Business News
Herley Chairman Announces Organizational Changes
Wednesday 07. May 2008 - Herley Industries, Inc. (NASDAQ:HRLY) Chairman and CEO, Myron Levy, released the following statement today:
“As we have previously announced, Herley Industries, Inc. and our former Chairman, Lee Blatt, have both settled our long-running dispute with the Justice Department within the last few days. With this issue finally behind us, the Board of Directors and management will turn our full attention to managing the Company.
With our goal firmly set on improving the profitability of the Company, we will significantly downsize our manufacturing facility in Farmingdale, New York as quickly as possible and transfer the bulk of its workload to our other facilities in Whippany, New Jersey; Woburn, Massachusetts; Lancaster, Pennsylvania; and Jerusalem, Israel.
While it is never pleasant to take this kind of action, it is necessary at General Microwave Corp. (GMC), which does business as Herley-Farmingdale. Despite our efforts to update and improve their operations, our Farmingdale facility has continued to report losses, quarter by quarter to Herley. This facility has been the single, largest contributor to poor corporate operating performance, and we simply cannot allow it to continue.
In 1999 we acquired GMC primarily to gain two assets that our Company needed. One was the microelectronics facility in Billerica, Massachusetts. That capability was quickly transferred to our existing facility in Woburn. The transfer was done well, and that hybrid business has been a vital, integral part of our overall operations. They supply other Herley facilities with the electronics that permit dumb bombs to become smart bombs, driver circuitry for multi-throw switches and most notably, the intelligence for the Sensor Fused Weapon (SFW).
General Microwave Israel (GMI), a subsidiary of GMC, was the second asset that we wanted in acquiring General Microwave. Herley’s emphasis on international business is well known to our long-term shareholders. Beginning with our acquisition of Vega Systems in 1993, which gave us a presence in 22 foreign countries, we have worked hard to make our international business at least 33% of our overall business. We wanted the Israeli technical capability, and we wanted better access to European and Asian markets. In that regard, we succeeded admirably. Under the able leadership of Yonah Adelman, GMI has consistently been the highest profit producer within the Herley family, when measured as a percentage of total revenues. It is estimated that GMI this year will produce revenues that are approximately five times those at the time of our acquisition of GMC.
Herley Industries, Inc. is one of the world’s premier microwave companies. To retain that position, we must constantly evaluate our strengths and weaknesses. We have four other facilities that can produce the business of Farmingdale. We believe that they can produce it better, faster, and more profitably. Farmingdale will remain a marketing office, with certain engineering prototype assets.
We are actively engaged in improving the efficiency of our operations, with a significant focus on performance improvements. This will include personnel adjustments as needed, such as the recent layoff at our Lancaster facility. We are convinced, however, that scaling back our Farmingdale facility is the next step toward improved profitability and increased shareholder value.”