Southwall to reduce costsSouthwall to reduce costs

Southwall Technologies Inc. plans to further reduce costs at its California plant, and said a slowdown in orders would likely cause it to miss its earnings estimates for the 2002 year and possibly rep…

Southwall Technologies Inc. plans to further reduce costs at its California plant, and said a slowdown in orders would likely cause it to miss its earnings estimates for the 2002 year and possibly report a loss for the third quarter. Starting in 2003, Southwall will reduce occupancy costs at its Palo Alto, California, US facility by consolidating office space into other existing buildings in that city. The maker of thin-film coatings for automotive glass and electronic displays also will modify its manufacturing work schedules to reduce overtime and other related labour costs. In an August press release, Southwall said the changes will save the company about US$ 1.7 million annually. In 2001, the company earned US$ 4.6 million, or 57 cents a share, on revenue of US$ 83 million. The company said it cut 23 employees at its West Coast plant because of the “world economy.” That represents about 15% of the facility“s staff and 24% of its operations group at the site, High labour costs, occupancy costs and the inefficiencies of older production equipment, made the California site less cost competitive compared to Southwall“s Tempe, Arizona, US and Dresden, Germany, facilities. Southwall also said that it third-quarter revenue would be hurt by a slowdown in orders. The company said it could not predict a net income or loss figure but said that if revenue fell in the estimated range, a net loss would be a possibility.