18.06.2006

Thomas fires CEO

On Thursday last week, the directors of Thomas Equipment terminated the employment of the company’s president ad chief executive officer, Clifford Rhee “for cause”. The board also accepted his resignation as a director, effective immediately.

The board of directors also approved “a broad-based restructuring to evaluate all corporate business activities, identify any operating and management deficiencies and immediately begin addressing all issues”.

The company says that the major restructuring is designed to provide Thomas Equipment with appropriate management and financial resources to address short-term needs and execute longer-term strategic opportunities.

James Patty, the current chief operating officer, who only joined the company on May ninth, will act as interim CEO. Patty has also been given the task of leading the restructuring.

Patty has spent a good deal of his working life in Pacific Rim and South America countries for US based corporations including: CalComp, a Lockheed subsidiary, Motorola, GET Manufacturing, AlphaSource, Allied Telesis, MAXTOR, Four Phase Systems.


"The board of directors believes this action is consistent with the restructuring plan that was previously announced," said David Marks, chairman of the board.
We began this significant initiative because the company has failed to generate the desired operating and financial results," said Marks.

"We believe that significant changes are required to revitalize the company to maximize operating efficiencies and future financial performance."

"The restructuring plan will take approximately six months to complete, during this time, we plan to provide our customers, suppliers, distributors, employees, creditors and investors with regular updates regarding our process. We thank each for their ongoing support, patience and understanding," said Patty.

Vertikal Comment

Thomas equipment was founded in 1943 and in recent years has made its name with skid steer loaders and mini excavators. It has an OEM agreement with Hyundai and operations in the Far-East and Belgium.

Earlier this year the company entered the telehandler and rough terrain forklift market with the completion of the purchase of a small Canadian producer, Tovel. The company plans to launch the Tovel product through the Thomas dealer network, including those in Europe, as well as supplying badged versions to partner Hyundai.
See Thomas enter telehandler market the first units were shipped to Hyundai in April.

Clearly all is not well, the reasons for Rhee’s sudden departure may well become clear later on. Competing in the Skid Steer and mini excavator markets, against formidable global competitors is no walk in the park.

Thomas, which is likely to report revenues in the region of $130 million for its year to the end of June, substantially up on 2005, is loosing money on its normal manufacturing operations.

It is also reporting massive swings in its exposure to derivative instruments, which resulted in a $27 million contribution in its latest quarter, but incurred an almost $60 million loss in the same period last year.

The company also has significant exposure to two large debtors in the Pacific Rim for purchases of hydraulic breakers and forklifts.

The Tovel acquisition follows on with the Thomas tradition of competing in markets dominated by global players with strong brands.

Watch this space.