American Custom Components Closes

Santa Ana-based American Custom Components Inc. has closed its doors and moved to liquidate its assets, company executives said Tuesday.

A manufacturer of components for the military and the telecommunications and computer industries, American Custom fell victim to a mountain of debt and falling prices for its products.

“We were trying to turn around the situation here but couldn’t do it,” Chief Executive Edward Loyd said. “I found myself spending three-quarters of the day fighting creditors. You can’t run a business like that.”

At its peak in 1996 and 1997, the company employed 95 workers and counted powerhouses such as Western Digital Corp., Seagate Technology Inc., Motorola Inc. and Raytheon Co. among its customers. It also did a booming business in the Far East, where there was great demand for its customized connectors, Loyd said.

But the Asian financial crisis knocked the company’s two biggest Asian customers out of business in early 1998, dealing American Custom a major setback. The company’s problems were compounded when Western Digital and Seagate, both increasingly under price pressures themselves, began offering American Custom less and less for its products, Loyd said.

“The market began to squeeze us,” he said. “We could no longer make a profit.”

In mid-1999, Western Digital and Seagate both dropped American Custom as a supplier, turning to cheaper vendors, Loyd said. Western Digital had accounted for about 43% of the company’s revenue.

Sales plummeted from $2.5 million in 1997 to $1.3 million in 1998 and dropped to about $600,000 in the last fiscal year ended March 31. The company would not reveal the extent of its losses.

“They took a massive hit in sales, started to lose money and couldn’t service their unsecured debt,” said James Bastian, the attorney representing the company in the bankruptcy proceedings.

American Custom ceased production last November. Employee layoffs began last March, when new management took over and continued until six workers remained, Loyd said.

Seeking to liquidate its assets, the company filed a Chapter 7 bankruptcy petition in U.S. Bankruptcy Court in Santa Ana on Friday. The petition listed nearly $70,000 in assets and about $1.8 million in liabilities.

Its stock recently traded at 2 cents a share on the over-the-counter market. The shares have lost 95% of their value over the past 12 months.

Loyd said he and a British investment group took a majority stake in American Custom last year for $700,000.