Micron to lay off 5 percent of workforce; Boise impact unknown

Some say the Boise campus will be hit; Elpida employees will keep their jobs.

broberts@idahostatesman.comAugust 12, 2013 

Two weeks ago, Micron was celebrating its purchase of a Japanese computer memory company that would make Micron the second-largest memory-chip maker on the planet. Now executives are bracing employees for a 1,500-worker reduction in Micron’s roughly 30,000 employees worldwide during the next 17 months.

What happened?

• Purchase of Elpida Memory Inc., with 5,000 employees, likely brought in some duplication of jobs, analysts say.

• Micron, in a letter to employees in the company’s chip packaging and quality testing operations, acknowledged it must do a better job of improving efficiency.

• Periodic reductions in force, such as the slightly less than 5 percent drop Micron is planning, are common in the industry and helpful to a company’s economic strength, analysts say.

What will happen to jobs at the Micron Boise campus?

Company executives won’t say. The campus has about 5,600 employees, some of whom work in a recently completed 111,000-square-foot research-and-development complex.

“The timing, extent and duration of potential workforce changes will vary by organization, geography, function and business needs across the company,” Micron said in a statement Monday.

The cuts will come through attrition, voluntary buyouts and layoffs and will be completed by 2014, the company said.

Dave Petso, of Petso Financial Consultants in Boise, said letters detailing the cuts have been distributed along with severance offers.

Petso told KTVB-TV  that the cuts in Boise appear to be heavy. Petso told the Idaho Statesman he doesn’t know how many people will be laid off, though he expects the Boise campus to be hit hard because Elpida has a research and development program in Japan and Micron has one in Boise.

Elpida will not face any changes, said Dan Francisco, Micron spokesman.

Micron executives didn’t say why the company isn’t laying off at Elpida. Petso said he’d heard the company had signed an agreement not to lay off any Elpida employees for the first three years following the sale. Micron declined comment.

Is Elpida the reason Micron is reducing its workforce?

Micron executives say no. Company executives are trying to get the best, most productive use out of their workforce, according to an employee communication obtained by the Statesman.

“Over the years as Micron has grown, we have not always been diligent in identifying areas that are not optimized to deliver value to our core business,” said Rick Bunch, Micron’s vice president of backend operations, which handles packaging and quality control. “While we are competitive in some areas, in others our cost structure limits our ability to compete in key markets.”

Bunch’s memo suggests the cuts may affect his area. “We recognize this may cause anxiety and uncertainty for team members,” he wrote.

Micron could be expected to go through a reorganization following the Elpida acquisition, and that would “likely lead to layoffs,” said Mike Howard, a semiconductor analyst with IHS iSuppli and a former Micron employee.

Why would Micron take this step?

The company most likely reviewed all its functions as the Elpida deal came to a close and began targeting areas of duplication, Howard said. Such reductions are commonplace in tech companies striving to keep their workforce in line with the competitive industry, he said. Tech companies such as Intel Corp. have done 5 percent workforce reductions in the midst of profitable years, he said.

Howard doesn’t think Japanese employees will replace Boise employees.

Micron has laid off thousands of employees in the Treasure Valley in the past decade. In 2008-2009, Micron laid off 3,500 people as the memory market sagged and the company ended production at an outdated fab at its Boise campus.

More recently, Micron pulled back on its solar energy and light-emitting diode ventures, costing 300 jobs.

Bill Roberts: 377-6408, Twitter: @IDS_BillRoberts

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