Conference 7.286::digital

2625.0. "DIGITAL closes storage manufacturing plant in Germany" by UNTADH::DIETRICH (and now for s.th. completely different) Thu Aug 19 1993 08:47

    This message has been sent to:
    - European PR managers and Teams
    - European Management Board
    - Country managers
    - European Communications Management Team.
     
    Fm:Communications, Europe.

    Please find attached the press statement that Digital issued today 
    concerning the company's intention to close its manufacturing plant in 
    Kaufbeuren, Germany.  This announcement has also been posted to all 
    Digital employees via Live Wire.
    
    We expect this announcement to generate considerable public interest,  
    both in terms of media coverage and in terms of attention from our 
    customers.
    
    When dealing with questions we recommend that you should:
    
    1) Underline that this decision has been made within the framework of 
       the company's worldwide, integrated storage manufacturing strategy.  
       One of the key reasons for the closure of Kaufbeuren is that the 
       industry is moving to a smaller form of high capacity/high 
       performance devices available at a fraction of previous prices.  In 
       short, magnetic disk drives have become a commodity product. 

    2) The commercial reality for Digital is that it cannot maintain two 
       storage manufacturing plants at Colorado Springs and Kaufbeuren, 
       with the attendant cost structures.  Kaufbeuren does not manufacture 
       the smaller form factor products to which the industry is moving.  
       Colorado Springs already does. 

    3) Digital will work with both local and national government, as well 
       as outside organizations, to find an alternative external use for 
       the site that will generate employment opportunity in the area.

    4) The intention to close Kaufbeuren will in no way impact Digital's 
       ability to serve the German market. 

    Don't hesitate to call if you need further information or a status 
    update.


Regards,

Gordon.
GJM/REO:*b.



Stefan Eckart
Kaufbeuren
(49) 8341-91-4403 

Gordon Moultrie
Geneva
(41) 22-709-4432

Nikki Richardson
Maynard
(508)493-6369


                    DIGITAL EQUIPMENT CORPORATION ANNOUNCES
         ITS INTENTION TO CLOSE ITS GERMAN STORAGE MANUFACTURING PLANT



MAYNARD, Mass. -- August 19, 1993 -- Digital Equipment Corporation informed its 
employees today that it intends to close its manufacturing facility in 
Kaufbeuren, Germany. The plant, which employs approximately 600 people, 
manufactures magnetic disk drives for information storage for computer systems.

The process for the plant closing will be a gradual phase-out of operations over 
the course of the next ten months. The process is expected to be completed by 
June of 1994.

The details of the plan to close the plant were outlined today to employees
in group meetings at the Kaufbeuren site. Digital will offer regular employees
whose jobs are eliminated a number of benefits including a financial support 
package based on years of service to the company and professional outplacement 
assistance.

Charles F. Christ, Digital's vice president, Storage Business Unit, said,
"Storage technology, like all technology in the computer industry, has 
experienced rapid advances in the last few years. Disk drives have become 
low-margin commodity products designed for less complex manufacturing processes. 
As a result of this industry trend, Digital has been left with an excess 
capacity in high cost/high capability storage manufacturing."

                                     -more-

                         *****DIGITAL CONFIDENTIAL*****


Digital Announces Intent
to Close German Storage
Manufacturing Plant
  page 2 of 2




Christ continued, "Digital's strategy is to position our manufacturing capacity 
where we can make optimal use of our assets. It is on the basis of this 
strategic intent that we have made this difficult decision to close the 
Kaufbeuren plant. Historically, the Kaufbeuren employees have run an efficient 
operation delivering high-quality work. The plant and its employees have made a 
valued contribution to Digital's success."

The German manufacturing operation began in Asch as a final assembly and test
facility. It was moved to Kaufbeuren in 1981 and was chartered to specialize in 
the manufacture of complex storage products in 1983. 

The disposition of the 277,000-square-foot (26,000-square-meter) building, 
located on 57 acres (23 hectares) of land, has not yet been determined. Digital 
owns the site and will work with public and private sector organizations to find 
a productive external use for
it. 

Digital Equipment Corporation, headquartered in Maynard, Massachusetts, is the 
leading worldwide supplier of networked computer systems, software and services.
Digital pioneered and leads the industry in interactive, distributed and 
multivendor computing. Digital and its partners deliver the power to use the 
best integrated solutions - from desktop to data center - in open information 
environments.

                                      ####

CORP/94/254  


    re: .0, and 2598.*
    
    Again, the rumor-mill and the grape-vine have proven to be more
    reliable than V.P. memos to the contrary.
    
    

re: .1

Would you care to explain what it is about the KBO closing announcement
contradicts Charlie Christs comments concerning the unsolicited bids Digital
received for parts of the Storage business? The information I have received
here in CXO indicates these were 2 totally separate issues.

-John

    
    re: .2
    
    It seemed to me that Digital wanted to squelch rumors about the sale
    of segments of the storage business, hence the Aug 3 memo from VP
    Christ.  The negotiations over the German site soured (no agreement on
    price), so the sale is still up in the air.  Technically it's not sold;
    but it's definitely going out of business.
    Perhaps the tone of the two messages in the space of two weeks is what
    led you to believe they were two separate issues?
    
    

>    Perhaps the tone of the two messages in the space of two weeks is what
>    led you to believe they were two separate issues?

	They are two separate issues. Selling a portion of a business is not
	the same as selling the building in which the business operates.

	Roy

MAYNARD, Mass. (Aug. 19) UPI - Digital Equipment Corp., which has been  
slashing its work force in recent years, said Thursday it will close its  
magnetic disk-drive manufacturing facility in Kaufbeuren, Germany, idling 
600 people.
   
Digital said the plant closing will be a gradual phase-out of operations 
over the next ten months and is expected to be completed by June.

A Digital spokeswoman said some of the Kaufbeuren employees may be able to 
be placed in jobs at other Digital plants. Currently, Digital employs about 
94,200 workers, down nearly 20,000 from a year ago, and analysts expect that 
employment may drop to as low as 90,000 by the end of the year.

The computer disk drive industry has been hammered this year by intense 
price competition as companies scramble to discount older products. 
Companies have been stuck with inventories of smaller-capacity drives that 
they will probably sell at prices far under their asset value.

"Disk drives have become low-margin commodity products designed for less
complex manufacturing processes," said Charles F. Christ, Digital's vice
president for its storage business unit. "Storage technology, like all
technology in the computer industry, has experienced rapid advances in the last
few years."

"As a result of this industry trend, Digital has been left with an excess
capacity in high cost/high capability storage manufacturing," Christ said.
"Digital's strategy is to position our manufacturing capacity where we can make
optimal use of our assets. It is on the basis of this strategic intent that we
have made this difficult decision to close the Kaufbeuren plant."

Digital began its German manufacturing operation in Asch as a final assembly
and test facility, then moved it to Kaufbeuren in 1981. The plant was 
designated to specialize in storage products in 1983.

Digital said it has not yet determined what to do with the 57-acre site and
the 277,000-square-foot building.

Digital, of Maynard, Mass., recently posted its first profit in two years,
earning $113 million on sales of $3.91 billion in its fourth quarter ended July
3. Over the past two years, it has fired its founder, eliminated about a fifth
of its jobs and replaced much of its top management.

Analysts believe that Digital will return to the red in the current quarter
due to the recession in Europe, the source of about half its revenue.

But they also believe its long-term prospects are better than International
Business Machines Corp. due largely to its new Alpha microchip technology, 
which may give it a major edge in the booming personal computer, networking 
and workstation businesses.

    
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    H.