Sony DADC US Inc. will lay off more than half of its Terre Haute workers, the company said Wednesday.
The company notified the Indiana Department of Workforce Development it plans to lay off 375 workers starting in mid-March. That is more than half of the company's 680 workers, Sony spokeswoman Lisa Gepthardt said.
The company notified the state on Wednesday it will be outsourcing the music and video manufacturing currently performed at its Terre Haute facility.
"As a result, and based on currently available information, we expect that approximately 375 employees in the Terre Haute facility will be separated from employment," the company wrote.
The first employment terminations at the plant, 1800 Fruitridge Ave, are to start on March 23. Additional terminations are anticipated through August 2018.
"These terminations are expected to be permanent," the company stated in a "WARN" notice to the state. "Employees do not have bumping rights." The Worker Adjustment and Retraining Notification Act of 1988, or WARN act, is a U.S. labor law which requires most employers with 100 or more employees to provide a 60 calendar-day advance notification of plant closings and mass layoffs of workers.
Gephardt said the decision to cut its Terre Haute workforce is based on the home entertainment market.
"It is really that the home entertainment market is facing a decline over the last several years with factors such as increasing use of streaming such as Netflix and Hulu and a decreased emphasis on packaged media by retailers," Gephardt said. "There has been a reduction of floor space with big box retailers, as packaged media is not emphasized as it once was," she said.
"We have stayed ahead of the curve with operational efficiencies, but the decline in the home video market has caused us to make the difficult decision to change the way we operate by outsourcing the technicolor home entertainment service," Gephardt said.
The Terre Haute plant will continue to manufacture Blu-ray discs for Sony's PlayStation gaming system as well as manufacturing for new formats such as Sony's SAT-HD100, a digital satellite receiver.
Steve Witt, president of the Terre Haute Economic Development Corp, said Wednesday the silver lining in Sony's announcement is that it will continue to employ several hundred workers.
"We all need to be grateful to Sony Corp. for their presence in our community for the past 35 years. It has been one of our largest manufacturing employers for the past 15 to 20 years, so Sony has had a tremendous economic impact," Witt said. "They are going to continue to remain in our community with the rest of the jobs" for Blu-ray technology.
Witt said several local companies — such as Advics Manufacturing LLC and Bemis Co. Inc. — are already actively seeking new employees and that employers in nearby communities, such as Greencastle, also have manufacturing jobs open.
"We also had three major economic developments in 2017 with Pyrolyx USA, Select Genetics in the Vigo County Industrial Park and a major expansion at GATX Corp. Those three projects represent $90 million in investment and 200 new jobs," Witt said.
"We have some existing companies that are looking for expansion with others on the horizon. We are still bullish on Terre Haute and Vigo County as far as the economy in 2018. One our strengths is our diversity in our economy. In addition to manufacturing, we have health care, higher education, a strong agricultural sector and retail. There are a lot of things working in our favor, not only in Terre Haute, but in west-central Indiana," Witt said.
Sony's announcement, however, caught some other local officials off guard.
"I am dumbfounded by this," said Judy Anderson, president of the Vigo County Board of Commissioners, when contacted Wednesday afternoon.
"The Terre Haute Economic Development Board has some really good possibilities right now," she added, "so I hope and pray something comes through for us. I always am optimistic, but I don't know if we will find job replacements for everyone. We have some really good prospects, and you do everything you can do to try to attract more jobs."
"It is a punch in the gut," said Karrum Nasser, a member of the Terre Haute City Council.
"One of the things as a councilman is you want to make it a community where people can raise a family and go on vacations and have a quality of life. We have had recent success with Pyrolyx USA, GATX Corp and Jadcore, and today I was asked to sign a tax abatement for an expansion at Tredegar [Film Products]," Nasser said.
"For every success, it is disheartening to have a failure, which is having 375 people laid off. That is 375 people who need to provide for their families," Nasser said.
"One of the things when Sony DADC came here 25 years ago, it was the new technology, and we were proud as a community to attract such a high technology business to make CDs. Now that technology is dying, so we need to create an atmosphere to attract the next big industry to come here and provide jobs for the next generation," Nasser said.