Key Tronic Sets Stage For Fresh Growth Spokane Based Company To Explore Opportunities Outside The Production Of Keyboards
With four years of sometimes painful restructuring behind it, Key Tronic Corp. is ready for significant growth.
That was the message to shareholders Thursday at the company’s annual meeting as Key Tronic officials outlined how they will present the company’s growth plans to the national investment community.
“Its really time to take the Key Tronic story out to the investing public,” said Jack W. Oehlke, Key Tronic’s president and chief executive officer. “It’s a good story to tell, and the time is right. We believe our house is in order.”
Oehlke and other top Key Tronic executives will tour the West Coast next week, making presentations to the investment community in major cities. An East Coast tour is scheduled the following week.
The Key Tronic management team will tell potential investors much of what they told shareholders Thursday. And the core of that message is that Key Tronic competes in a growing market with declining prices.
So while the company will work to grow its market share of the global computer keyboard market, it will also focus on creating products for new and larger markets which suit the company’s core strengths.
“We’re not abandoning keyboards,” Oehlke emphasized. “But we are going into a market that affords us more opportunities.”
Since its founding in 1969, Key Tronic’s principal product has been computer keyboards. That market comprised 82 percent of the company’s sales in fiscal 1997.
But Ronald F. Klawitter, Key Tronic’s executive vice president of administration, illustrated the challenges that market poses.
The global keyboard market has been growing by 17 percent a year. But the price of keyboards has been shrinking even faster. In 1992, Key Tronic keyboards sold for an average of $47. In 1997, the average keyboard sold for $18. And, Klawitter said, prices will continue to shrink.
So while Key Tronic’s sales grew by 9 percent last year, revenues declined from $200 million to $185 million.
So Key Tronic will focus on original design and manufacturing (ODM) of other products. While the global keyboard market is about $1 billion annually, Oehlke said, the ODM market is $70 billion annually.
Through its work with keyboards, the company has become very good at rapid interactive design. Oehlke said that Toshiba came to the company last year with a concept for a product drawn on a napkin, and Key Tronic delivered the product to the marketplace in three months.
The company is also a leader in plastic molding and in high-quality, low-cost assembly. Those skills can be applied to a range of products other than keyboards.
“We believe we can take these elements into the ODM market and significantly grow this company,” Oehlke said.
Highlights of the past year included significant new customer contracts with Gateway 2000 for keyboards; Nortel for telecommunications-related keyboards; and Web TV for keyboards that use Key Tronic’s leading infrared technology.
Along with infrared devices, the company’s technology developments in 1997 included its fingerprint recognition technology and its work in “smart card” development.
, DataTimes