WALLA WALLA - Key Technology is cutting about 40 jobs, most of them in Walla Walla, and reducing salaries to stay profitable and conserve cash, the company announced Thursday.
Key, a global leader in designing and manufacturing process automation and sorting systems particularly for food processing, is one of the dozen top employers in the Walla Walla Valley, with about 400 workers.
The publicly traded company plans to cut about 7 percent of its work force globally, said Dennis Hopwood, vice president of Human Resources at Key.
Last fall, the company reported having 612 full-time employees, with 140 of those working outside the U.S. Key Technology has offices in Oregon, Netherlands, Mexico, China and Australia.
The cuts are part of cost-reduction initiatives that include canceling cash and stock incentive awards and suspension of a 401(k) match for employees.
"We believe we've taken appropriate actions today, but there's no certainty what the future may hold," Hopwood said.
Economic uncertainties have made many of Key's customers to delay their orders, said Jack Ehren, Key's senior vice president and chief financial officer.
About 50 percent to 60 percent of Key's market is in North America and about 25 percent to 30 percent in Europe, Ehren said.
The company expects net sales in the second fiscal quarter to be down 10 percent to 15 percent, compared with the first fiscal quarter in 2009. But despite lower sales, the company expects to be modestly profitable in fiscal 2009, which ends in September.
Net sales in the first quarter dropped 5 percent to $27.4 million from a year ago.
Also, Key's expansion plans are on hold, Ehren said.
Last year, Key Technology bought the 172,600-square-foot building it leased from the Port of Walla Walla and the 20-acre campus at the Avery Street Industrial Park for $6.5 million.
Key trades on the NASDAQ stock exchange, and its stock prices have fluctuated from $7.10 to nearly $40 in the last year. On Thursday, the share price closed at $10.
Key still is a strong company with a strong balance sheet, Ehren said. "We're optimistic about the future."