TTM Technologies, an American electronics and printed circuit board manufacturer, announced serious layoffs and the closure of three plants in different parts of the United States. Thus, the production facilities in Anaheim and Santa Clara (California) and one plant of the company in Hong Kong will be stopped.
Part of the lines will be transferred to other plants of the company as part of the production optimization. The main objective is to increase utilization of the remaining plants, optimize costs and reduce production costs. TTM Technologies has a total of 24 plants and a staff of 17 thousand people.
TTM Technologies is a major American manufacturer of industrial electronics, printed circuit boards and equipment. Since February 2013, the company has been traded on NASDAQ and has transparent reporting for investors and customers.
So, according to the company's 2022 reports, TTM Technologies had total revenue of a pretty impressive $2.495 billion with gross profit of $457.9 million. The company had similar numbers for 2021 - $2.248 billion in turnover and $372 million in gross profit.
Looking at the company's quarterly revenue for the past two years, we can see that TTM Technologies has been doing well: in the fourth quarter of 2022, TTM generated $617.2 million in revenue compared to $598.1 million a year earlier.
That said, TTM Technologies' business can hardly be called high margin. After all operating and tax deductions from gross profit, the company's fourth quarter 2021 net income was only $8.3 million, and in the fourth quarter of 2022, when sales and gross profit growth are taken into account, it was down to $6 million.
If you subtract the gain from the sale of the company's assets in 2022, TTM Technologies' total net income was down almost 20% to $42 million from $54 million in 2021. Another $51 million came from the sale of assets.
The cuts at TTM Technologies indicate that the recessionary spiral that began to spiral back in late 2021 has also reached industrial manufacturers. Whereas a year earlier it was consumers and consumer-related companies that felt the effects of the slowdown, followed by B2B services (we previously wrote about employee layoffs at the Big Three), now it is manufacturers.
The TTM Technologies situation is a telling example: this is a fairly large and old public company that has been successful in its niche for decades. TTM prints boards for microwave equipment, works with U.S. defense, aerospace, telecom providers, medical device development, automakers, and, of course, the infrastructure part of computer systems in the form of data center equipment. In fact, the products of TTM Technologies are present in all modern industries and technological areas, where printed circuit boards as such are present at all. TTM engineers not only design and create the components for devices, machines, assembly lines or data centers, but also write control software for them, which is reflected on the company's website.
TTM management notes that the demand for their products and solutions for aerospace and defense industries remains high, but in other sectors, given the current macroeconomic situation, there is a decline. This is forcing the company to optimize its business operations. Separately, the board of TTM Technologies records a decrease in the growth rate in the data center segment, which is a logical continuation of the situation in the cloud market and layoffs by Internet giants. Whereas in 2021 this segment accounted for about 25% of revenue, in 2022 it will account for only 16.7%. This year, according to the forecast, this value may drop to 9-12%.
And if such an organization, with so many economic ties and a turnover of $2.5 billion a year, puts three plants under the knife at once by transferring lines to other productions, then we are witnessing another round of economic slowdown. Only now we are not talking about layoffs of account managers, as happened in IT companies last year, but about a slowdown in all sorts of technological industries of the world's first economy.
This means that the cuts will affect the very engineers and technicians who, until recently, felt in demand and completely financially secure.