WATERLOO — Turbosonic Technologies has taken the unusual step of temporarily reducing salaries and giving some employees temporary unpaid leaves of absences as it works its way out of the global recession.
TurboSonic, which operates out of an office on Parkside Drive, sells equipment that cleans up the dirty air coming out of industrial smokestacks.
Ed Spink, the firm’s chief executive, said everyone is worried about the environment but the downturn caused companies to curtail capital spending, which in turn affected sales of TurboSonic’s clean air technologies.
“The demand just dried up,” he said. “There are no greenfield developments right now, because companies are closing plants rather than building plants and there are no plant expansions going on in the industries that we serve.”
TurboSonic’s technology is used in the wood products industry to remove tars, pitches and other compounds that are driven off the wood during the drying process. It also removes metals that are driven off in the smelting process and cleans emissions from oil refineries. Those are industries that were hit hard by the recession.
The United States is TurboSonic’s biggest market. It also sells in Europe and has an office in Italy to mitigate the effects of North American downturns, but this recession “affected everything, everywhere,” Spink said.
New environmental regulations are coming into effect in the U.S., but a lot of companies are in a “wait and see” mode right now, he added.
Last month, TurboSonic reported a net loss of $297,958 US in its fiscal second quarter. It earned net income of $302,553 US in the same three-month period a year earlier.
On Monday, the company announced it was taking action achieve cost reductions of $450,000. It has laid off a handful of employees, including two full-time staff and one contract person, but is trying to avoid job cuts.
Before the downturn, TurboSonic employed 51 people, including 26 in Waterloo and 25 at its offices in the U.S. and Italy.
For the most part, the savings are coming from temporary salary reductions ranging from 20 to 50 per cent, as well as a limited number of temporary unpaid leaves of absences.
Spink said the company, which is still unburdened by debt and has a good cash position, is trying to keep as much of its team together as possible.
“We could have laid off substantially more people to achieve the same financial objective, but then you are destroying your team that you have built over 30 years,” he said. “This was the best option for keeping the team together by sharing some of the pain while maintaining our ability to bounce back.”
Spink said the measures are short term and there is already some evidence of a turnaround this year. “As new regulations come in through this year, I think we will see a return to more robust times.”
The company also has a new catalytic gas treatment product that uses chemical oxidation instead of thermal oxidation to burn up pollutants, which reduces the demand on natural gas and provides companies with a money-saving incentive as well as environmental benefits, Spink said.
“We are anticipating that will cause a new surge of demand for some of our products,” he said.
rsimone@therecord.com
