Atari Inc., the video game and home computer manufacturer that has sometimes been used to symbolize America's employment future in high-technology jobs, said yesterday it will fire nearly a quarter of its U.S. work force in a shift of Atari's manufacturing operations overseas.
Atari said that 1,700 workers in California will lose their jobs as a result of the company's decision to shift production from Sunnyvale, Calif., to Hong Kong and Taiwan. The layoffs will be phased in from now to June or July with 600 workers out of a job yesterday.
The production move comes only weeks after Atari's parent, Warner Communications, reported lower-than-expected earnings for 1982 for its consumer electronics division.
Analysts said the production shift, which follows the pattern of consumer electronics items such as watches and television, results from economic pressures in the highly competitive home computer and video games industries. Atari said yesterday it is designed "to reduce escalating manufacturing costs"--such as labor, the value of the dollar and regulatory costs.
The announcement of the move and the large layoff is bound to raise questions about projections that jobs lost in the foundries and auto plants can be replaced easily by jobs in high technology industries and that high-tech industries can preserve the U.S. position in international trade.
"It clearly indicates that the high-tech firms are also moving abroad and that they are no guarantee for absorbing the nation's jobless," said Rudy Oswald, director of research for the AFL-CIO.
The value of high technology in America's future has been espoused by a group that has been dubbed the "Atari Democrats," who advocate shifting resources away from declining industries, such as steel and automobile manufacturing, into the high technology and service industries where growth is expected to occur.
President Reagan, too, echoed some of those sentiments in his State of the Union speech, earning for himself the label "Atari Republican"--a label likely to be revised as a result of yesterday's announcement.
Atari has said that financial considerations dictate that some of its production be moved abroad. "Our computer production costs will go down dramatically in 1983," John Cavalier, president of Atari's Home Computer division, is quoted in Electronic News, a trade publication.
Atari already manufactures some video games in Taiwan and in Limerick, Ireland.
Interviewed by that magazine at the Consumer Electronics Show, Cavalier noted that "there were no Atari computers manufacturered offshore in 1982. There will be a significant percentage manufactured offshore in 1983." In fact, an Atari spokesman said yesterday, virtually all its home computers will be manufactured abroad.