Employees at the HP Indigo plant in Kiryat Gat will likely join the list of those whose factories have initiated a partial suspension in production. The company will suspend production toward Passover, putting a further burden at one of the largest centers of jobs and foreign investment in Israel.
Hewlett Packard Co. (NYSE:HPQ) is expected to shut down a number of wide digital printer production lines at the HP Indigo plant for one to three months. There is concern that the shut-down will persist, resulting in layoffs.
HP has about 5,000 employees in Israel.
The economic crisis has hit the digital printer industry hard. In Israel, a number of companies in the industry are streamlining, including Kodak Israel Ltd. which fired 250 employees and moved one of its production lines to China.
HP's printer and imaging division saw a 20% drop in sales in the fourth fiscal quarter, which ended in January 2009, compared with the corresponding quarter, to $6 billion. Sales of digital printers fell 33%, and sales of commercial printers fell 40%. With results like these, HP has launched drastic cost-cutting measures.
HP Indigo is based on Indigo NV, which HP acquired in 2002 for $720 million. HP Indigo has 1,500 employees at two plants in Kiryat Gat, which manufacture digital printers and ink, and at its R&D center in the Ness Ziona Science Park.
The HP Indigo printer plant has 600-700 employees. The ink plant, set up in 2004 at an investment of $100 million, is smaller, with tens of employees. There could be mass layoffs if the halt in production is prolonged.
HP Indigo denies that it is contemplating layoffs. It said in response, "HP Indigo has no plans to lay off employees at this stage. The company, like every responsible company in the economy, adjusts its production to the current market conditions."
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2009
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