Agere's 1M-SF Plant in Play--Again

Agere is closing the 600-employee plant Dec. 31, 2005. At its operational peak in 1998, the plant employed 1,800 workers. Agere invested $1.2 billion into plant upgrades from 1996 to 2000 but hasn't put substantial additional money into the plant since then, local high-tech industry consultants tell GlobeSt.com.

Area industrial brokers familiar with the plant and land prices in the John Young Parkway submarket say the property will probably be listed for about $2 billion, a record asking price for comparable assets in Florida. But buyers are not expected to line up quickly for this asset or to pay Agere's undisclosed asking price, Orlando brokers tell GlobeSt.com. Agere struck out in finding a buyer on its first attempt in 2002.

"While this is arguably the largest high-tech facility of its kind in Orlando and probably in all of Florida, you're not going to get a major bulk warehouse distributor or a national distribution center developer, for example, bidding for this asset, mainly because of the costly retrofitting that would be involved," says a longtime south Orlando broker who previously tried to find a buyer for the property.

Another longtime area broker who wasn't involved in finding a buyer for the property two years ago is also negative on the property's future. "The worst scenario for the property is that it will wind up being vacant and become a white elephant on the metro Orlando industrial market," says the broker. He asked for anonymity because of his past relations with Agere representatives.

"The best scenario is that another high-tech manufacturer, who can utilize the in-place equipment, will buy the property at a highly discounted price and continue to employ a large workforce there," the broker adds.

Besides the loss of jobs to the community, another big loser in the plant's closing will be Orange County. Agere has been paying about $3 million in annual property taxes in the past six years, county tax records confirm. Agere is the county's largest taxpayer after Walt Disney World Co. and Universal Orlando.

"While our actions to reduce the workforce are clearly very difficult for employees, they are absolutely necessary to align our expenses with our revenues," Agere president and CEO John T. Dickson says in a prepared statement. "The issues we faced with three major customers now seem to have broadened into an industry-wide inventory correction, as reflected by a spate of earnings warnings from most companies in our industry."

Still, Dickson says, selling off the local asset will not seriously hurt Agere's financial health. "Agere Systems has a strong balance sheet, exceptional relationships with our customers, and we are confident that the improved cost structure, with sharply focused R&D investments, will drive profitable growth as we move through 2005."

Agere Systems is considered by industry peers as a global leader in semi-conductors for storage, wireless data and public and enterprise networks.