Call it a Paradigm shift.
Salt Lake-based Paradigm Medical Industries Inc. said Tuesday it will move manufacturing of diagnostic medical equipment from San Diego to its Salt Lake plant, 2355 S. 1070 West. But the size of the company's Utah work force is expected to change little, if any, in the wake of the move.
The company considers the action, which includes the closing of the San Diego plant, to be the second part of a "downsizing/rightsizing" strategy designed to cut operating costs by at least $2 million annually.
"Closing our California office and manufacturing site will result in a reduction in our payroll, the elimination of some duplicate functions and improved manufacturing efficiencies," said Thomas F. Motter, the company's chairman and chief executive officer.
"We will also eliminate lease expenses in San Diego. Our manufacturing plant in Salt Lake City is currently under-utilized. It can produce our equipment for surgical and diagnostic products, as well as consumables. San Diego was only producing diagnostics."
Heber M. Maughan, chief financial officer, said the San Diego plant, which has about 30 employees, will shut down most operations over the next couple of months. Paradigm obtained the plant when it acquired Vismed Inc., doing business as Dicon, and the lease is expiring this summer, he said.
He said perhaps only a few key employees will make the switch to Salt Lake City, and otherwise the Utah staff will not be affected. The company has more than 60 workers outside of San Diego, with most in Utah.
"We have built adequate capacity for the closing and transfer of manufacturing in San Diego," Motter said. "We have adequate capacity to meet near-term demand for our proprietary Ocular Blood Flow Analyzer devices, which had been produced only in San Diego since the second half of 2001."
The company in January cut about 20 workers from what was then a staff of about 110. The cuts occurred in San Diego and Utah. Those, combined with eliminating outside consulting services, were considered one way to reduce costs.
"That phase has been completed. We will now begin phase two of our 'right-sizing.' It should be completed by midyear," Motter said.
Motter said the overall work force total by June 30 should be about half what it was Dec. 31.
On Tuesday, the company said the expected drop in operating expenses and a projected "sizable" revenue increase should have the company profitable and with positive cash flow by the year's end. That's a far cry from its saying that it "may never achieve profitability" — a statement in a document filed with the Securities and Exchange Commission in late December.
The company last year had a net loss of $13 million, or 98 cents per share, compared with a loss of $9.3 million, or 81 cents per share, for 2000. Sales were about the same both years: $7.9 million.
Paradigm develops, manufactures, sources, markets and sells ophthalmic surgical and diagnostic instrumentation and accessories.