The technology slump has hit home for wholesaler Ingram Micro, its officers said Wednesday, likely putting the brakes on job growth at its 1,700-job sales center in Amherst and raising the possibility of cuts through attrition.
"Our No. 1 objective for 2001 is to take costs out of our business," chairman and CEO Kent B. Foster said.
However, he said, the trimming will focus on specific efficiency gains and using more e-commerce tools instead of across-the-board cuts.
"As people leave through attrition, we're going to be very careful on the add-back," said Michael J. Grainger, president and chief operating officer.
The remarks came during interviews with reporters and analysts after the company announced financial results for 2000 and its outlook for 2001.
The California-based distributor of computers and other technology expects its sales to fall about 13 percent in the first quarter compared to the previous three months. Profits, while beating analysts' expectations for the end of 2000, are projected to come in at about half the level expected for the first quarter of 2001.
The bracing news was foreshadowed by warnings from technology companies of a downturn this year. Analysts expect computer manufacturers Dell, Gateway and Hewlett-Packard to see their sales decline this year, putting a cloud over technology wholesalers. Sales of desktop PCs fell 24 percent in December and continued to slump last month, according to PC Data, an industry tracker in Reston, Va.
In response, Ingram Micro is shifting its sales efforts to hotter products like hand-held and wireless devices for consumers and powerful, server-class computers for business, Foster said. Worldwide, the company generated sales of $30.7 billion last year and profits of $226 million.
Ingram Micro generates roughly two-thirds of its U.S. sales from its two brick buildings on Wehrle Drive in Amherst. The site also performs technical support, customer service, and back-office functions like credit evaluation.
After opening a new expansion building in Amherst to accommodate growth in 1997, the company cut 140 jobs in 1999 amid PC price wars. It made up the losses last year as competitors left the market and prices firmed.
The exit from the U.S. market of rivals like Micro Age, Merisel and Inacom should keep computer price wars from rekindling as demand turns downward this year, said Brian Alexander, an analyst with Raymond James in Florida. The exits leave Tech Data Corp. and Ingram Micro as the remaining giants of U.S. technology distribution.
As part of a new focus on corporate or "enterprise" computer systems, Ingram Micro is building a system testing and demonstration center at its Santa Ana, Calif. headquarters, the company announced earlier this month.
But the new building doesn't represent a shift in the company's focus to its West Coast sales center, Grainger said. The Amherst site remains the main source of customer contact for U.S. sales, as well as a center for computer operations and programming. Among its roles, he said, is the development of software for use in Ingram Micro's international operations.
While the company will scrutinize all replacement hiring, it won't squeeze costs to the point where customer service suffers, he added.
Headquartered in the Los Angeles suburb of Santa Ana, Ingram Micro distributes technology products to 175,000 outlets worldwide, from CompUSA to smaller retailers and value-added resellers. Its distribution center in Jonestown, Pa., supplies the eastern United States, one of seven distribution centers around the country.