Why we do not have any posts here when everyone knows there are layoffs at Korry Electronics
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Recruiting is really desperate to find anyone in the aerospace industry. They they want miracles for pocket change. If they reach out via LinkedIn. Just delete the inmail.
Sad state of affairs. Korry was once a great company, one which was looked up to by many in the display industry. People were always the strong point within the company and that made the company great and a good place to work. Profits are a terrible driver of sucess on a short term. People are always what makes a company great. And I have known a few over the 45 years I was employed there. Dan ... phew.
Was informed by 2 current employees that 120-150 more people were laid off today. (Sept. 1, 2020)
They both lost their jobs today.
Another round of layoffs @ Korry! Half voluntary retirement & then next day non voluntary, I believe 120 between both!
Korry let go another 20 people. Looks like they're in-line with small incremental layoffs every so often to avoid The Warn Act. This is their second layoff event since Transdigm Group bought Esterline.
Per TDG announcements and conference calls - Trans is on track with phasing out divisions that were immediately identified as of no value. Phase I of that has been closed at 192M dollars toward the 1B dollar recovery from the sale of certain ESL divisions that they already planned on selling before inking the sale.
Keep watching the TDG Quarterly Announcements for further information on what else they plan in liquidating and consolidating.
Korry is anything but healthy. It's been going downhill since they went public and sold out to ESL. Sadly, it's fact. They lost a lot of great people who fled years ago when they realized Korry wasn't what it once was and that Big Corp was poising it for sale (post ESL acquiring it and going public).
It's been resource starved and running on fumes for years. They take on contracts that they lose money on just to prevent competition from getting the work. They underbid in some cases. That's not a healthy business model. That there, is called devaluation.
The display lines they took on from Belgium are reportedly going back thus, those jobs will be gone once that transfer has been completed - if it actually manifests. It's been a long running discussion on that just like offloading the switches and knobs division.
Korry has Cancer and has been dying a slow death for years. One would have to blind to not see they're diseased. They didn't even have funding for common things like a decent microscope with a camera or decent scopes for engineering.
They began offloading engineering work to other firms only to discover they had overspent and went over budget and not only that, it wasn't designed properly thus, they had to spend more money to redesign the whole program. You can't run in that mode and make money.
People got burned out after running in Chinese Fire Drill for years solid. Quality personnel quit after getting hammered with RMAs and customer complaints. As more people fled due to stress, they weren't back filled. This compounded more stress on the people in those roles to which, the smarter folks finally left.
Program Managers started quitting until the manager, Parks wound up leaving. Look at all the people who fled or retired since 2014.
From top brass executive level down to line managers to facility personnel and janitorial services... It has changed and not in a good way. Korry has been resource starved. As a result, they've been robbing Peter to pay Paul.
When Relational Investor Ralph Whitworth sat on the committee, they were forcing the sale of ESL back in year 2012. They contacted a hatchet man known for poising companies for sale and whom had an excellent track record at it. They brought former UTC CEO over to flip it to which, he was successful in doing so - 4B dollars for a company worth half that amount.
It's all been planned for years and years. Even ESL board members wanted out before the market went soft to avoid going under.
They had five buyers looking at it back in 2008-2012 but, the markets were soft thus, they couldn't sell it for love or money per the seller who wanted to unload it.
Korry lost a lot of workforce over time and during and post the transformation period.
A lot of veteran employees with a lot of years left to go work for the competition.
Look at the machine shop and tooling department. No resources. No money allotted thus, every single piece of tooling was a single point of failure. They never invested in it as management on the inside dropped the news they planned on offloading Knobs and Switches to Mexico - just like what ESL did with the NMC Aerospace injection molding division. It all went to Mexico and they closed the plant to cut labor costs all while bringing in borrowed skeleton crew to sustain on orders.
The burden rate in that facility is soaring. It was 126.00/hr in year 2014. It's higher now than it was thus, they're not making a huge profit margin without marking it up hundreds over. In doing so, this may lead to pricing themselves out of the market.
Hell, the internal database for cost out is so far off, no one even knows how much anything really costs to manufacture thus, they apply a huge markup across-the-board in order to make money.
You can only operate in that mode under certain circumstances. One is, if you own the market and have little to no competition or, your products are one of a kind.
Korry originally fell into the latter.
They didn't produce avionic panels - that came later to which, they're still wet behind the ears and don't have consistent protocol in place thus, each design is a one off. This becomes lessons learned every time they start a new program. Ask them to show you their design guidelines book. They once had one but not anymore. It's all ad hoc. The left hand designs around a 100k pot while the right hand designs in a 10k pot. But since there's no resources, there's no gatekeeper. It goes into prototype mode and doesn't work as a result. Then the time spent trouble shooting it at the design level is costly and time consuming.
That is not healthy. That's waste and leads to cost overruns and schedule slips.
They knew they were in trouble long ago. Grover told corporate they were losing revenue and going to go under due to obsolescence and needed a whole new market and not just avionics panels now that the competition had stepped up to undercut Korrys price.
They didn't have a whole lot of experience at all with anything other than switches initially. That's what Boris Korry did. He was thee switch guy.
Along the way, someone decided they needed to break into new business thus, along came the panel lines to which, some programs went on for 12 years with zero return. In fact, programs went into the red. They were running on borrowed money but was in the red per accountants That's not a healthy business. Korry is anything but healthy.
Then 777x came along w a behind the scenes favor which was another money loser compounded with more losses in the back end with expected make up gains in the spare market. Only problem is, BAC isn't getting orders for 777x and some have cancelled due to financial burden and the plane being too large and too costly.
You have to be quick and agile to adapt to market shifts. We see a huge risk with some of the programs and assign a risk assessment value post analysis.
3% of the workforce was let go recently.
Looking ahead, look to TDG for announcements coming later.
The holdings firm that bought ESL is liquidating entire business units and platforms and parsing out the entire ESL portfolio into stand alone businesses to facilitate liquidation of assets and business units per diem.
This was announced recently by TDG during the SEC phone conference.
They are going to liquidate billions thus generate an instant return on investment by selling off the unwanted business units immediately.
We think TDG is just getting warmed up. They announced a five year plan. A five year plan will net them a greater than 20% return on investment when they flip it. This is a typical business model investment methodology. The five year plan was what Stakeholders and Investors had ESL on since Relational Investors and ESL board members pushed to sell the whole business and get out before another market downturn took place. That five year plan started in year 2014 and lasted until they inked the deal five years later in 2019.
That flip for profit was a no brainer. One would have to be deaf dumb and blind or in denial not to see that coming.
They're stuck in the wash, rinse, repeat cycle only this time, with a new owner in control. TDG is fast and furious and very aggressive holdings firm.
Before they inked the deal, TDG had already completed the front end modeling and forecast regarding Roi over the next five years should they decide to flip it for profit. Turns out, it's greater than 20%
Right now, per TDG, in Phase I, they're recovering an instant billion off the 4B sale price. They're a little over extended so, to recoup and and swing the numbers and mitigate financial risk, they need to sell some units that are of no desire.
TDG is to announce capital allocation and future plans in the liquidation phase in further detail come late Q3 or some time in Q4
You'll have more information right from the source during a call in on whether or not they're going to Love it or List It
Maybe because there are very few people affected. And more like 1%, if that, not 15%.
Korry is healthy and doing well.