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Nortech to close Merrifield plant, affecting 60 employees

The Merrifield location is also selling and then leasing back manufacturing facilities in Bemidji and Mankato with expectations of net proceeds, minus expenses and taxes, of about $5 million.

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Nortech Systems Wednesday, Aug. 12, in Merrifield. Kelly Humphrey / Brainerd Dispatch
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MERRIFIELD — Nortech Systems is closing its Merrifield plant in part to lower overhead costs and shifting that work to other Minnesota locations.

“Given the challenging economic environment, we are pleased with the significant improvement in operating profitability for the second quarter, our sale and leaseback agreements with Essjay and the Company's plans to drive PCB manufacturing productivity,” stated CEO and President Jay D. Miller in a news release. “Our balance sheet continues to strengthen, and the sale leaseback and plant consolidation will provide significant liquidity to make further investments in the business. Our goal through these essential moves is to enhance Nortech’s ability to operate through the current COVID-19 pandemic and succeed long term.”

The Merrifield location is also selling and then leasing back manufacturing facilities in Bemidji and Mankato with expectations of net proceeds, minus expenses and taxes, of about $5 million.

The company reported it entered into the sale and leaseback agreement with Essjay Investment Co. with a 15-year lease and renewal options. Nortech then said improved operational efficiencies as well as saving money were behind the announcement for the closure of the Merrifield plant, which will affect 60 employees. Wire and cable assembly, system-level assembly and printed circuit board manufacturing will be shifted to the other sites.

“The Merrifield production facility consolidation is expected to be complete on or before December 31, 2020, and will impact approximately 60 employees, who will be offered positions at other Nortech facilities in Minnesota. Additionally, by the end of 2020, the company will shift its PCB manufacturing from its Monterrey, Mexico, location to its Mankato, Minnesota production facility, Nortech's PCB center of excellence,” the company reported.

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Nortech Systems is a leading provider of design and manufacturing solutions for complex electromedical devices, electromechanical systems, assemblies and components. Nortech Systems primarily serves the medical, aerospace and defense and industrial markets. Its design services span concept development to commercial design, and include medical devices, software, electrical, mechanical and biomedical engineering.

Nortech, a leading provider of engineering and manufacturing solutions for complex electromedical and electromechanical products serving the medical, aerospace and defense and industrial markets, reported net sales of $26.5 million for the second quarter ending June 30, compared with $27.3 million for the second quarter of 2019.

“Operating income for the second quarter of 2020 was $49,000, which compares with an operating loss of $1.2 million for the second quarter of 2019,” Nortech reported in a statement. “Net loss for the second quarter of 2020 was $123,000, or $0.05 per diluted common share. This compares with a net loss for the second quarter of 2019 of $1.6 million, or $0.58 per diluted common share. Nortech's backlog at the end of the second quarter 2020 was $46.6 million.”

Nortech, a leader in electro-magnetic products for Minnesota and around the world, had seven locations around Minnesota in 2016, each one specializing in its own set of core products. About five years ago, the Merrifield location had 87 employees and was running two shifts in the 47,000-square-foot operation.

Related Topics: MERRIFIELDMANUFACTURING
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