Sony to shut down Springfield factory.

Byline: Sherri Buri McDonald The Register-Guard

SPRINGFIELD - After just eight years of operation here, Sony is permanently shutting its compact disc plant in the Gateway area.

The surprise move will knock out one of Lane County's largest and most prestigious high-tech employers and throw 277 employees out of work.

Sony will phase out the jobs and the factory over the next three months, said Dan Egan, executive director of the Springfield Chamber of Commerce, who was notified of the move by a Sony official.

"It's certainly a sad day," Egan said. "Sony has been the best corporate and community partner you could wish for for Springfield and the greater metro area. ... Those will be hard jobs to replace."

Egan said his information came from Noreen Franz-Hovis, human resources director at the Springfield plant, in a brief phone conversation on Tuesday. He said the company will release more details to employees at a meeting at 2 p.m. today.

Sony officials in Springfield and New York have not returned numerous calls from The Register-Guard.

Rumors of layoffs at or closure of the International Way plant have circulated for the past few days, following national media reports of major restructuring by the plant's financially strapped parent company, Sony Music Entertainment. The Springfield closure is part of a plan to cut 1,000 jobs companywide.

Employee Byron Baesler, 35, who prepares screens used to print onto compact discs at the Springfield plant, said Sony had given no official word of the local closure yet.

"It's not going to affect me like it will a lot of people," said Baesler, who is single.

"You can't really be mad because we've seen it coming," Baesler added. The CD music industry is stagnant and saturated with competitors, and Sony has struggled with losses.

Still, Baesler said, word of the closure "was very sudden."

Another employee, who asked to remain anonymous, said he thinks Sony employees will have a hard time finding new jobs locally. "There's nothing else like it," he said, referring to CD manufacturing.

Entry-level production employees started at $9.50 an hour, plus benefits, and generally advanced to $10 an hour after six months, the employee said.

The closure is staggering in a number of ways.

It marks the abrupt departure of a company whose arrival in Springfield in 1995 was greeted with almost delirious enthusiasm. Springfield and state officials worked hard and very secretly to land the $50 million plant.

Government agencies gave Sony about $8 million in incentives, tax credits and other help to build the factory, and over the following five years waived the company from paying about $4 million in property taxes. Sony only began paying its full portion of property taxes in the 2001-02 tax year.

Sony's arrival in Springfield came near the beginning a period of rapid high-tech growth in Lane County. Sony's departure comes as the county's high-tech workers have reeled under cutbacks. For example, in 2001, HMT closed its computer hard-drive disk factory in Eugene, cutting 350 workers. Last year, Rosen Products closed its display-screen factory in west Eugene, eliminating 225 jobs.

Economists in the past several months have noted that the county's employment levels appeared to have stabilized, and were hoping that there would be no more big closures.

Sony's departure is likely to hurt a number of ancillary businesses in the Eugene-Springfield area, possibly including the Shorewood Packaging plant that sits near the Sony factory and has done extensive work for Sony. Shorewood officials did not return calls this week.

The departure also will deal a blow to Lane County's tax base. Sony in the current tax year has paid $622,589 in property taxes. That money goes to a number of taxing districts, including the city of Springfield, Eugene School District (which covers much of the Gateway area), and Lane County.

The factory had been facing an uncertain future for some time. Last January, amid a tough market for music CDs, Sony eliminated 70 jobs in Springfield. It was the first broad layoff at the factory since it opened in 1995.

Sony's music unit has struggled in a changing market where music listeners are increasingly burning their own CDs and downloading music from the Internet.

Sony's music unit had operating losses of $142 million in 2002, Reuters reported.

Under chief executive Andrew Lack, who replaced industry veteran Thomas Mottola in January, Sony Music Entertainment plans to slash $100 million in annual costs and 1,000 of 10,000 jobs worldwide.

A report in The Los Angeles Times in late March quoted Sony executives saying the company would cut about 350 corporate, music-label and support staff members from operations in Los Angeles, New York and Nashville; about 100 jobs in Southern California; about 400 jobs at an international operation, and an additional 300 jobs at manufacturing plants in the United States and abroad.

Apparently the 277 jobs in Springfield will make up the bulk of those manufacturing-job cuts.

The Springfield plant may have been a target for cuts because it produced mostly music CDs, a market that has plateaued over recent years. The growing market for DVDs is being served by other Sony disc manufacturing plants, such as its facility in Terre Haute, Ind.

Sony Disc Manufacturing is a tiny part of the vast Sony Corp. empire. The Tokyo-based conglomerate, which makes everything from television sets and computer parts to movies and the PlayStation game console, is in the midst of companywide cutbacks to improve profits.

Matt Cooper and Christian Wihtol contributed to this report. Sherri Buri McDonald can be reached at 338-2367 or [e-mail].

SONY'S UPS AND DOWNS IN SPRINGFIELD

Jan. 18, 1994: Sony announces that it will build a $50 million CD factory in Springfield and hire at least 300 workers.

July 1995: Factory begins production.

2000: Sony says it is retooling the factory so it can produce DVD discs whenever corporate officials give the OK.

January 2002: Sony says it is cutting 70 jobs, the first major layoff at the plant.

August 2002: Sony says it is adding a DVD packaging line and 19 jobs at the plant.

September 2002: Tom Costabile, longtime head of the plant, quits to become president of the U.S. manufacturing arm of Warner Music Group.

April 2003: Sony announces it will shut the Springfield plant.