Zebra starts layoffs, transition to China

Lincolnshire-based Zebra Technologies Corp. is on target to lay off about 150 workers at its Vernon Hills manufacturing facility, including a first wave of 64 by July, as the company outsources its manufacturing to China.

A second wave of about 60 workers likely will leave by September, the company's human resources Vice President Joanne Townsend said Tuesday.

"This is part of our two-year plan to transition our manufacturing facilities," she said.

In February 2008, Zebra said it would hire Jabil Circuit, headquartered in Florida with manufacturing operations in Huangpu, China, as its outsourcing partner to make its printers. The transition would eliminate roughly 650 Zebra workers from Vernon Hills and operations in California. The move was part of an overall strategy to streamline its manufacturing and supply chain operations.

In early May, Zebra posted $9.3 million profit for the first quarter, compared to $27.6 million in the same period last year. Sales also dropped from $192 million versus $246.3 million a year ago.

"This outsourcing initiative to move all of its printing products overseas was done proactively," said Brian Drab, an analyst with William Blair & Co. in Chicago. "This was done before they saw any impact from the recession and it was a smart move by management."

Besides moving its manufacturing to China, Zebra intends to reconfigure the former manufacturing space in Vernon Hill into a distribution center. It would then reassign about 100 workers to that distribution center when it's finished, Townsend said.

Affected workers will be getting severance packages that include job outplacement services and career advice, she said.

Zebra, with about 3,400 employees worldwide, moved its headquarters from Vernon Hills to another office in Lincolnshire earlier this year. The headquarters has about 150 of those workers.