HAUPPAUGE, NY—Electrograph Systems, one the country’s leading national distributors of AV gear to the professional, commercial, and high-end consumer markets, announced late last month that it will be “moving forward with a liquidation process.”
“We would like to thank our resellers for their business over the past 25 years, our vendor partners, and other friends in the industry for their support. Above all, we thank our loyal employees for their hard work and dedication,” said outgoing president Sam Taylor, who, along with all the senior management at Electrograph, has left the company.
The most senior level employee remaining at the company is John Riley, working out of Electrograph’s Hauppauge, NY offices. Riley was previously the vice president for eastern region sales, but it is now charged with leading all sales efforts as the company liquidates. Electrograph still has inventory to sell, and over the next several months, customers can still buy equipment at what is expected to be discounted prices. The company issued a press release that said, “During the winddown period, a group of 60 employees will be staying and the four warehouses in City of Industry, CA; Grove City, OH; Hauppauge, NY; and Middletown, NY will remain open and shipping product. The remainder of Electrograph’s 75 employees were laid off.”
“Unfortunately, Electrograph faced the perfect storm of a difficult credit environment, a weakened economy, and pressure on sales,” Taylor stated. “And while companies the size of GM and Chrysler make headlines in this economy, even greater pressures exist for companies smaller than those that lack the kind of access to credit, or crisis financing available in larger industry sectors. Electrograph pursued a sales process, but for a variety of reasons it was unsuccessful, and liquidation is what the board decided.”
Although a private company is not required by law to post its numbers, Electrograph generated around $400 million in annual sales at its peak in 2007. Taylor, as well as other top industry players I’ve spoken to, firmly believes that Elecrograph’s business model was a great one, and does not see any pressing need to realign the distribution model in the commercial AV industry.
When a company grows rapidly and sets out an ambitious agenda, as Electrograph did, it’s a more fragile equation than what drives companies in most U.S. industries. The risk is greater, and there are few safety nets. But rewards are great too, and it’s important to remember that the market as a whole is still growing, not shrinking, and more competition mean better deals for the customers and more sales in the long run. So while this Electrograph news may rattle the company’s customers and vendors, if not the industry as a whole, this news should not be construed as an ominous indicator of the health of the AV industry in general.