property tax receipts as a result of the plant were expected to increase about US$ 8.6 million annually once the plant had been completed. Corning described the cancellation of the Oklahoma City plant project as a “permanent abandonment” of the development.