200 Workers Face Layoffs : Ducommun Shareholders OK Electronics Group Sale

Times Staff Writer

Ducommun Inc. shareholders Friday approved the $125-million sale of the company’s electronics distribution businesses to Arrow Electronics Inc., a move that will cost about 200 workers their jobs, the Cypress-based firm said.

Although the sale was announced four months ago, employees did not begin receiving layoff notices until mid-December, a Ducommun official said.

Most of those affected work at Ducommun facilities and subsidiaries in Southern California.

New York-based Arrow, the second-largest electronic components distributor in the country, has scheduled a special meeting Monday for a shareholder vote on the deal, scheduled to close Jan. 12. Ducommun Chairman Wallace Booth will join Arrow’s board if the sale goes through.


Being sold by Ducommun in the stock and cash deal are Ducommun Data Systems, MTI Systems Corp. and Cypress-based Kierulff Electronics, the nation’s fourth-largest electronics distribution company. Arrow will issue between 4.1 million and 4.6 million shares of Arrow common stock, worth about $40 million, to Ducommun shareholders and will assume about $90 million in Ducommun debt.

The Ducommun employees who are to be laid off work mainly in accounting and personnel at corporate headquarters and in the three divisions being sold. They already have been notified that they will be let go between Jan. 31 and March 31 because of the sale, said Ray Pregent, a Ducommun vice president.

The majority of the electronics distribution group’s employees--about half of Ducommun’s total staff of 2,500--will be transferred to Arrow.

While most of those losing their jobs work in Cypress, employees at some of the company’s other locations in 25 states, including MTI’s headquarters in Long Island, N.Y., also have been notified that they will lose their jobs. Pregent said all of the company’s employees--including those not affected by the layoff--have been given bonuses, starting at $100, to encourage them to stay through the closure of the deal.

Ducommun, which was founded in 1849 and is California’s oldest continuously operating company, will retain its cable manufacturing unit, Tri-Tec Engineering, and will continue to produce aerospace, industrial and electronic parts at three divisions--AHF-Ducommun in Gardena; Aerochem in Orange and Jay-El Products in Carson.

Together those four business units accounted for $68.5 million in revenues in 1986.

The electronics operations being sold generated 80% of Ducommun’s 1986 revenues of $455.2 million, but also have produced most of its losses.

Ducommun shareholders will receive at least one Arrow share for each Ducommun share, with distribution to begin in mid-March, Pregent said.


Ducommun, which moved its corporate headquarters to Orange County from Los Angeles in 1986, lost nearly $39 million in 1985 and 1986 and has bank debt “in excess of $90 million,” some of which will be relieved by the sale, Pregent said.

Within the past year, the company also lost major distribution agreements with Advanced Micro and Motorola and has gone through two presidents in two years.

When the sale to Arrow was announced in September, a stock analyst described Ducommun’s decision to concentrate on its profitable aerospace businesses as one that made “a great deal of sense.”