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As a design engineer for a leading contract manufacturer or OEM of circuit boards, your challenge is to get products to market as quickly as possible with the latest technology and highest quality. Off-the-shelf approaches won't work. You need customized solutions delivered as specified on time to insure a competitive edge. Our goal is to exceed our customers' expectations every step of the way, and to be a long-term partner who is a pleasure to work with. In other words, we aim to be the world's best interconnect company.
Merix Corporation is a leading manufacturer of advanced printed circuit boards that are used in sophisticated electronics equipment. From its manufacturing plant in Forest Grove, Oregon, Merix serves the communications, computer, and test and industrial instrumentation markets, supplying 'interconnect' devices that link microprocessors, integrated circuits, and other components. The company derives approximately three-quarters of its annual revenue from sales to the communications and computer markets.
Merix was born from the corporate structure of Tektronix, Inc., a troubled Fortune 500 company that freed itself from several of its divisions as part of a reorganization plan implemented during the early 1990s. Before being beset by the problems that triggered Merix's formation, Tektronix had developed into one of Oregon's most important and largest enterprises. Founded in 1946 and based in Beaverton, Oregon, the company established a lasting presence in the business world by developing a way to accurately measure and display high-speed electrical signals. Tektronix's pioneering developments in the testing, measurement, and calibration of electric signals served it well during the postwar period, creating one of the largest concerns of its kind in the country. The company leveraged its mainstay business to branch out into other businesses, notably the formation of a circuit board operation in 1959.
Tektronix's circuit board business blossomed in the years to follow, eventually earning distinction by occupying a separate facility in 1983 in Forest Grove. From Forest Grove, the circuit board division served a distinguished clientele, supplying products to IBM, NCR, and Rockwell International, among others. Tektronix, meanwhile, was beginning to show its age. Throughout the 1980s, the company was hobbled by declining sales from its core products and, significantly, its strategic focus became blurred by numerous side ventures. Tektronix management took action in the early 1990s, and part of the solution for the company's ills was the creation of Merix.
As Tektronix entered the 1990s, its chief executive officer and chairman, Jerry Meyer, began formulating a plan to rid his company of the unflattering tag of a moribund former powerhouse. An important part of his plan hinged on narrowing the company's focus on its core product lines. Those businesses deemed outside the company's strategic pale were to be either divested or spun off as separate entities. To assist him in his restructuring efforts, Meyer hired John Karalis, a former vice-president and general counsel at Apple Computer, Inc. who joined Tektronix in 1992 as vice-president for corporate development. Karalis was one of the first of a group of former Apple executives who migrated to Tektronix in the early 1990s, a group that included Deborah Coleman, an 11-year Apple veteran who joined Meyer and Karalis in 1992 as vice-president of materials operation.
By the time Coleman joined Tektronix to head the company's circuit board division, she was already a renowned figure in the corporate world. A native of Providence, Rhode Island, Coleman earned a Bachelor of Arts degree in English literature from Brown University in 1974 and an M.B.A. from Stanford Business School four years later. During college, she worked at Texas Instruments, before beginning her post-academic career at Hewlett-Packard as a financial manager. In 1981, in what she later hailed as her best business decision, Coleman joined Apple as part of founder Steve Jobs's Macintosh management team. At Apple, Coleman established her reputation as an ambitious, indefatigable, and sometimes over-ardent executive. She logged 100-hour work weeks while at Apple, drove a car bearing the personalized license plate 'GECEO2B'&mdash′oclaiming her goal to be chief executive officer of General Electric Company one day--and struck one of her greatest admirers as being 'too bossy, too loud, too rough around the edges, too everything,' as quoted in the May 1996 issue of Oregon Business. Coleman's supporters acknowledged she had a somewhat abrasive managerial style, but they also applauded her rise within the executive ranks at Apple. She started at Apple developing Macintosh and LaserWriter products, before being selected to manage the Macintosh manufacturing plant. Coleman was named vice-president of operations and later, at the age of 34, she became the youngest chief financial officer of a Fortune 500 company in the country.
Merix's 1994 Spinoff
Not long after Coleman joined Tektronix, Meyer and Karalis began implementing their plan to spin off non-strategic internal components operations. The restructuring that ensued included the sale of Tektronix's ceramic packaging operation to VisPro Corp., a combination joint venture and divestiture of its integrated circuits operation, and the spinoff of its Forest Grove circuit board manufacturing plant. Coleman was selected to serve as the chief executive officer and chairperson of the new company created by the March 1994 spinoff, a company named Merix Corporation that began as a $78.5-million-in-sales company. Although Merix was created as a distinct business, its ties to Tektronix remained strong after the spinoff. Tektronix ranked as Merix's largest customer, accounting for nearly half of the circuit board maker's sales immediately following the separation. Further, Tektronix owned a considerable portion of Merix. Merix converted to public ownership in June 1994, with Tektronix retaining a 43 percent interest in its former division.
Despite Merix's financial connections to its former parent company, the Forest Grove-based concern was an independent enterprise capable of standing on its own in its industry. The company was a leading supplier of printed circuit boards, backplanes, and flexible circuits--devices referred to as 'interconnect' products because they are used to link microprocessors, integrated circuits, and other components. Armed with approximately $30 million raised from Merix's initial public offering, Coleman was intent on greatly increasing the company's stature, hoping to create a $500-million-in-sales business by the end of the 1990s. She wasted little time adding to the production capacity and technological expertise of the firm, acquiring a printed circuit board manufacturing facility in Loveland, Colorado, from Hewlett-Packard in 1995. The following year, Coleman acquired the Soladyne division belonging to Rogers Corporation. The acquisition gave Merix a printed circuit board manufacturing facility in San Diego, California. Following the Soladyne acquisition, Merix's sales reached $155.6 million, nearly twice the amount collected two years earlier when Coleman was just beginning to navigate on her own.
Faltering in the Late 1990s
As Coleman prepared for further expansion during the late 1990s, her hopes were dashed for a spurt of explosive growth to catapult the company toward the $500 million mark. Merix, like other companies in its industry, was buffeted by the collapse of markets in the Far East. The impact of the Asian economic crisis was exacerbated by an industrywide oversupply of electronics components, causing scores of electronics firms to adopt defensive postures. Coleman was forced to retreat as well, as Merix's profits plummeted in 1997 and again in 1998. As the industry downturn dragged on, Merix's losses increased, prompting Coleman to scale down the company's operations, lay off workers, and cut costs wherever possible. A $28 million restructuring program was begun in mid-1998 that saw the company shutter its manufacturing facility in Loveland in October 1998. Coleman conceded that the acquisition of the printed circuit board facility was the worst business decision of her career, declaring that she had paid too much for the plant. Coleman also rid Merix of its manufacturing facility in San Diego, selling the former Soladyne business in early 1999 to Tyco Printed Circuit Group Inc., a subsidiary of Tyco International Ltd.
Shortly after Merix's structural changes were complete, the company underwent managerial changes. In the midst of the restructuring process, Mark Hollinger, the company's senior vice-president of operations, was named chief operating officer. In May 1999, Hollinger was promoted to president and promised the chief executive position by September 1999. His ascension was triggered by a decision Coleman made in January 1999 to step down as Merix's chief executive officer, ending her reign five years after it had begun. Coleman professed a desire to devote more time to investing in emerging technology companies, but she was expected to remain Merix's chairperson until at least 2001. Hollinger, meanwhile, inherited a company poised to emerge from a worldwide surfeit of circuit board manufacturing capacity.
As the company waited for conditions to improve, having done what it could to position itself for the market's return to equilibrium, Hollinger declared his intentions to diversify Merix's customer base and to pursue strategic alliances with other concerns in the electronics industry. At the time he took the helm as president in May, there were already signs that recovery was on its way. Merix completed the expansion of its Forest Grove facility, a project that had commenced at the beginning of 1998, and began to hire employees after months of trimming its payroll. By late 1999, when Hollinger added the title of chief executive officer, there were tangible signs of recovery on the company's balance sheet. During Merix's second quarter in fiscal 2000, which represented the last months of calendar 1999, the company recorded $1.2 million in net income, a figure that compared favorably to the $1.9 million loss registered during the same period a year earlier. A significant contributor to the financial results was increased orders from manufacturers of communications equipment, a market segment that grew from 30 percent to approximately 50 percent of Merix's revenue during the previous year. The company's stock recorded an encouraging gain as well, increasing from $5 per share in May 1999 to $14 per share by the end of 1999.
As Merix entered the new century, the company appeared to have put the difficult years of the late 1990s behind it. One positive outcome of the industrywide downturn was the consolidation it triggered, as a form of corporate Darwinism played itself out. Those printed circuit board manufacturers that proved less resilient to the harsh market conditions either exited the business or were acquired by other firms, thereby reducing the number of competitors Merix faced as it plotted its course in the 21st century. Hollinger, who continued to steer the company toward an increased presence in the data communications and wireless communications markets, stood to gain from the return to more favorable market conditions. 'The order rate for high-technology printed circuit boards continues to be very strong,' he noted in a June 19, 2000 interview with Electronic News, 'and capacity in the industry is definitely tightening. Demand from both new and existing customers in the communications market segment is driving much of our sales growth.'
As Hollinger formulated his strategy for the future, the judicious expansion underway in mid-2000 buoyed hopes for strident growth in the years ahead. The company's prospects brightened in July 2000 with the announcement of a $65 million investment that was expected to exponentially increase production capacity. Combined with a $25 million expansion of the Forest Grove plant that was announced in May 2000, the additional infusion of capital was expected to double production capacity by mid-2003. With its stature set to increase significantly, Merix pressed forward, intent on remaining an industry leader in the years ahead.
Principal Subsidiaries: Forest Grove Operation.
Principal Competitors: Flextronics International Ltd.; Hadco Corporation; Micron Technology, Inc.; Tyco International Ltd., Viasystems Group, Inc.
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