Dec 08, 2012 (The Oregonian - McClatchy-Tribune Information Services via COMTEX) --
Five years, and five rounds of layoffs.
That's the tale of Tektronix under Danaher Corp., the East Coast conglomerate that paid $2.85 billion for Oregon's signature technology company in the fall of 2007.
Tek's sales are falling and the company is losing market share. Meanwhile, Tektronix has severed relations with Oregon's tech economy -- a sector it spawned, all by itself -- and retreated into its depopulated, 250-acre campus near Beaverton.
Employees say the latest layoffs, which coincided last month with the fifth anniversary of Tektronix's sale, have reduced the company's Oregon work force to as few as 1,000 -- half the number at the time of the deal.
Danaher, based in Washington, D.C., made itself into a $16 billion company by snapping up old-line businesses like Tek and remaking them into efficient, highly profitable subsidiaries.
Tektronix was Danaher's biggest deal ever, and it's turning out to be a big disappointment. The sale closed one month before the start of the Great Recession, and Danaher's persistent efforts to transform the company haven't been enough to overcome economic, cultural and technological headwinds.
"In terms of expected returns on the business, they have not gotten to the double-digit (percentage) returns that they set for all acquisitions," said Richard Eastman, an investment analyst who follows Danaher for Robert W. Baird & Co.
In some ways, Danaher and Tek seemed an odd match.
From the time of its founding in 1946, Tektronix had been the closest thing in Oregon to an elite research university. The company attracted engineers from across the country, promising unfettered technical exploration, and spun off an array of seedling companies that ultimately became the Silicon Forest.
Danaher, by contrast, was a relatively low-tech industrial conglomerate in 2007. It focused on buying established manufacturing companies and wringing inefficiency out with a rigid management program known as the Danaher Business System ("DBS is who we are and how we do what we do.")
Tek employees became Danaher "associates." The new owners reined in research and cut off access to information about the business that Tektronix used to share freely.
For some employees, the changes brought culture shock. To others, they were reforms long overdue.
Tektronix President Amir Aghdaei, who took over early in 2009, rarely speaks about his company publicly. That's in keeping with Danaher policy (Danaher will no longer discuss its Oregon operations, and declined to comment for this report).
Beyond its campus, top executives at Intel and other Oregon technology companies say they have no relationship with their counterparts at Tektronix. Longtime Tek employees now working at other Silicon Forest companies say they've lost touch with any former colleagues still at Tektronix.
Within the company, though, employees say Aghdaei is personally accessible and has done a good job of adapting Tek product development to customer needs rather than engineers' pet interests.
Tektronix's core business is, and always has been, oscilloscopes, a tool whose arcane name belies its crucial role in the global electronics industry. Scopes, as they're known among hardware geeks, are ubiquitous at lab benches around the globe. Engineers depend on them to measure how their inventions are performing, and test new ideas.
At its peak 30 years ago Tektronix employed more than 24,000 people. The company earned almost cult-like affection among many of those workers, who reverently recall an employer that nurtured a family atmosphere and rewarded good ideas with bonuses, investment and acclaim.
In time, though, Tektronix's accommodating approach became too much of a good thing. Far-flung product lines grew unwieldy, so Tek sold off or shut down many of its operation. Just 4,500 employees remained worldwide when Danaher arrived in 2007.
In that context, then, Danaher wasn't such an odd fit after all.
A serial acquirer, Danaher had a proven formula for buying solid, underperforming companies and wringing out waste and inefficiency. Its goals meshed with Tek's own efforts to build a more focused and more profitable company.
Many of Tek's setbacks are simply a matter of timing. Danaher bought in at perhaps the worst possible moment, as demand for Tek's venerable electronic testing equipment plunged during the recession.
Conditions improved markedly as the industry recovered in 2010 and 2011, but went sour again this year as the tech industry fell into another down cycle.
Excluding subsequent acquisitions, sales in Danaher's test-and-measurement business, which also includes Everett, Wash.-based Fluke Corp., are flat compared with where they were at the time of the sale.
Danaher won't divulge specific results for Tektronix but has indicated that it's performing worse than the test-and-measurement business as a whole.
"Core sales declined at a midteens (percentage) rate" last quarter, Danaher CEO Larry Culp said of Tek during an October conference call with investment analysts.
Danaher certainly hasn't neglected Tektronix. At least six times since buying the company it's acquired other businesses to add to Tek's product portfolio.
The current problems, in Culp's view, are a "macro call," by which he means Tek's stumbles are the fault of the global economy, not because of any problems fundamental to its business.
Others take a dimmer view.
"The general feeling is, and Danaher would not admit to this, is that Tektronix has lost some market share to (rival) Agilent over the past three years," said Eastman, the Baird analyst. "Where it seems to be is mid- to low-end oscilloscopes."
Additionally, Eastman and Tektronix employees say the company has been hurt by uncertainty over U.S. defense spending, which could drop sharply next year regardless of whether or not President Obama and Congress manage to avert the fiscal cliff.
Again and again, Danaher has responded to Tek's falling revenues with what it calls "dynamic resource allocation" -- layoffs, in common vernacular.
Follow The Oregonian's Silicon Forest Blog and its author, technology writer Mike Rogoway.
-- On Twitter: @rogoway
-- and @siliconforest
-- On Facebook
Last month, Tektronix quietly offered early retirement packages to an unspecified number of longtime employees, according to several current and former workers. Few took the company up on its offer, so it resorted to eliminating jobs in a previously unreported round of layoffs.
Tektronix won't say how many employees remain at its Washington County headquarters, but earlier statements from the company -- and public records examined by The Oregonian -- show that Tektronix cut 450 employees in three layoffs following the Danaher takeover.
It's not clear how many more were shown the door in two subsequent rounds of job cuts.
Additionally, in 2009 Tektronix required employees to take an indefinite 10 percent salary cut.
It restored full pay early in 2010, but the uncertainty about job status and wages sapped morale in parts of the company, according to employees, and drove some workers away.
Hillsboro-based TriQuint Semiconductor Corp., which makes chips for smartphones, has been a popular destination for recent Tek alums, according to employees. Others left for Rohde & Schwarz, a German instruments company with a growing presence in Beaverton.
Even before Danaher's cutbacks, Tek had retreated from large portions of its massive campus. Today, visitors say, the first thing they notice when they arrive on site is the absence of people.
Nike, whose world headquarters is essentially across the street from Tek's, now owns a piece of the campus and has its employee store there. Comcast also leases 110,000 square feet from Tek for a large call center.
Earlier this year, at Tektronix's request, Washington County updated its master plan for the site -- anticipating the possibility of redevelopment on some or all of the property. But Tek has not said it's looking to move out.
Current and former Tek workers -- some of whom asked not to be identified for fear of angering an employer that is hyper-sensitive to publicity -- are split on whether Danaher has been good or bad for Tek.
To Julie Akin, who spent 32 years at the company, new ownership was a catastrophe.
"It was just turmoil all the time from the time they purchased us," said Akin, 54. "We never knew what was going to happen."
Danaher apparently had a plan, she said, but never let employees in on it. That was a stark contrast from the way Tek operated when it was independent.
"If things were bad, they would tell us things were bad and they would include us in making decisions," Akin said.
The nadir came in 2009, when Tektronix said it would offshore Oregon manufacturing jobs -- including Akin's -- to Shanghai. Tektronix then flew the Chinese workers to Oregon and ordered Akin and her colleagues to train their replacements.
"Obviously it pissed everybody off," Akin said. But she said employees -- wanting to hold on to every last paycheck -- went along with the plan.
Two hundred lost their jobs when that work went overseas, state records show.
Today, Akin said, she can't find other work and is living off food stamps, lamenting the passing of the old Tek.
"That damned Danaher," she said. "I'm telling you, that was the downfall of Tektronix."
That's not how Grego Sanguinetti sees it.
"Tektronix's problems are Tektronix's problems. There's pluses and minuses to Danaher as a company, but I certainly can't blame this on Danaher," said Sanguinetti, an engineer who worked at Tek in the 1980s, returned in 2003, then lost his job in last month's layoffs.
In Sanguinetti's telling, Tek had lost its edge in high-end oscilloscopes before Danaher arrived. He and others say that the Danaher influence has been focused on customer needs, manufacturing and service. These are the areas where Danaher excels. But Tektronix was slow in turning attention back to the flagship high-end products.
Tektronix used to be a technology incubator, Sanguinetti said, investing and nurturing bleeding-edge technology that produced its high-end products.
It still has tremendous talent, he said, and if it can regain its focus it can succeed.
"I would like to see it work, and I would like to see them make it work," Sanguinetti said. "Right now, they're fighting from behind."
-- Mike Rogoway; twitter: @rogoway; phone: 503-294-7699
___ (c)2012 The Oregonian (Portland, Ore.) Visit The Oregonian (Portland, Ore.)
at www.oregonian.com Distributed by MCT Information Services