Citing a softening demand within the IT industry, Ingram Micro, a global distributor of computer products, will lay off 1,000 workers, or about 6 per cent of its workforce, in an effort to save US$30 million to $40 million annually.
In a statement the company also said it will close its Newark, California-based distribution cente and its Santa Ana and its two 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), reorganise its IT resources and restructure its US 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, 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 and Dell Computer], 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.
An Ingram Micro spokesperson in Australia confirmed the distributor has not cut any Australian staff.