Ducommun Will Sell Real Estate to Raise Cash
Ducommun Inc., a money-losing aerospace contractor, said Wednesday that it plans to sell unused real estate in Texas, Oklahoma and California to raise much needed cash.
Norman A. Barkeley, Ducommun’s chairman and chief executive, told shareholders at the company’s annual meeting in Long Beach that he is not sure how much Ducommun would receive from the property sales. He said the proceeds would be used to reduce the Carson-based firm’s $67.9-million debt.
Besides selling the property, Ducommun is also negotiating to sell its Tri-Tec Engineering unit, a maker of cable assemblies for the computer industry. According to the company’s annual report, Tri-Tec’s assets have a book value of $2 million. The subsidiary operates plants in Gardena and Tijuana, Mexico. Barkeley said there are no plans to sell any of the company’s other assets and that Ducommun itself is not for sale.
Suffering from cost overruns, production problems and bloated inventories, Ducommun has lost money for four years straight. Those losses, totaling $77.4 million, have wiped out the company’s net worth, which now stands at a negative $9 million.
Barkeley, former chairman and chief executive of Lear Siegler, joined Ducommun last summer and became its chairman in January. Since arriving at Ducommun, Barkeley has replaced most of the firm’s top managers and has slashed employment to 985 from 1,200.
Trying to sound upbeat, Barkeley told shareholders Wednesday that many of Ducommun’s problems are “over and behind us.” Nonetheless, he said, the state’s oldest company--founded in 1849--faces “a long road back” to financial health. The company’s precarious financial condition, he said, “leaves very little leeway for unforeseen adversity.”
Barkeley said the company is working hard to produce a profit in its second fiscal quarter, but he declined to predict the results. Ducommun earned $360,000 during the first quarter of this year.
Donald R. Schort, Ducommun’s chief financial officer, said in an interview after the meeting that the company has raised prices on many of its products, some by as much as 20%. He said Ducommun’s other operating units--Jay El, Aerochem, and AHF Ducommun--have underpriced many of their products and in some cases were taking losses on them.
Ducommun’s principal customers are the government and commercial airplane builders. Its units produce switches for aircraft instrument panels, conduct chemical processes on metallic parts for aircraft, and fabricate and shape parts.
Alan N. Ducommun, a former director and grandson of the company’s founder, Wednesday praised Barkeley for “turning the company around.” Despite the bad news, Ducommun said the 30-minute annual meeting was the most upbeat session he had attended in many years because the firm is showing at least a few signs of recovery.
