Independent computer-keyboard manufacturer Key Tronic Corp. sees a future in advanced designs, strategic flexibility and retail presence.
The company seeks to address Key Tronic's slowdown in sales, sustained pricing pressures and a sliding stock value. Fred Wenninger, president and chief executive officer, has committed to bringing down costs and develop other devices that complement the company's strengths.
Key Tronic designs and develops tooling and operates more than 100 molding machines with clamping forces of 50-800 tons. Key Tronic uses a variety of automated machines with two-color and two-or three-material capabilities, rotational and injection molding processes, mold flow analysis and insert, runnerless and stripper molds.
The molding occurs primarily in a 158,000-square-foot plastics center that is part of the 270,000-square-foot Spokane, Wash., corporate headquarters and site for low-volume production, electrical and final assembly and tooling and mold making.
``We have one of the largest molding operations on the West Coast,'' said Doug Voda, Key Tronic's director of manufacturing engineering. ``We produce more than 1 billion key tops and piece parts per year.''
Most often, Key Tronic injection molds parts of ABS, high-impact polystyrene, polyester, polycarbonate and thermoplastic elastomers.
A high-volume production facility with electrical and final assembly and molding capabilities occupies 100,000 square feet in Ciudad Ju rez, Mexico. In 1996, Key Tronic transferred its primary manufacturing segment to Mexico from a money-losing Dundalk, Ireland, site.
A one-time restructuring charge of $2.7 million contributed to Key Tronic's net loss of $1.8 million on sales of $201 million for the fiscal year ended June 29. Dundalk continues as a sales office and support and distribution center for the European market. At a profit peak, Key Tronic recorded profit of $11 million on 1984 sales of $131 million.
Key Tronic produces switch membranes for wireless applications at a 42,000-square-foot facility in Las Cruces, N.M.
The company has expanded into original design manufacturing, marketer Anja Krammer said in a telephone interview. She is director of worldwide marketing and channel sales through distributors and retail outlets.
The upscale ODM concept extends well beyond contract work.
Now, Key Tronic designs and manufactures smart card reader-enabled keyboards for VeriFone Inc. and cutting-edge universal-serial-bus keyboards and multimedia devices for companies such as Toshiba Corp.
Choosing strategy becomes a challenge when selling keyboards into the consumer electronics and computer markets, which have volatile competition and eroding prices. Last year's relocation to Mexico from Ireland has helped fend off Asian competition. Key Tronic has roots from supplying keyboards to more than 170 original equipment manufacturers, most in the computer industry.
During fiscal 1996, Hewlett Packard Co. accounted for 34 percent of sales; Microsoft Inc., 17 percent; and Compaq Computer Corp., 7 percent.
In branching into retail, Key Tronic launched a proprietary Lifetime-brand line in June 1996. Independent sales organizations support Key Tronic in distributing keyboard products through more than a dozen retailers, such as CompUSA Inc., Best Buy Co. and Egghead Inc.; and catalog houses, such as Micro Warehouse Inc., Computer Discount Warehouse Inc. and Tiger Direct Inc.
Key Tronic sees new opportunities in telecommunication and medical markets, ``purely because of the core plastics and engineering design capabilities,'' Krammer said.
``We have looked to refine our capabilities and not just look at the computer industry,'' she said. ``We've looked at consumer electronics and other industries that need input devices.''
``Today, we make various keyboards with wireless and infrared technologies,'' Krammer said.
Cable-free desktops, remote running of presentations and laptop docking stations are emerging. Strong signal strength will allow use of an untethered keyboard up to 40 feet away from a Web surfing computer or television set.
Robert Toomey, research analyst in Seattle for Piper Jaffray Inc., recommends Key Tronic with a strong-buy rating. The stock is ``suited for aggressive investors who are willing to withstand above-average risk in a small-cap stock,'' he wrote in a May 2 report.
The stock slide, however, has led some investors to call for liquidation.
Toomey likes Key Tronic's entry into engineered plastic molded electronic devices, which he said generate margins ``about twice those of computer keyboards'' and minimize Asian competition because of product complexity, longer sales cycle and greater need for customer interaction and involvement.
The devices include computer printer housings and controls, fingerprint identifiers and hand-held ear detection devices. ``All of these products have large sales potential,'' Toomey wrote.
Key Tronic is the largest independent keyboard manufacturer and the only one based in the United States. Competitors, typically units of Asian conglomerates, include Minebea Ltd.'s NMB Technologies Inc. division in Chatsworth, Calif.; Lite-On Group units Maxi Switch Inc. in Tucson, Ariz., and Lite-On Peripherals Inc. in Milpitas, Calif.; and joint venture Fujitsu Takamisawa America Inc. in Sunnyvale, Calif.
Key Tronic was founded in 1969 and employs about 2,860.