Tower continues cost-reduction measures, cuts 170 jobs
The specialty foundry said it is continuing to place strong focus on cost efficiencies in order to better withstand the continuous decline in the US dollar/ Israel New Shekels exchange rate, foundry wafer price pressures and the overall worldwide economy.
By Ann Steffora Mutschler, Senior Editor -- EDN, May 28, 2008
As part of a cost-reduction plan announced late last year to help Migdal Haemek, Israel-based Tower Semiconductor Ltd realize $40 million in savings, the specialty semiconductor foundry said today it has commenced the first steps of that plan which includes a workforce reduction, changes in organizational structure, and use of multiple sourcing.
Tower reminded that it continues to place strong focus on cost efficiencies in order to better withstand the continuous decline in the US dollar/Israel New Shekels (NIS) exchange rate, foundry wafer price pressures, and the overall worldwide economy.
Also, the company noted that it still has yet to receive the promised and committed government grants relating to its cap-ex investments during 2006 through 2008, which are now two years past due. To this end, Tower said it is filing a petition with the Israeli High Court of Justice targeting an approval certificate from the State of Israel for up to $80 million of grants, approximately $40 million of which are overdue.
Tower’s cost-reduction plan includes an immediate reduction in workforce of approximately 170 employees, primarily in managerial and support related functions, which the company expects will result in approximately $14 million per year in employment-related and activity expenses.
Secondly, Tower will make changes to its organizational structure to generate a wider span of control per manager.
And lastly, the company said it will continue to achieve materials and spare parts costs savings by multiple sourcing and price negotiations.
Tower asserted that its recent acquisition of Jazz Semiconductor creates additional opportunities for synergies, which the company plans to realize through operational and purchasing efficiencies. The acquisition is targeted to result in a near doubling of revenue and EBITDA.
“These measures are needed for Tower to overcome the current unfavorable market and economic trends, hence improving Tower’s financial picture. This leaner organizational structure will allow Tower to be stronger in the market and sets the proper foundation for the integration of activities surrounding the Jazz acquisition,” concluded Russell Ellwanger, CEO of Tower, in a statement.
