Spokane Journal of Business

Tech parts makers retrench

Companies here pursue clients in other urban areas in light of long downturn

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Left high and dry by a slowdown in the electronics industry, Spokane-area high-tech parts manufacturers have had to chart new courses.

Some of the companies have searched extensively elsewhere in the West for new business, a strategy that has paid off to varying degrees. Because of that, some are projecting an increase in sales this year, and others have been able to stop the decline in revenues.

Regardless of sales, many tech manufacturers are operating with substantially fewer employees than they had late last year, even though some have beefed up their sales staffs.

Mike MacKay, president of MacKay Manufacturing Inc., a precision machine shop, says that for the most part, The decline in demand has stopped. Looking forward, things are looking better.

Tech manufacturers had to retrench after an abrupt slowdown hit the electronics industry last year. The downturn followed a massive ramp-up by some electronics manufacturers earlier in the year, says Lee Tate, founder and president of Tate Technology Inc., a Spokane electronics company that assembles circuit boards.

Specifically, Tate says, Liberty Lake-based Telect Inc., one of Tates largest customers, experienced a sharp drop-off in orders, and that affected many of its parts suppliers. Telect, which makes telecommunications equipment, announced two cutbacks earlier this year in which it eliminated about 585 positions, or about 25 percent of its work force.

Whatever happens to them happens to us, almost at the same magnitude, Tate says, adding that Tate Technology currently employs 78 workers, down from a high of 150 last year. Some of the remaining employees are working reduced hours, he says.

Altek Machining & Molds Inc., a Liberty Lake-based custom injection-molding company, has beefed up its sales and engineering staff, invested in more equipment, and lured new customers from the Seattle and Portland markets, among others, says Mike Schneider, the companys vice president of business development.

Its aggressive approach has paid off, he says. The companys sales are up 8 percent so far this year over the same period last year. Its work force, however, has been shaved by about 10 percent, he says, and currently stands at about 160 people.

Basically, theres good news and bad news, Schneider says. In general, our business is faring well. Were gaining new customers at a rate thats greater than the effect of the slowdown.

He says about 80 percent of Alteks business currently comes from customers outside of the Spokane area, up from about 60 percent last year.

Don Hemmer, president of Liberty Lake-based Accra-Fab Inc., says that precision metal parts company has made inroads into other metropolitan markets, although he declines to be more specific.

Accra-Fab laid off more than 100 employees here in February. It has called back about 60 of them, but it doesnt have immediate plans to recall any more employees. Hemmer says the company now has about 325 employees here.

The companys sales so far this year are 30 percent lower than last years, and Hemmer says he expects to finish the year at that level. He doesnt expect any further declines.

MacKay says his company also is doing business elsewhere on the West Coast.

MacKay Manufacturings revenues so far this year from customers in various electronics industries are 20 percent lower than last year, but that falloff has been offset somewhat by a 10 percent increase in sales to customers buying its medical-related electronics, MacKay says. Overall, he says, sales are down thus far this year, but he expects revenues to catch up to last years figures by year-end.

He says the 70-plus employee company has weathered the recent downturn by laying off only a handful of people, though the company has pared down the workweek for some of its employees to 32 hours from 40.

Some companies say they arent accustomed to having to seek business so actively, since many of their customers have come to them with plenty of increased business in recent years.

For example, 9-year-old Tate Technologys strategy has been to ally itself with a few select companies and grow as those companies grow, Tate says.

While Tate must bring in some new customers during the slowdown, its closely monitoring whats happening with its longtime customers.

We know our existing customer base will recover, he says. We struggle with the idea of landing new business and being torn with who not to serve when that happens.

Accra-Fab and MacKay both started expansion projects before the downturn took hold, and Hemmer and MacKay both say theyll be able to accommodate both their old electronics customers and the new clients when business picks up again.

Executives at both companies say the expansions were part of long-term growth plans, and neither project was disrupted by the slowdown.

Linn  Parish
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Editor Linn Parish has worked for newspapers and magazines since 1996, with the bulk of that time being at the Journal. A Montana boy who has called Spokane home for some time now, Linn likes Northwest trails, Deep South foods, and lead changes in the ninth inning.

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