Key Tronic Corp., the Spokane Valley-based contract manufacturer, says it expects to begin making products in December for Kaz Inc., a Southborough, Mass.-based maker of health, home, and garden products.


Key Tronic declines to say what product or products it will be making for Kaz initially, but says it expects to add several other Kaz product programs over time that altogether will boost Key Tronics revenue by more than $25 million annually.


I think eventually it could grow to be all of their products, says Ron Klawitter, Key Tronics chief financial officer.


Headquartered 30 miles outside of Boston, Kaz makes humidifiers, air purifiers, air washers, heaters, moist and dry heating pads and wraps, thermometers, and bug zappers, and sells them through national retailers such as Home Depot Inc., Wal-Mart Stores Inc., and CVS Caremark, and also internationally. It reportedly has annual revenues of about $500 million.


We are very pleased to be working with a world-class customer like Kaz, Key Tronic President and CEO Jack Oehlke said in a press release announcing the new client.


Key Tronic said in its recent fourth-quarter and fiscal-year earnings release that it expects 10 new customers to come on line in its 2009 fiscal year, which began at the end of June, and to contribute strongly to its revenues. Kaz is the first of those new customers to be identified.


Kaz is a privately held company that says it has been offering health-care and home-environment products since founder Max Katzman invented the worlds first electric vaporizer more than 80 years ago. It has 17 locations around the world, including six facilities in the U.S., seven in Europe, and four in East Asia, according to its Web site.


However, it is trimming back its U.S. operations. Recent published reports indicate it plans to close manufacturing plants in Hudson, N.Y., and Memphis, Tenn., eliminating a total of 380 jobs in those markets by next summer, and to move that work to a Key Tronic plant in Mexico.


Richard Katzman, president and CEO of Kaz and the company founders grandson, told The Business Review, of Albany, N.Y., that the company already outsources much of its manufacturing. He told The Business Journal that he thought about moving the work done by the 300 Hudson manufacturing employees to China, where the company has 2,000 employees, but the cost of doing business there is growing, too, which led him to decide to work with Key Tronic in Mexico.


Key Tronics headquarters are located in Spokane Valley, at 4424 N. Sullivan, but the bulk of its roughly 2,500 employees are located at facilities elsewhere. Those facilities include a distribution center in El Paso, Texas, and manufacturing plants and warehouse operations in Shanghai, China, and Juarez and Reynosa, Mexico. It does about 85 percent of the manufacturing in Juarez, which is where the Kaz products will be made, Klawitter says.


Key Tronics largest customers over the last three years have been International Game Technology Inc., Zebra Technologies Corp., and Lexmark International Inc., according to federal regulatory filings.


Key Tronic had an order backlog of $42.2 million as of the end of July, up from $34.1 million a year earlier. In its most recent fiscal year, the manufacture of transaction printers accounted for 36 percent of its revenue, followed by gaming products, at 19 percent, and commercial printers, at 16 percent, the regulatory filings show. The remaining categories included communication and consumer products; computer and peripheral; and industrial.


Contact Kim Crompton at (509) 344-1263 or via e-mail at [email protected].