Feeling the pinch of high operating costs from its U.S. Elevator subsidiary, Cubic Corp. on Monday reported a slight drop in earnings for the second quarter ended March 31. It was the second consecutive quarter of decreased profits at the high-technology electronics and defense contracting company. Second-quarter net income dropped 1.2% to $4 million on sales of $82.2 million, up 17%.
For the six months, earnings decreased 4.4% to $7.7 million on sales of $153.5 million. The sales were up nearly 14% from the same period the year before.
Benefits from a management consolidation at U.S. Elevator have not yet affected the company’s bottom line, according to Cubic spokesman Jerry Ringer.
Of Cubic’s three main operations, the elevator division ranks second in terms of sales but last in terms of operating profits.
In an attempt to cut costs, U.S. Elevator next month will lay off about 100 workers from its Spring Valley manufacturing plant and transfer an equal number of jobs across the border to Mexicali.
Most other elevator companies have shifted operations abroad to trim labor costs.
Cubic now pays an average of $360 per week to U.S. Elevator workers. The average U.S. Elevator worker in Mexico will receive only about $80 a week.