Fab 21 tagged to close; vendor to fill in gap

CORVALLIS - Hewlett-Packard plans to cut 300 to 400 jobs at its Corvallis campus as it outsources some of its last remaining local manufacturing operations, several current and former employees have told the Gazette-Times.

The Palo Alto, Calif.-based technology company has so far refused to confirm any details of the impending job cuts, though a spokeswoman said last week that HP's imaging and printing group "is considering some changes in how it produces and distributes original HP supplies."

Multiple sources, however, say HP managers have told employees that one of three silicon wafer fabrication facilities at the Corvallis site will be shut down and that 35 percent to 45 percent of the 850 employees who work in the fabs will be laid off. No timetable has been announced for the cutbacks, and it isn't yet clear which employees would be let go.

The sources asked to remain anonymous for fear of retaliation by the company.

The city has not yet received formal notice of impending layoffs at HP, but local economic development officials are meeting today to lay plans for assistance programs for displaced workers.

Employees were warned last week that the cuts were coming, with managers delivering the bad news in a "coffee talk" on the Corvallis campus.

Specifically, Fab 21 has been slated for closure. That facility, a large clean room where silicon wafers are made, produces the basic computer chips used in inkjet printer heads.

As a cost-cutting measure, Hewlett-Packard has decided to buy those wafers from a vendor. But it will continue to add higher-level print head circuitry in-house to protect its intellectual property, the sources said.

The imaging and printing group has been HP's cash cow - and the core of its local employment base - since inkjet printing technology was developed by Corvallis engineers in the mid-1980s. Last year, inkjet printing technology brought in nearly $28.5 billion, or about 27 percent of Hewlett-Packard's $104 billion in total revenue.

But the printing business has matured, with rivals such as Lexmark and Epson chipping away at HP's market share, and the company has made repeated cutbacks to its imaging and printing work force.

That trend has been playing out for years at the Corvallis campus, which had more than 6,000 direct employees plus thousands of contract workers as recently as 1996 but today has an estimated 2,500 HP employees.

The latest cuts appear to be the largest since 2005, when the company used generous buyout offers and early retirement incentives to slash more than 700 jobs from its Corvallis payroll.

Laid-off employees reportedly will have an opportunity to apply for openings within the company, but so far there's been no public statement about severance benefits.

Bennett Hall can be reached at 758-9529 or bennett.hall@lee.net. Matt Neznanski can be reached at 758-9518 or matt.neznanski@lee.net.