DAYTON, Ohio -- NCR will outsource production of its automated teller machines in the Americas and shuffle the manufacturing of ATMs among its overseas plants to save money, a move that will eliminate nearly 1,200 jobs, the company said Thursday, according to the Associated Press.
NCR has about 29,300 employees worldwide. NCR said the cuts will be made during the next nine months. No plants will be closed.
ATM production in Dallas; Waterloo, Ontario; and Sao Paulo, Brazil, will be shifted to an outside manufacturer. The plants [image-nocss] will continue to do engineering and advanced-product work, said Bruce Langos, senior vice-president of global operations. Under the plan, about 425 of the 700 jobs at the Waterloo plant will be eliminated as will about half of the 100 jobs at both the Dallas and Sao Paulo plants.
Jerry Silva, research director of retail banking for TowerGroup, a research and consulting firm, told AP the restructuring is a smart move by NCR. He said ATM-makers are feeling competitive pressure from companies that make less-expensive ATMs commonly found in convenience stores. He said those companies now are trying to sell their products to financial institutions.
This restructuring will strengthen NCR's global order fulfillment capabilities to better meet customer expectations and needs within this ever-changing market environment, said Bill Nuti, president and CEO of NCR. The realignment should enable meaningful cost reduction as we optimize our manufacturing operations by improving absorption across geographies and strategically outsourcing to contract manufacturers where the company can reap economies of scale.
The strategy includes proposals to reduce manufacturing operations and shift the focus of the Dundee, Scotland, facility to new product introductions and the delivery of high-complexity/low-volume solutions; meeting volume customer demand in Europe, Middle East, Africa and Asia-Pacific through NCR manufacturing facilities in Beijing, Budapest and India; and moving to a contract manufacturing model in the Americas.
NCR will transition ATM manufacturing in the Americas to a manufacturer over several months to ensure that no interruption in shipments or quality is experienced by NCR customers, it said.
The approach is expected to reduce overall operating costs and free capital to invest in revenue-generating programs in sales, engineering and market development. In line with this restructuring, NCR intends to continue to focus resources on engineering and advanced development, product management and marketing in affected locations where the manufacturing realignment is anticipated to result in reductions in manufacturing employment.
Earlier last week, NCR Corp. said it intends to separate into two independent publicly traded companies through the spinoff of 100% of the company's Teradata Data Warehousing business to holders of shares of NCR common stock.
The transaction, expected to be tax-free to NCR and its shareholders, will enable the two publicly traded companies, both leaders in their respective markets, to better focus on their distinct customer base, business strategy and operational needs.
Teradata, which had revenues of $1.5 billion and operating income (excluding pension expense) of $309 million in 2005, is a leader in the enterprise data warehousing market.
After the spinoff, NCR will continue to provide self-service technologies, which include ATMs; retail self-checkout systems; automated bill payment systems; and airline, hotel and hospital self-check-in/out kiosks. In addition, NCR will focus on its other businesses, which include retail point-of-sale technologies and customer-support services as well as business consumables and check-processing and imaging solutions. Combined, these businesses had revenues of $4.5 billion and operating income (excluding pension expense) of $251 million in 2005, it said.
Nuti said, This separation is a logical strategic step for NCR. Teradata and the new NCR operate in different markets each with solid prospects for the future, but they have markedly different business models. Both new companies should benefit from sharper management focus on their unique business opportunities. Each new entity should be able to more effectively pursue their specific growth and research and development agendas, while designing employee incentive plans that are more directly aligned with their own performance and growth objectives.
NCR expects to benefit from increased investment in its sales organization, which should further strengthen the company's competitive position, market share and brand as it pursues self-service opportunities in new industry and geographic segments, it said.
Following the separation, Bill Nuti will serve as president and CEO of NCR, and Mike Koehler, currently senior vice president of the Teradata Division, will serve as president and CEO of Teradata.
Consummation of the proposed spinoff is subject to certain conditions, including final approval by NCR's board, receipt of a ruling from the Internal Revenue Service (IRS), the absence of any material changes or developments and the filing and effectiveness of registration statements with the Securities & Exchange Commission (SEC). Approval by NCR shareholders is not required.
The stock distribution ratio will be determined at a future date, the company said. The spinoff is expected to be completed in six to nine months.
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