Despite reports of as many as 60 employees leaving the firm in the last 14 months, company officials say Climax Portable Machining & Welding Systems is well-positioned for the future. The company produces products for heavy industrial applications.

The job cuts at Climax Portable Machining & Welding Systems are more sweeping than initially reported, reflecting a restructuring plan following lagging sales figures and also signaling a change in climate for the hometown Newberg company.

Although the changes include a large reduction in workforce, company officials maintain the shift is a positive one that will overall strengthen the business.

A former employee who spoke on condition of anonymity estimated there have been roughly 60 workers let go in the past 14 months, including as many as 36 employees on Jan. 7. The source confirmed 29 employees cut for certain in January, including engineers, machinists, machine maintenance techs, planners, human resources personnel, sales support staff, assemblers, quality control, logistics and production support.

This newspaper had previously reported 20 people laid off in early January, and the source indicated that was the figure announced to company employees by management. But when told by a coworker the next day that the figure was actually higher, the source began counting whom was no longer with the company.

The layoffs were not necessarily a shock, the source said, offering a timeline of dramatic change at the company that began a few years prior.

Climax Portable Machine Tools began operating 50 years ago, establishing Newberg as its world headquarters. It was the premiere manufacturer of onsite machine tools that saved customers the task of delivering heavy duty broken machinery to the shop for repair.

Three decades after it was founded, Climax was purchased by a Texas-based company, Team Industrial Services. The Newberg manufacturer sold again in 2005 for $14.5 million, according to Business Wire, to three investment holding companies who retained it for the next eight years.

In 2012, Climax acquired Bortech Corporation, expanding its product line into the welding industry. With that purchase the company changed its name to Climax Portable Machining & Welding Systems.

Former employees say Climax’s fiscal year 2013, which ran from June 1, 2012 through May 31, 2013, was a record year in revenue.

Oil mining operations were booming and gas prices were up, particularly at the close of 2012. For Climax, that meant a lot of companies needed its products to perform maintenance on industrial mining and drilling equipment.

Just two months after fiscal year 2013 ended, the three private equity companies sold Climax to Industrial Growth Partners, a San Francisco-based investment company.

As Climax is not a publicly traded company, it doesn’t disclose its revenues, but in 2008 its revenue was reportedly in the “mid-$30 million range,” according to the Portland Business Journal. In 2012 this newspaper reported the company had experienced “double-digit increases in sales” during the eight preceding years.

IGP purchases companies with revenues of at least $25 million, according to its investment criteria.

Former Climax employees estimate the fiscal year 2013 revenue at roughly $50 million.

“Everyone figured 2014 would be bigger and better,” the unnamed source said.

A few months after the IGP sale, Climax purchased Calder Testers Inc. in Houston, Texas, a company that manufactured testing equipment used in the oil and gas industry, among others.

Former Climax employees say CEO Geoff Gilmore planned to focus on similar purchases, completing one acquisition of a smaller company per year. The business had a goal of growing the company to where it was making $100 million per year in revenue, company officials told the Portland Business Journal shortly after the 2013 sale.

But the world market fluctuates and the oil industry has its ups and downs; the 2014 fiscal year figures revealed there was a $9 million shortfall from the company’s projected revenue, the source estimated.

In the fall of 2014, six months after the disappointing fiscal year ended, Gilmore left Climax after 15 years. He could not be reached to comment for this story.

A month later, in December 2014, Thomas Cunningham was brought in as the new CEO, following an executive search carried out by Martin Partners. Cunningham had most recently served as managing director of Manlift, a manufacturer of lift equipment in Dubai.

When Gilmore suddenly departed and Cunningham came on as president and CEO, employees were wary of what could be next. But they were assured, the source said, that Cunningham was not brought in to restructure the company.

Soon after, the job cuts began.

In the first four months Cunningham was CEO, the source estimated 15 to 20 people were cut from the company. A number of these were management positions, department heads and the like.

Despite the cutback in employment, Climax in October 2015 purchased Texas-based H&S Tool Inc., but shortly afterward there were further reductions in the Newberg workforce.

In December 2015 three more people were laid off, while at least five were fired for what a former employee described as “disciplinary reasons.”

Then, in January, the big layoff occurred.

In a Feb. 3 letter to Climax employees, Cunningham addressed the changes occurring at the company, describing the layoffs as well as steps the company is taking toward expanding its international sales figures. The letter was titled “Climax: A Company on the Move.”

Cunningham described the recent changes as “necessary and positive overall for the company,” but noted that “as with any major change, the positive achievements do not come without some downsides, such as our recent reduction in workforce.”

He posited that employees who have a “more discerning perspective on the company and its history understand that much of what we are doing now is long overdue — catch-up or remedial work, if you will,” but also noted that for some employees “this has been a revelation, perhaps even a shock.”

The changing climate of the company was attributed in large part to market forces.

“The world economies are sluggish, businesses are cutting back on capital spending, and our end-markets are down (most notably: oil and gas, mining and heavy construction, and ship building and repair),” Cunningham told the company.

Although he expressed confidence that the economy would improve in the future, he said it’s unclear when that will happen, just how much improvement will occur and what the company will look like at that point.

Although there have been layoffs and terminations (he pointed out that some of the terminations over the past year have been “related to the performance of the individual, to a greater or lesser degree in each case”) the company has also expanded its effort toward international sales.

There has been a 30 percent increase in the sales department over the past year, with sales representatives added in new markets around the world.

Cunningham also addressed the layoffs and some of the response that’s been received.

“Some of you might feel like we have over-done it,” he wrote. “That is an understandable and not unexpected feeling in this situation. However, I assure you that we have sized the organization appropriately for our current and projected level of revenue, and brought it more in line with how other factories are operating in modern times.”

He wrote that the company’s current head-count of employees is “about right,” although more changes could be made as the market fluctuates.

“The important point is this: we cannot continue to do things the way we were,” he wrote.

Reached by email, Cunningham declined to state how many people work at the Climax operation in Newberg, and how many there were 14 months ago when the management change took place.

“One competitive advantage of being a private company is that we do not talk in front of our competitors about vital financial and operational data,” he said. “Suffice it to say the company is strong and efficient, in great shape to compete and win world-wide.”

Asked to comment on the layoffs, Cunningham confirmed there had been a “recent right-sizing of our local workforce” and attributed it to three main factors: expansion of global sales and service operations, which has meant a shift away from Newberg; reorganizing the company to a more efficient model; and adapting to changing mining and oil markets that have made the company “more discerning about how we spend our investment dollars.”

Three more workers were let go on Feb. 3, a former employee said.

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GAllen@NewbergGraphic.com