The state of engineering at Checon is good! We have customer oriented ‘Value Engineering’ projects moving rapidly through the system, we have material development efforts nearing conclusion, and we have re-invented a core piece of Checon’s manufacturing technology, developing a process twice as fast and with significantly improved process monitoring. I’d say the state of engineering at Checon is indeed very good!

Our major focus has been on the development of our new Silver Tin Oxide materials. While the development effort is being led by the trio of Gary Haupt, John Vaz and Dennis Nixon; that effort is being shared and contributed to by the whole Checon team – with the machine shop developing billets, fixtures and tooling; the production departments assisting in processing of the materials and the electrical guys in conjunction with the quality staff developing our new electrical testing capability.

Three grades of AgSnO2 with 6, 9 and 12% metal oxide content are expected to be ready for initial production quantities at the end of 2008. These materials will be geared towards meeting the electrical demands of the industrial controls market and allowing construction via the Toplay process – the highest quality contact assembly method available. Naming of the new materials is an interesting process – we’ll keep you posted!

Our sales team is anxiously awaiting the new materials – since interest is high among many of our customers as they consider the move to a non Cadmium containing contact system.

The events of the last few weeks have certainly shaken every one’s faith and perceptions of the U.S. economy and its credit markets.  Iconic financial institutions employing minds graduated from some of the finest business schools in the country find themselves on the verge of bankruptcy or requiring merger partners because the increased debt, which they introduced on their books, became pools of quicksand. Financial institutions eschewed loan to value ratios (equity) in the pursuit of bigger books of business.  This system only works as long as the trends continue in a positive direction.  It would seem that good old fashioned common sense and fiscal prudence took a back seat to book smarts and quantitative analysis.

The management at Checon has not abandoned common sense and fiscal prudence in the pursuit of more business.  We still look at things like cash flow and we submit every initiative to quantitative analysis as well as a “smell test”.  Checon Corporation has embraced a lean manufacturing program, which has yielded significant inventory reductions in a relatively short period of time.  Lean principles that have also been applied to the purchasing of expense type items have resulted in improved profitability.  While financial institutions were increasing their debt load, Checon has been having considerable success in reducing the amount of debt on its books.

During 1994, Checon Corporation established a silver leasing arrangement with its financial institution, which replaced a silver hedging program that had existed for several years.  The silver leasing program smoothed out cash flow by eliminating cash “shocks” arising from margin calls in a volatile metals market.

While we all would much prefer those long stable periods of positive economic growth, the management of Checon has implemented an operational and financial strategy, which has the company weathering difficult economic times and thriving when times are good.

The past year or so has been marked by an unprecedented rise in commodities of all types, resulting in rising costs for purchased products for the first time in more than a decade.  Checon’s products are certainly no exception.  With silver and copper making up the vast majority of the price of electrical contacts, our customers have been faced with unexpected component costs that often cannot be quickly passed on to their end device prices.  We’ve all heard the reasons; huge demand from China and India for raw materials, a weak US dollar, speculation in oil, and sympathy with other commodities specifically, silver’s historic link to gold.  Political unrest and the recent economic instability often drive the price of gold higher due to uncertainly in other investments.

The result for our customers is a difficult situation that can leave them uncompetitive if they anticipate higher component costs and reflect them in their pricing, or pinched for margin if they don’t and commodities rise further.    From time to time I get a call from a customer asking for my insight as to where the markets are heading.  Usually I tell them that I’m still holding some silver coins I purchased at $14 silver back in 1983.  Now that silver has traded over $20/ounce that story has lost some of it’s impact, but for over 20 years I’ve been in the red, so you need to be careful where you get your advice.

While we can’t help you know where the markets are headed, we’ve worked on some interesting strategies to stabilize the price of our products based on where the markets currently are.  Of course a stable price is not such a good thing when the markets are declining, so any decision along these lines involves some risk.  At least for some of our customers, price stability is more important than achieving the absolute lowest price.

Contact us if you are interested in learning more about what your options are. We would be glad to discuss them with you.   In the mean time if you get a hot tip on where the price of silver is going, give me a call, I’m still trying to decide what to do with those coins!

We’ll start here – since it’s Checon’s website – but no doubt I will ramble off to other topics by the time I run out of gas.

You’ll no doubt be able to read a press release on this site announcing the recent reorganization of people within the Engineering and Sales functions which I am really excited about. It’s great to be able promote from within and I am confident that Wayne Mello will do an excellent job as Technical Sales Specialist and that Bob Johnson will bring his 30 years of experience at Checon to good effect in the process engineering and quotation role we’ve established.

Engineering is really busy these days with material development efforts – most particularly on a new Silver Tin Oxide material. During the course of our efforts, Gary Haupt has managed to develop a whole new path of development that we are hopeful will bring an entirely new slant on Silver Tin Oxide – the thought of leap-frogging the competition is so enticing! ☺

Our Extrusion press has had a major refit – Bill Estey and John Vaz have ignored budgets and brought our dated extrusion up to speed with all the latest and greatest technology! New pumps, hydraulic and electronic controls and a detailed servicing of all the major components have yielded significantly increased extrusion power. This will have a huge effect on all our extrusion capabilities – those difficult materials will become that much easier and we’ll be able to develop larger billets for extrusion – gaining improved production efficiencies.

You may know I’ve taken up sailing in the past 5 years and currently own a 37ft sailboat. She’s 25 years old but in great condition… other than the bottom of the hull has been neglected badly. One has to put antifouling paint on the wetted surface – to prevent animals and plants attaching themselves! Normally each year (or every other year at least), you’d put more paint on – but the general thought is that you’d sand off the old stuff first… Well “Toodle-oo!” hasn’t had her bottom cleaned in 25 years by the look of it. So, this year we set to remove all the build-up. 9 full days of sanding, stripping, sanding, stripping, sanding and stripping - and finally we’re down to the bare hull. Nice smooth white fiberglass. You can imagine that sanding the bottom of a boat is not much fun – arms often up above your head – hopefully the family’s medical bills for achy backs and necks won’t add up to too much!

Toodle-oo! and Cousin Charles’ “Solebay” in Bermuda – June 2007