Partly because of the rise in the minimum wage, Johanson Dielectrics Inc. is opening a new plant in Tijuana, Mexico and transferring jobs to it from the San Fernando Valley and Ventura County.
The Sylmar chip capacitor manufacturer is laying off 197 employees from that east Valley facility, according to a notice filed March 20 with the state Employment Development Department.
In a letter dated the same day posted at the Johanson Dielectrics website, John Ricardi, vice president of sales and business development, wrote that a portion of the manufacturing operations at the Camarillo facility will also move to Mexico.
The number of Camarillo employees who will lose their jobs is included within the 197 reported to the EDD, according to Justin Greene, the chief financial officer, who added that some will be offered positions at the new plant.
One of the reasons behind consolidation in Tijuana was the rise of the minimum wage in California coupled with foreign competition continuing to drive global product prices downward, according to Ricardi’s letter.
The state boosted minimum wages starting last year. It is currently $10.50 an hour for smaller employers and $11 an hour for larger ones. It is set to rise to $15 an hour by 2022.
“The Tijuana operation will contain new production equipment that allows Johanson to have parallel operations during the transition that enables us to maintain delivery commitments to our customers while performing stringent training and process qualifications in the new facility,” Ricardi wrote.
Capacitors made in the new facility will be shipped back to Johanson factories in California for final test and inspection until satisfied that the Tijuana product quality and process controls meet company requirements, he added.
Greene said that cost cutting was not only reason for the consolidation to Mexico. The company’s customers and competitors are also located there, primarily between Tijuana and Mexicali.
“We like to be close to our customers and ever close to our competitors,” Greene said.