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July 12, 1993

FATE OF VILLENEUVE PLANT IN BALANCE FOLLOWING ZENITH DATA-PACKARD BELL PACT

By CBR Staff Writer

Examining Bernard Pache’s comments to a parliamentary committee last week that Compagnie des Machines Bull SA’s $1,800m debt makes it necessary to divest some units, La Tribune notes that it has already sold over half of the sites it once occupied in Paris, retaining seven of 15, and points the finger at the Louveciennes plant. Meantime the move by Bull last week to gut manufacturing – cutting 250 out of 370 jobs – at its personal computer plant in Villeneuve d’Ascq answered, for the moment at least, the question about that faci-lity’s future that was raised after its agreement to buy a 20% stake in Packard Bell Electronic Inc, Chatsworth, California. Of the possibility that Packard Bell could resuscitate the plant in northern France, a Bull spokesman said, There are a number of discussions ongoing about where we might take our manufacturing at Villeneuve in the context of the Packard Bell agreement, but it is much too premature to predict any outcome. One could almost have predicted the virtual closure of Villeneuve after the partnering between Zenith Data Systems, which has publicly lamented its difficulty in achieving sufficiently cost-effective manufacturing, and Packard Bell, a personal computer manufacturer envied for its manufacturing capability.

Primarily desktops

The $40m Villeneuve plant and Zenith Data’s other plant in the US turn out primarily desktops, while its partners in the Far East do notebook assembly, says a Zenith Data Europe spokesman. Finishing touches on the notebooks are done in Europe, he said. Packard Bell’s manufacturing activity, which is guarded like a state secret, also turns out desktops, and allegedly operates six days a week with two shifts. At the time of the Packard Bell agreement, the Zenith Data spokesman said the two companies had overlap in desktop man-ufacturing, but also complementarity. There are parts of the desktop they make well, such as power supplies, while we do motherboards really well. In retrospect, however, one could see clues to Villeneuve’s fate in remarks made the spokesman at the time of the agreement. The intention is to maximise the resources of both companies. They strengthen their product line with our portables and at the high end, and we benefit from improved manufacturing efficiencies and bigger buying power, he said. We will clearly benefit from Packard Bell’s manufacturing process. They have one of most envied, cost-effective manufacturing of any sector, he said. The accord brought an immediate financial benefit to Zenith Data’s laptop production; Zenith Data is revising upward its unit estimates for this year, the spokesman said. But laptop manufacture does not provide sufficient work to sustain Zenith Data’s own plants. At the announcement of job cuts at the plant in northern France, Zenith said the remaining employees would occupy themselves with cus-tomisation and distribution. One trade union member said bitterly, That won’t last through 1994, noting that Packard Bell has a facility in the Netherlands for customisation that has a capacity to push through 100,000 units per year. Even if the alliance with Packard Bell brings new employment at Villeneuve d’Ascq, it will be too late for most of those employees. For the moment, personnel manager Herve Hannebicque says Bull must recreate comparable jobs in the region that have been lost at the factory. But, after being promised two years back that Villeneuve was the factory with a future, they just may not believe it any more. – Marsha Johnston

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