Dive Brief:
- Ryder System will lay off approximately 801 employees and cease its operations at a customer’s site in Austin, Texas, according to a Worker Adjustment and Retraining Notification (WARN) notice dated Jan. 10.
- The layoffs involve an Applied Materials site at 9700 U.S. Route 290, Ryder’s letter stated, and the terminations will occur between March 18 and 31.
- “Due to a customer’s changing business needs, Ryder will no longer operate the customer facilities located in the Austin, Texas area, effective March 31, 2023,” the company told Supply Chain Dive.
Dive Insight:
The shift comes as Applied Materials is insourcing a significant portion of its operations and transitioning another portion to two 3PL providers, Ryder told Supply Chain Dive.
Semiconductor and technology company Applied Materials — which generated $6.75 billion in Q4 revenue, up 10% YoY — has sought changes to meet customer demand.
“Our top priority has been mitigating supply chain constraints that prevented us from fully meeting customer demand,” Applied Materials CEO and President Gary Dickerson said on a November earnings call. He noted the company expected to continue to close supply chain gaps over the next few quarters and was finding creative sort-term solutions to address root causes while strengthening its logistics and supply chain management.
Ryder provides labor and management oversight for the site, training workers to receive and handle a portion of inbound materials to support the semiconductor company’s manufacturing process. Ryder noted this represented a fraction of the supply chain, saying that Applied Materials’ Q4 earnings comments refer to larger, more complex issues beyond what Ryder provides to the company.
The layoffs will mark an end to a partnership for the site that began in 1999, according to Ryder. While the transportation company has over 50,000 customers, it doesn’t always have customer accounts renewed. Partnerships span across three- and five-year cycles.
“We regularly win, and on occasion, do not renew certain customer accounts in the normal course of business,” Ryder said.
While Applied Materials’ customer demand increased in recent years, “supply chain and logistics constraints” affected the company’s ability to fulfill demand in its 2022 fiscal year, which ended Oct. 30, according to the company’s annual report.
And some issues could continue into the company’s 2023 fiscal year, too.
“Although there have been improvements in supply chain performance, Applied expects some shortages to persist into fiscal 2023 and managing these supply chain constraints to increase shipments to customers remains a top priority,” the company said in the report.
Dickerson said the biggest supply chain constraints are in its metal deposition business, its largest business unit. Beyond supply shortages, the company is mindful of macroeconomic headwinds, leading it to re-engineer products and implement price adjustments, and also navigating new regulation from the U.S. as of Oct. 7, Dickerson noted.
“These new rules are complex and cover a broad range of semiconductor technology that includes wafer fabrication equipment and related parts and services,” Dickerson said on the call. “We have taken all the necessary actions to comply with these new rules, including suspending shipments and support where required.”
