As of the second fiscal quarter 2009, in view of deteriorating market demand, the Company initiated a cost reduction effort to reduce headcount. The Company expects a total reduction of about 850 jobs, or approximately 18 percent of the worldwide workforce for the 2009 fiscal year compared to the fiscal year ended June 30, 2008.
The reductions in headcount are expected to save about $33 million on an annualized basis when completed at the end of the 2009 fiscal year. The Company expects to incur severance related costs for the 2009 fiscal year of about $10 million associated with these reductions.
Additionally, in conjunction with the previously announced manufacturing cost reduction plan, the Company is consolidating its Newport, Wales fabrication facility, which is expected to conclude at the end of calendar 2009. This facility consolidation is expected to save approximately $8.0 million per year when completed.
Also, the Company is planning to close its El Segundo, California fabrication facility and consolidate its production capacity to the Company's Temecula, California fabrication facility. The Company expects to complete this by the end of calendar 2010. The closure of this facility is expected to save approximately $12.7 million per year when completed. The Company expects to incur costs of about $20 million over the course of the consolidation and closure of both fabrication facilities.
"Due to continued poor visibility, we expect fiscal third quarter 2009 revenue from ongoing customer segments to range between $115 million and $150 million," stated International Rectifier President and Chief Executive Officer Oleg Khaykin. "While the current business climate remains challenging, we are proactively taking steps to help manage the effects and I am pleased with the progress the team is making in restructuring the Company."