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Materion to close California facility

17 Dec 2012

Thin-film optical coatings production will be consolidated at Massachusetts and Shanghai facilities.

Materion, the engineering materials company whose Barr Precision Optics division specializes in thin-film optical coatings, is to shut down its Californian production facility.

The site in Buellton – close to Santa Barbara – was purchased by Materion through its acquisition of Thin Film Technology back in 2005. The facility produces custom coatings for a variety of photonics components including Raman filters and mirrors, used in applications ranging from biomedicine to astronomy.

News of its impending closure comes after Materion announced last month that it was nearing completion of a major expansion of its large-optics coatings facility in Westford, Massachusetts. The Buellton activities will be relocated to both Westford and Shanghai, China, the latter being the headquarters of Materion’s 2011 acquisition EIS Optics.

The EIS Optics facility comprises a 97,000 square foot manufacturing site that employed 350 people when acquired in October last year. It houses state-of-the-art clean rooms with vacuum deposition and sputtering systems, as well as assembly processes.

According to Materion, EIS Optics is the world's largest manufacturer of color wheels for color splitting in field-sequential lighting management in digital production, video production and video imaging.

Wider consolidation
The optical coatings reorganization is part of a wider company consolidation that also sees Materion’s European facility in the Czech Republic shut down and its activities relocated to Limerick in Ireland.

In addition, four facilities within Materion’s advanced materials business division in Albuquerque, New Mexico, will now be reduced to two.

“The consolidation of these facilities will allow for improved operating efficiency, cost savings and the ability to service the market more effectively,” stated the company, adding that the cost of the various moves would negatively impact earnings in the closing quarter of the year by approximately $0.10 per share.

A similar cost will also be incurred in 2013, but when combined with the previously announced closure and consolidation of Materion’s Newburyport, Massachusetts operations – plus further actions at the Shanghai site – the net effect is expected to be neutral to 2013 and to improve earnings by approximately $0.20 per share in 2014.

Orders remain “choppy”
With its overall sales currently tracking well below the levels seen a year ago, Materion says that the global macroeconomic environment remains uncertain, with customers only able to provide it with very limited visibility. “Order entry continues to be choppy,” noted the firm.

CEO Richard Hipple said of the fab closures: “Manufacturing improvements, coupled with our more recent acquisitions, have given us the opportunity to consolidate operations, and therefore reduce costs and service our global customer base more effectively. The actions announced today will position the company to operate more efficiently and generate higher future earnings.”

Optics and photonics technologies are regarded by the firm, whose traditional business areas are focused on metals, as a strategic growth area, and the company has made a series of acquisitions to increase its photonics presence in recent years.

In an investor presentation last week, Materion said that it expected to post optics-related sales of $155 million in the current financial year, out of the company’s total turnover of around $1.25 billion.

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