With Electronics Manufacturing Group (EMG) in an accelerated growth phase and the electronics manufacturing services sector flourishing, the Calgary-based company announced last week the departure of its president, Dave King.
Although the timing seemed odd, particularly with EMG, a publicly traded company on the Canadian Venture Exchange, on the verge of moving to the Toronto Stock Exchange, chief executive David Snell played down the news.
“This is something we had foreseen for some time,” said Snell, who has assumed the role of president on a permanent basis. “It was a mutual understanding between Dave and I. Both parties regret that a difference in philosophy as to management style has resulted in a parting of ways.”
King, who had held the post for two years, did not return phone calls.
“This will not have an impact on our operations,” said Snell, who is also vice-chairman of the company that provides product development and delivery services to the global technology and electronics industry.
The market didn’t react negatively, with the share price gaining six per cent on the day of the news and closing the week strong at $4.62, despite a week-ending selloff of technology stocks.
EMG will be listed on the TSE on Friday (Feb. 9). Snell was on Bay Street this week promoting EMG to brokerages.
“We’re meeting with financial groups and poised for a great year. We’re hoping that the TSE listing will increase the liquidity of the stock. The demand for our services is increasing to a point where our sales force is having a hard time keeping up.”
Many analysts have been touting electronics manufacturing service (EMS) companies as cosy shelters in a grim economic climate of slowing sales. EMS companies have been benefitting from financial distress of electronics manufacturing companies, many of which have been out-sourcing their work.
The increase in out-sourcing has already paid dividends with big EMS companies such as Celestica. While Snell, a former vice-president of Wi-LAN, was promoting his company — dubbed Canada’s “baby Celestica” — Celestica, a Canadian company, was telling analysts to expect revenue of $12.5 billion to $13 billion US in 2001.
EMG has a niche market, primarily targeting smaller or mid-tier companies as its customers.
“As the economy cools, it forces people to rationalize their operations and go to outsourcing,” said Snell, adding that his company will also benefit from the one-per-cent reduction in interest rates by the U.S. Federal Reserve.
EMG was recently recognized by Alberta Venture Magazine as the province’s sixth-fastest growing company, with growth of 3,681 per cent from 1997-99 and the province’s fastest growing manufacturing company. The company has yet to reach profitability. Financial results are due to be released Feb. 14.
