$n$ Key layoffs cost local operation 8 jobs

The company's restructuring included a 3.5 percent reduction in its total work force

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WALLA WALLA -- Key Technology Inc. has laid off eight of its Walla Walla employees as part of a global restructuring strategy announced this morning.

The designer and manufacturer of process automation systems cut 3.5 percent of its global workforce Thursday, Key President and Chief Executive Officer David Camp said. The staffing reduction was mostly concentrated in China but included management and technical positions at the Avery Street plant, he said.

The move was intended to increase efficiencies by consolidating internal operations under a smaller number of managers.

"We did that in a number of circumstances -- to look at our alignment and make things as efficient as possible," Camp said today.

Camp said no more layoffs are expected for the firm, Walla Walla County's 10th largest employer with roughly 460 workers. But he said "there's a great deal of uncertainty."

"The global economy right now is as uncertain as I have ever seen it," he said.

The reductions come just ahead of the company's Oct. 12 unveiling of its 31,500-square-foot Innovation & Solutions Center. The Poplar Street facility, transformed from a former furniture store in a $1.5 million-plus overhaul, has become Key's customer visitor center for everything from demonstrations to meetings.

Key continues to receive a large number of orders for its electro-optical inspection and conveying systems, Camp said. However, the company estimates net sales for the fourth quarter of fiscal 2011 ending today and to be announced Nov. 10 will be about 15 percent lower than the comparable period from 2010. That's primarily due to delays in customer delivery schedules, Camp clarified in the announcement. The company is projecting an after-tax net loss of $900,000 for the fourth quarter.

Orders for that same period or expected to be between $34 million and $36 million. A significant portion of the ending backlog is scheduled to shop after the first quarter of fiscal 2012, Camp said.

He said all of the laid off employees were offered severance packages of varying value based on position and length of service.

The company expects to take a pre-tax charge of $1.1 million against earnings for termination benefits related to the cuts.

Affected employees were told the news Thursday before today's announcement.

The layoffs are Key's first major job reduction since 2009, when the firm made two sets of cutbacks.

Vicki Hillhouse can be reached at vickihillhouse@wwub.com or 526-8321.

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