TORONTO -- Wounded by steadily declining sales, SMTC today announced it would close its factory in Suzhou as part of a larger reorganization aimed at cutting costs across the company.

The electronics manufacturing services provider also named Ed Smith president and chief executive and Rich Fitzgerald chief operating officer. Smith has been acting as president and CEO in an interim role since the early February resignation of Sushil Dhiman. 

SMTC said it expects to take $1.6 million in charges tied to a global restructuring plan to align operational functions and reduce its cost structure. The plan is expected to result in approximately $5 million in annualized savings once complete.

As part of the restructuring, SMTC will wind-down and close its Suzhou facility, a move expected to be substantially completed by the end of the second quarter. The firm will also lay off 210 employees at the its manufacturing facilities and corporate headquarters.

China was SMTC's second largest contributor, with revenues of $8.3 million in the most recent quarter. Explaining the move, the firm said, "The company has evaluated its’ Asia strategy in relation to the current two facilities in China. off In order to reduce cost, improve efficiencies and better align with target markets, the company has approved a plan to consolidate operations with the closure of its Suzhou facility. We will be transferring customers to service them with existing capacity in our other manufacturing facilities."

For its first quarter ended Mar. 31, SMTC had revenue of $33.2 million, down 26.2% from a year ago. The decrease was primarily the result of one networking and communications customer that transferred its business to other contract manufacturers. Demand also decreased with one longstanding customer, which was offset by revenue from a new customer during the quarter.

Gross profit for the quarter was $3.6 million, compared to $4.9 million in the first quarter 2016. Adjusted gross profit was $2.3 million down from $3.8 million.

The net loss was $400,000, down from net income $1 million last year. Excluding the impact of unrealized foreign exchange gain of $1.3 million on unsettled forward exchange contracts in the quarter, the net loss was $1.7 million. Adjusted EBITDA was a loss of $300,000 compared to $1.4 million.

In a press release, Smith said, “Although the financial results for this quarter are disappointing, we have developed a detailed long-term strategic plan for our company to better align our cost structure with our current operating levels. I am excited about this new phase for the company and have just signed on as permanent president and chief executive officer. We have reorganized the company to put more responsibility back in our manufacturing facilities and connect our customers directly with our factory leaders."

Fitzgerald, the new COO, fills a new position established as part of the global restructuring plan. He will be responsible for the three manufacturing facilities in Chihuahua Mexico, Dongguan China and Fremont, CA, and the engineering and supply chain groups.

Smith and Fitzgerald worked together at SMTEK. Most recently, he was global vice president of Avnet Integrated Solutions.

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