News
Diebold blames international woes for Virginia plant closing
An abundance of manufacturing capability and a changing international market for ATMs are behind Diebold's decision to shut down a Virginia plant.
February 6, 2002
European acquisitions and changes in the ATM industry have led to the scheduled closing of a Diebold Inc. manufacturing plant in Staunton, Va., the company announced.
Diebold will offer separation packages and outplacement services to the 48 employees affected by the plant closing. By March 31, the date the plant is scheduled to shut down, the North Canton, Ohio, company will spend $2.5 million to $3 million on the aforementioned employee services, the closing of the plant and the transfer of equipment to other Diebold facilities. No other closings are planned at this time.
The Staunton facility opened in 1997 for precision sheet metal processing of ATM components. Diebold's facility in Lynchburg, Va., will continue to perform sheet metal processing. Some of the equipment used at the Staunton plant will replace older equipment at facilities in Lynchburg and Sumter, S.C.
Diebold has more than 11,000 employees worldwide, in North America, South America, Europe, Africa, China and Australia. The company reported $1.3 billion in revenue in 1999. Earnings for the year 2000 have not been reported.
Diebold experienced substantial layoffs at its North Canton plant in 1984, but never a plant closing. "This is the first time we've had to do this type of things since we've been expanding globally," said Mike Jacobsen, manager of corporate communications.
Essentially, Jacobsen said, the number of Diebold manufacturing facilities exceeded the demand for the company's products. Closing the Virginia plant is an attempt to balance the number of plants with the demand for Diebold ATMs worldwide, he said. With this arrangement, the company hopes to increase production and lower its inventory investment. The transition is also expected to shorten product delivery times.
Acquisitions
The events that led to the planned Virginia plant closing began with Diebold's efforts to establish a manufacturing presence in Europe, Jacobsen explained.
In 1998, Diebold ended a relationship with IBM in which the company sold Diebold products outside the United States. Diebold went on to acquire the ATM -related businesses of Amsterdam-based Groupe Bull and Getronics NV in February 2000 for $160 million. The companies shared a plant in Cassis, France, that gave Diebold a manufacturing presence in Europe for the first time, Jacobsen said. Diebold also runs manufacturing facilities in Sao Paulo, Brazil, and Beijing, China.
Although he did not offer specific examples, Jacobsen said the international ATM industry "changed rapidly" after Diebold's European acquisitions. While Diebold attempted to develop a global infrastructure, its manufacturing capacity in North America was surging ahead of demand. Eventually, Jacobsen said, Diebold was forced to consider closing a plant.
"With these acquisitions, in North America, we were just over capacitated," he said.
Todd Clark, executive vice president with Texas transaction processor Core Data Resources, agreed that changes have occurred in the global ATM industry.
Diebold's major competitor, NCR Corp., has gained market share from Diebold internationally, Clark said. There has also been a shift in the type of ATM deployments abroad.
"Foreign countries are getting more retail-deployed ATMs like those the United States has seen for the last five or six years," Clark said. "That's now hitting Europe and Asia."
Consequently, Clark said, the need for larger outdoor drive-up and through-the-wall ATMs -- the kind typically built with the sheet metal parts like those produced at Diebold's Virginia plant -- will be reduced as retail deployments increase.
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