Qualtek Manufacturing has laid off all but four of its employees and will shut down early next year after losing contracts from its two largest customers due to the COVID-19 pandemic, the company’s president said.
The 51-year-old specialty metal manufacturer, based in Colorado Springs, likely will close in late January after fulfilling remaining customer orders and decommissioning manufacturing equipment, Qualtek President Christopher Fagnant said. The company notified its then 22 employees last month of the shutdown plans and laid them off after completing orders, shutting down production lines and shifting equipment and production of a respiratory medical device to a major customer he declined to identify.
Much of Qualtek’s revenue and production were generated from two customers — the unidentified medical device manufacturer and Band-It Index, a Denver-based company that makes parts used in Boeing aircraft. A steep decline in travel early in the pandemic cut Band-It’s orders with Qualtek by about 90%, prompting Qualtek to eventually sell the manufacturing line to Band-It. Demand from the medical device manufacturer surged early in the pandemic but fell sharply a few months later when demand for the device dwindled.
“During the surge, we had 60 employees and hired another 20 or so temps (temporary workers) in April 2020 to help us meet demand, but it turned out everyone was panic buying due to supply-chain issues and then they didn’t buy anything from us for six months,” Fagnant said. “We were able to survive into this year with two rounds of Paycheck Protection Program loans, but we struggled to get our sales and order flow straightened out.”
By early fall, Qualtek didn’t have enough orders to ensure that the raw materials the company had ordered would be needed, so Fagnant canceled the raw material purchase and told employees the company had little alternative but to close without new orders. A last-minute attempt to sell Qualtek also collapsed, he said.
Qualtek won’t be filing for U.S. Bankruptcy Court protection from its creditors since the company repaid its bank loans before the pandemic started and had no other debts, Fagnant said. Instead, the company will instead “wind down” the business, pay remaining employees bonuses to stay until remaining orders are filled and receive final payments from customers when orders are completed, he said. Fagnant’s parents, Tony and Mary Fagnant, own the 42,000-square-foot Qualtek building at 4230 N. Nevada Ave. and have listed it available for lease with Olive Real Estate Group. The couple, who bought Qualtek in 2000, continue to operate Milestones for Growth, a shared industrial space for small manufacturers that operates in a building adjacent to Qualtek’s plant. They helped found Blue Star Recyclers, which hires developmentally disabled adults to disassemble electronics and sell them for reuse.
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