News From Terre Haute, Indiana

Business

March 11, 2012

What does the future hold for Sony DADC?

Downloads cutting into CD/DVD sales

TERRE HAUTE — As compact disc and DVD sales decline, some people are beginning to wonder how much longer the sun will continue to rise over a Sony DADC production plant in Terre Haute.

But company leaders and some industry analysts believe those worries are unfounded, at least for the foreseeable future.

CD and DVD technology are “getting gray” with age, said Rick Munarriz, a technology analyst for the Motley Fool, a financial and investment education website. But “it’s not the end of the world. That factory in Terre Haute will still be there. It’s not time to dust off the resume’.”

CD sales have been falling steadily in recent years as more people download music digitally over the Internet. DVD sales have declined, as well. However, the sales of Blu-ray discs, a technology developed by Sony and produced in Terre Haute since 2006, are rising, said Dave Rubenstein, president of Sony DADC Americas.

“We are seeing good growth in the sales of Blu-ray discs,” Rubenstein stated in an email response to submitted Tribune-Star queries last week. “So we believe that many people who used to buy DVDs are now purchasing Blu-ray discs and enjoying an enhanced high-definition viewing experience.”

On the music side of the business, some Internet websites have predicted the end of the CD in the near future, but Munarriz and other industry observers disagree. Unlike vinyl records, cassette tapes or eight-tracks, the CD is not being replaced by a superior technology as far as sound quality is concerned, Munarriz said.

“There are benefits to the [CD],” he said. “That’s why it’s not going away.”

The same holds true for the Blu-ray disc, Munarriz said. Downloading movies digitally may be gaining in popularity, but there will remain a market for Blu-ray discs, he said. “There is no media superior to CD or Blu-ray,” he said.

Still, there is no doubt Sony DADC has had to make changes due to the declining CD and DVD sales.

In 2010, the company announced it was laying off 160 workers at its Pittman, N.J., plant, transferring all of its DVD manufacturing to Terre Haute. Less than a year later, Sony cut 300 jobs in Pittman to consolidate its remaining CD manufacturing in Terre Haute, adding 150 jobs to the Fruitridge Avenue facility. And Sony recently announced the closure of a CD distribution center in Fishers, costing 248 jobs.

At the same time, Sony has continued to invest here. Last May, the company announced plans to spend $72 million upgrading the Terre Haute plant, mostly for its Blu-ray line.

All this indicates that Terre Haute has earned the title of Sony DADC’s primary manufacturing facility for CDs, DVDs and Blu-ray equipment.

“Over the past few years, we have realigned our manufacturing businesses in the U.S. and shifted business to our facility in Terre Haute, which is now clearly our flagship production location,” Rubenstein wrote.

“Going forward, our mission stays the same: To provide our customers with products and services that exceed their expectations,” the Sony DADC president stated. “We are proud to be located in Terre Haute and are committed to continuing to grow our business in the coming years.”

Arthur Foulkes can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.

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