Elan: Many Small Manufacturers Will Fail in 2011
By Jason Knott
President of Elan Home Systems says manufacturers with less than $20M in revenue are “high risk” for collapse.

Is the industry preparing for a deep shakeout of manufacturers? Yes, according to Paul Starkey, president of Elan Home Systems, part of Nortek’s Linear AVC group.

“Unfortunately, we are going to lose manufacturers in the next 12 to 24 months,” he says in an interview with CE Pro. “Any manufacturer under $20 million in revenue I would categorize as being in a high-risk group. They still have to provide the same functions [i.e, technical support] as an $80 million or $100 million company, but they really can’t scale their costs down.”

He continues: “There is going to be a shakeout. Companies with 40-percent to 50-percent revenue declines over the past few years do not have access to financing. They will be forced to close up shop.

“These past two years have been a real test. The financial restraints on manufacturers have been hard. Companies needed to have deep reserves to survive. Those with strong financial backing have a big advantage in terms of investment and growth,” he adds.

The industry has recently seen several manufacturers or brands pack it in, including Escient, Snell Acoustics, Imerge and most recently Sequel Technologies.

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