PORTLAND, Ore. — After swelling the ranks of Oregon high-tech manufacturing and helping shift the state economy from its dependence on timber to a new base in computer chips, Fujitsu announced Thursday it will close its only U.S. semiconductor plant and lay off 670 workers.
“It’s going to have a big impact, I would think,” said Art Ayre, a state labor economist.
Ayre said Oregon has roughly 200,000 manufacturing jobs but other recent layoffs, including about 700 workers at Freightliner, the DaimlerChrysler heavy truck subsidiary based in Portland, have helped push the state jobless rate to 6.5 percent — the second-highest in the nation behind Washington.
Fujitsu built the suburban Gresham semiconductor plant in 1988, when the Japanese electronics company was welcomed as part of the effort to diversify a wood products economy that had been battered by one of the longest recessions in state history.
Fujitsu quickly took root in the “Silicon Forest” — the nickname given the metro area high-tech industry that has grown up halfway between the computer hardware center in California’s Silicon Valley and the Microsoft software empire in Seattle.
“This plant was a big part of the community,” said Ron Craig, Fujitsu’s human resources director in Oregon.
Last summer, Fujitsu peaked to about 900 workers, but the sagging economy forced a round of layoffs that trimmed about 250 jobs at the end of August.
The closure announced Thursday was blamed mostly on the sharp decline in demand for cell phones and other handheld electronic devices, which use the so-called “flash memory” chip produced at the Gresham plant.
“The market has been very unkind to Fujitsu in Gresham,” Craig said.
Until last year, the Oregon plant had specialized in dynamic random access memory chips — known as DRAM — for personal computers. But as the DRAM market weakened and the flash market took off, Fujitsu spent $350 million to convert the Gresham plant and pumped up production.
Now the plant is entirely surplus capacity that Fujitsu can no longer afford, Craig said. The equipment will be sold, he said, but decision on whether to sell the building is pending.
“Everybody was fooled,” he said, noting that market growth in flash memory was estimated at well over 100 percent at the time of the plant conversion at the end of 1999.
Fujitsu already has trimmed more than 21,000 workers from its worldwide work force of 180,000, due to slumping demand for electronics, computers and telecommunications equipment.
The company considered converting the Gresham plant to a joint venture with Advanced Micro Devices Inc., its longtime partner in the flash memory business, but Craig said the market had quickly deteriorated beyond expectations.
“No rebound is projected for at least 12 months in the flash memory market,” Craig said, pushing any hope of a recovery well into 2003.
Rich Doherty, who tracks the electronics industry for trade show manager Envisioneering Inc., called the layoffs “terrible news for the holidays” but said Fujitsu did not have an extensive U.S. manufacturing investment compared to other Japanese companies.
“The only thing that might bring this back faster is defense spending on homeland security, which needs flash memory for many projects,” Doherty said. “But that’s a long shot.”
Workers will receive paychecks and benefits through the end of January, when they will receive severance pay based on length of service and assistance in trying to find a new job, Craig said.
But Ayre said finding another job during a recession will be difficult, especially during the seasonal tightening in hiring following the holiday season.
“There aren’t as many alternatives,” Ayre said, noting that the service and retail industries are suffering too, unlike previous recessions, when they provided jobs for many laid-off manufacturing workers.