Suddenly Sluggish Pc Market Leads To Key Tronic Layoffs
Key Tronic Corp. has laid off about 60 of its full-time employees this month as the Spokane-based computer keyboard manufacturer continues to cope with reductions in customer orders.
Demand for personal computers world-wide is apparently slowing at rates greater than the industry had anticipated, and that means Key Tronic’s customers are slowing their orders.
“We’ve had some layoffs throughout this month due to some downturn in our revenue forecasts going forward,” Ken Clement, Key Tronic’s director of human resources, confirmed Monday.
The company’s research and administration division was reduced by 22 people. Some of those reductions occurred at Key Tronic’s facilities in Las Cruces, N.M., and El Paso, Texas. Eleven jobs were eliminated in the electrical assembly area. Thirteen jobs were affected in the assembly operations area and 16 jobs in the mold shop.
“Not only is demand off for our mold shop work, but we also transferred a few of our molding machines to our plant in Juarez (Mexico) to get them closer to the production site,” Clement said.
Clement said the company has also reduced its temporary work force.
Analysts at Piper Jaffray reported earlier this month that, “Several of (Key Tronic’s) large customers have asked that shipments in the second and third quarters be slowed … End market demand is slowing significantly and inventories of keyboards are apparently building at the retail and original equipment manufacturer levels.”
“This has apparently happened very quickly in the last couple of weeks,” the Piper Jaffray report stated.
Fred Wenninger, who last year replaced Key Tronic Board Chairman Stanley Hiller as the company’s chief executive officer, told investors at the company’s annual meeting in October that Key Tronic needed to broaden its customer base to minimize earnings swings.
Wenninger, who is also Key Tronic’s president, said that while Key Tronic had made great strides in recent years by winning important new contracts with major companies like IBM and Microsoft, it needed to do more.
In an earnings report statement last week, Wenninger said the company has had some success in broadening the customer base, but results from those new accounts will take time to show up on the bottom line.
In the meantime, Key Tronic must make adjustments to cope with revenue reductions. Although the company was profitable in the second quarter of the fiscal year, ended Dec. 30,, the earnings report statement indicated company officials expect to sustain a loss during the third quarter.
Key Tronic employs about 2,700 people company wide, about 975 of them in Spokane County.
The company manufactures computer keyboards and other input devices in the United States, Mexico and Ireland.