Nortech Systems (NSDQ:NSYS) announced this week that it will shutter one manufacturing plant and sell two others to lease them back following a tough year for the business.
Maple Grove, Minn.-based Nortech said Tuesday that it will close its plant in Merrifield, Minn., by December 31, 2020, and offer that plant’s 60 employees jobs at its other Minnesota operations. The company also plans to shift the Merrifield plant’s wire and cable assembly, system-level assembly and printed circuit board (PCB) manufacturing to its other Minnesota locations.
Nortech said it has agreed to sell its factories in Bemidji and Mankato, Minn., to Essjay Investment in the third quarter of 2020 for approximately $5 million and lease them back to continue operations. By the end of 2020, the company will shift PCB manufacturing from its Monterrey, Mexico, location to Mankato. Nortech, which has been in Mexico since 2001, moved its Monterrey operation to a space that was twice as large in 2018.
Nortech reported a loss of $123,000 or -5¢ per share on sales of $26.5 million for the quarter ended June 30, 2020, compared with a loss of $1.6 million or -58¢ per share for the same quarter of 2019, when it registered sales of $27.3 million. The company, which sells to the medical, aerospace and defense industries, reported a production backlog of $47 million at the end of Q2 2020.
“Given the challenging economic environment, we are pleased with the significant improvement in operating profitability for the second quarter, our sale-and-leaseback agreements with Essjay and the company’s plans to drive PCB manufacturing productivity,” Nortech president & CEO Jay Miller, said in a news release. “Our balance sheet continues to strengthen, and the sale leaseback and plant consolidation will provide significant liquidity to make further investments in the business. Our goal through these essential moves is to enhance Nortech’s ability to operate through the current COVID-19 pandemic and succeed long term.”
Nortech currently has seven manufacturing locations and design centers across the U.S., Latin America, and Asia.
