11:05 AM EDT Mon. Apr. 11, 2005
Ingram Micro plans to lay off 550
employees in North America as part of a
restructuring plan in which the company will
offshore customer service, finance and other
The Santa Ana, Calif.-based distributor is in
final negotiations with two outsourcing service
providers and expects to select one by the end of
the month, said Keith Bradley, president of Ingram
Micro North America. The layoffs will occur over
several months and include customer service,
finance, vendor management, technical support and
some inside sales positions. Field sales and
management will not be affected, Bradley said.
"We realize this is a difficult decision to
make. But we have to make it to increase our value
to shareholders, vendor partners and customers.
When we are through this transition, it will lend
itself to us becoming a more flexible structure,"
Bradley said. "By the time we're finished, we'll
end up with a more cost-effective business
structure. We regard ourselves more as the leader
in the value-added area, and this is about how we
can be as productive as possible and get the most
bang for our buck."
About half of the layoffs will occur at Ingram
Micro's Santa Ana headquarters. The rest are split
between Canada and Williamsville, N.Y., with about
5 percent of the total cuts coming from other
Ingram Micro intends to have service-level
agreements in place to ensure that customer
satisfaction isn't affected, according to Bradley.
"We are fully committed to make sure our
customer and vendors experience the same service
level and same day-to-day satisfaction. We have a
corporate governance model to make sure we manage
the transition aggressively," Bradley said. "We
don't just ramp up tomorrow. We will have
associates from the partner on-site in our
location to learn the way we do things and to make
sure they know our culture. Also, a number of our
associates may go overseas to help in the process.
We will have teams on-site for an extended,
parallel time. We will only sever the cord once we
are satisfied service levels will not be impacted
Bradley recently visited the potential
partners' facilities in Asia and said he witnessed
outsourced operations for some of its vendor
partners handling calls for orders from Ingram
"These are the same people that our vendor
manufacturers and customers are already taking
advantage of. We went through a training class
where they go through dialect assimilation and
where they learn American culture," Bradley said.
With the restructuring, Ingram Micro said it
plans to save about $10 million this year and
about $25 million on an annualized basis by the
first quarter of 2006. The moves will cost about
$18 million after taxes, including about $5.5
million in the first quarter of 2005.
The reorganization is slated to be completed by
the end of the year. Ingram Micro expects to save
enough money to pay off the restructuring costs in
less than 18 months, Bradley said.