Inside Sources claim a headcount reduction of 15% of workforce at the Korry Electronics, formerly under Esterline ESL, is going to occur Wed, June 26th, 2019.
Per SEC, Q2 Shareholders Report, Transdigm has aggressive plans to immediately sell off and liquidate entire business units until they recoup 1B dollars off the 4B purchase price of ESL during the buyout.
Post 55 days of ownership, Transdigm announced the sale and liquidation of assets plan that will net them 1B dollars in return for the sale of business units that are of no interest.
Also announced, is the mention of a five-year plan. A 5-year plan is typically employed by investment and holdings firms to flip a business for profit and, in this particular case involving ESL, TD announced they calculate a 20% Return on Equity in five years. In short, they plan on selling it all for profit.
They also announced the capital allocation plan will be delayed until late 3rd quarter to sometime in the 4th quarter with an announcement on that plan along with their plan of the future involving integration into their portfolio and restructure of manufacturing going forward.
It is unknown what they plan on parsing out but, Korry was a direct competitor to Transdigm thus one could say it is safe to speculate that, based on the fact that they're cutting heads by 15% at Korry Electronics alone - compounded with the fact that Korry was a direct competitor, compounded with a statement made by TD regarding the acquisition of intellectual property from the purchase is to be used to their advantage to pursue military contracts in their fastest growing market with regards to return, it is highly likely that they will bury Korry and put them out of business after they've integrated product lines and technology into their divisions nearby in Everett and eastern Washington that build the same type of products.
This would reduce their burden by ridding the long-term lease on the building that Korry resides in Everett - that building is not paid for and is a 75-year lease agreement if memory serves me correct. They do not own that property thus, it almost comes as a no-brainer with regards to closing down the Korry Electronics plant.
They can then sell off the long-term contracts and then issue Last-Time Buy letters to customers per diem. This will absolve them of all accountability and liability going forward thus, reducing burden with regards to contracts.
They'll cut their losses on labor and engineering costs and the long-term lease costs and utility costs associated with the property and any outstanding loans for the "Transformation" of the plant that occurred starting in 2015 that cost them double digit millions.
The switches and knobs lines were rumored to be parsed out to Mexico plants while parsing out some of the electronics lines to India to cut costs. ESL built a large facility under the radar in India that could be sold off to interested buyers in the liquidation phase.
The display line is being shipped back to Belgium as the burden rate is high and they've not been successful in first-pass yield ratio thus, their profit margin on those is marginal. It remains unknown as to if Transdigm will sell off that business until later this year with years end announcement.
They could easily transfer all of the avionics panel lines over to TDs manufacturing plants as they're making the same products already thus, integration and restructure of this is also feasible.
Expect more news towards the end of the year from Transdigm (TD) on integration and restructure of manufacturing in late Q3 - Q4.