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BREAKING: NCR restructures ATM division, expects to cut 1,200 jobs

January 10, 2007

DAYTON, Ohio - Officials at NCR Corp.announced Jan. 11 that they plan to cut 1,200 jobs as part of a realignment strategy that aims to improve the company's global ATM manufacturing efficiency.

NCR says it will continue to manufacture ATMs in Beijing; Puducherry, India; and Budapest, Hungary. But in the Americas, the company is moving toward a contract model that will push its ATM manufacturing to outside vendors.

"This restructuring will strengthen NCR's global order fulfillment capabilities to better meet customer expectations and needs within this ever-changing market," said Bill Nuti, NCR's president and chief executive, in a company statement. "The realignment should enable meaningful cost reduction as we optimize our manufacturing operations by improving absorption across geographies and strategically outsourcing to contract manufacturers where the company can reap economies of scale."

NCR would not say with which companies it is negotiating - only that financial self-service equipment is not their primary business. But it did say the move is not expected to have an impact on any of its ATM product lines.

NCR's Dundee, Scotland, plant is taking the biggest hit, with 650 expected job cuts. And the ATM manufacturing facility in Waterloo, Canada, will likely drop 450 employees.

NCR's Carrollton, Texas, and Sao Paulo, Brazil, plants have been spared the brunt of the layoffs - 32 of Carrollton's 72 jobs are expected to be axed, while about 60 are expected to be cut in Sao Paulo.

"Managing three separate factories (in the Americas) is hard to manage," said Bob Tramontano, NCR's vice president of Self-Service. "We feel very sure of our capability to manage each of the (contract) sites to make sure the customer knows he is getting the highest quality from NCR."

Each of the three Americas facilities will retain research-and-development, project-management and marketing departments. Only the operations side will be scaled back, Tramontano said.

Those same departments will continue operating out of Dundee, but the operations side - logistics, supply-line management, manufacturing, etc. - will be moved to NCR's facilities in India, Budapest and China.

"We can have better efficiency, and that efficiency can be passed on to our customers in better lead time," Tramontano said. "So by combining our capacity it allows us to have greater volume, so we should be able to have better flexibility to respond to our customers."

Dundee will continue to manufacture a handful of NCR's more complex financial self-service products, he added, but most operations are being realigned.

"We're freeing up some capital so we can innovate more often. This is about re-investments in the new NCR self-service business and continuous improvement," Tramontano said. "I believe it's a win-win for everyone. It is regrettable, however, that the way we had to get to this is through employee reduction."

Tramontano could not speak to the amount NCR expects to save annually as a result of the realignment. He also would not release details about what the future holds for NCR's manufacturing facilities in Dundee, Carrollton, Waterloo and Sao Paulo.

"We will probably lease out the buildings that we own or reduce the footprint if we rent," he said.

NCR is expected to release more details about the financial impact the new ATM-manufacturing plan will have on company revenue Jan. 25 during its fourth-quarter earnings call.