ENDICOTT — In mythology, a phoenix is a bird that is periodically reborn, rising from the ashes of its predecessor. It is the symbol of renewal. i3 Electronics, Inc. is the successor to Endicott Interconnect Technologies (EIT), which filed for Chapter 11 bankruptcy in 2013. The company continues as a vertically integrated manufacturer of […]
ENDICOTT — In mythology, a phoenix is a bird that is periodically reborn, rising from the ashes of its predecessor. It is the symbol of renewal.
i3 Electronics, Inc. is the successor to Endicott Interconnect Technologies (EIT), which filed for Chapter 11 bankruptcy in 2013. The company continues as a vertically integrated manufacturer of high-performance, electronic-packaging products. Its services include the design and fabrication of printed circuit boards and advanced semiconductor packaging, turnkey services for printed circuit board and integrated-circuits assembly and testing, systems integration, and advanced-laboratory services.
“We serve a variety of markets: aerospace and defense, medical, communications, computing, and industrial. Where A&D (aerospace and defense) once represented the bulk of our business, 50 percent of our revenues now come from the high-performance computing and medical fields,” says Robert L. Nead, company president. “Our technology can be found in the world’s fastest supercomputers; life-saving medical devices (pacemakers, defibrillators, X-ray machines, CT scanners, patient-monitoring systems); complex imaging systems; mission-critical defense applications (avionics, electronic warfare, sensor systems, unmanned systems, intelligence and surveillance); and many other products. The customer base includes high-profile companies such as IBM, Cisco, Northrop Grumman, Department of Defense, St. Jude Medical, and Siemens.”
i3 Electronics currently employs between 415 and 420 people, according to James T. Matthews, Jr., CEO, “and is in the process of hiring another 10. We have one location here at the Huron Complex in Endicott where we lease 800,000 square feet. Last year, the company generated about $80 million in revenue.” Five members of the Matthews family and the estate of Matthews’ father comprise the corporate stockholders.
Reorganization
“Since reorganizing the company, our goal has been to right-size the firm and be competitive,” says Nead. “We needed to stabilize our operation and convince both the employees and our customers that our strategic plan is working. One of our major expenses was the fact that, in 2013, EIT was leasing 1.2 million square feet with a very high energy cost. Much of our effort has been to right-size the facility. Within the next 18 months, we expect to further reduce our footprint from 800,000 to 400,000 square feet. This right-sizing effort has helped to put us on a very competitive footing.”
The reorganization also included a major investment to make the operation more efficient. “Our capital investment from 2013 to 2016 will total $10 million,” notes Matthews. i3 Electronics has run a three-shift operation, 7 days a week, since November 2014.
Highly competitive fields
“This is a very competitive business,” opines Nead. “We compete with a number of international firms in all of our fields. To stay ahead of the competition, we focus on the technology that we put into our products and on their reliability. The fact that we are vertically integrated means that we understand all aspects of making the product and offer a quicker time-to-market for our customers. R&D is at the center of our efforts to reduce the size, weight, and power consumption of our products.
That’s why we employ close to 10 percent of our workforce in that area.”
i3 Electronics holds 107 patents.
“The effort is paying off,” affirms Matthews. “We have stabilized the company and both diversified and expanded our activity and customer base. The confirmation comes from long-term, contract renewals.”
Matthews and Nead ascribe much of the company’s reorganization success to its leadership team. In addition to Matthews and Nead, Jim Thornton is vice president of operations; Mike Cummings is director of engineering; and Matt Neely is the engineering manager. i3 Electronics also recognizes support from professional-service companies: M&T Bank for financial-services support and Davidson Fox & Company, LLP for accounting.
But the CEO and president reserve special recognition for the company’s employees. “We have an exceptional talent base of engineers, scientists, innovators, and operators” stresses Nead, “that we draw on largely from the local community. We collaborate closely with area institutions of higher education, such as Binghamton [University]. The company has had a successful summer-internship program that goes back 20 years. The talent here at i3 Electronics really gives us a competitive edge.”
The company has growth on its mind now that it has righted the operational ship.
“Now that we have stabilized the company and reduced our cost of operation, our strategy is to grow our customer base, revenues, and profit,” states Matthews. “We no longer rely heavily on revenues from large projects in the aerospace and defense industry. To use a baseball analogy, it’s clearly better to rely on hitting singles and doubles consistently rather than to rely on home runs for our success. Our strategic plan calls for organic growth going forward, but we are always looking at opportunities to grow through mergers and acquisitions, if the fit is right. In fact, we have already looked at a few and elected not to proceed. The future is bright: Robert and I are confident that by 2016, i3 Electronics is poised to grow at a 15 percent, annual compounded rate.”
Nead has a bachelor’s degree in material science and metallurgical engineering from the University of Cincinnati and an MBA from Dunchurch College in Warwichshire, England. He has more than 30 years of technical and managerial experience working mostly in regulated industries such as the telecommunications and medical fields. His former employers include Atlantic Inertial Systems, Goodrich Corp., GEC Marconi, and International Harvester.
Endicott Interconnect Technologies was formed in 2002 to buy the electronic-packaging business from IBM Corp. The severe recession of 2008 caught the company overly dependent on major contracts with the U.S. Department of Defense and some of its vendors. EIT suffered cumulative, financial losses of $100 million from 2009 to 2012 and filed for bankruptcy protection on July 10, 2013. Papers filed with the court showed assets of $36 million and liabilities of $86.9 million. On Sept. 26 of that year, Integrian Holdings, LLC, a corporation owned by J.T. Matthews, Jr., purchased EIT’s assets by assuming $15 million of secured debt and paying $1.5 million to creditors and another $2.4 million for EIT’s expenses. The purchase was approved by the court on Nov. 1. As recently as 2012, EIT employed 1,000 people and generated $250 million in annual revenue.
While mythology describes the phoenix as a bird of renewal, the Book of Job also calls the phoenix a bird of long life. Matthews and Nead are convinced i3 Electronics is both.
Editor’s note: CNYBJ spoke with Nead and Matthews on Feb. 10. On March 3, the company announced in a letter to employees that Nead is stepping down from his position as president, effective March 6, now that the company’s “turnaround is complete.” Matthews assumes the president’s post in addition to his current CEO job.