Jeffrey Schlarbaum admits it was a little unsettling walking into IEC Electronics Corp. last January for what was expected to be a contentious annual shareholders’ meeting.
He had left the Newark, Wayne County, firm over two years earlier as company president after what he described as dissatisfaction with the company’s direction under then chairman and CEO Barry Gilbert.
Times have changed, however. Schlarbaum now is focused on a new direction, serving as IEC’s president and CEO.
Schlarbaum, 49, was named to the top spot last February, succeeding Gilbert, who was terminated following a shakeup led by IEC’s largest shareholder, Vintage Capital Management LLC. Schlarbaum is also a member of the board of directors.
Vintage Capital, a Florida-based firm, had said it was displeased with IEC’s performance and introduced its own board of directors to be voted on at last year’s annual shareholder’s meeting. The alternative slate was elected.
IEC provides electronic manufacturing services for technology companies in the medical, industrial, aerospace and defense sectors. It does custom manufacturing of circuit cards, system-level assemblies and a variety of custom cable-wire harness assemblies.
It ranked 14th on the most recent Rochester Business Journal list of manufacturers. The firm has 820 employees and logged sales of $127 million in fiscal 2015, which ended Sept. 30, up 5 percent from fiscal 2014. It reported a net loss of $3.8 million, or 37 cents a share, in fiscal 2015 compared to a net loss of $14.7 million, or $1.49 a share, in fiscal 2014.
The business has its headquarters in Newark and additional locations in Rochester and Albuquerque, N.M.
After three straight years of losses at IEC, Schlarbaum is focused on restoring sustained profitability by improving operations.
He also is working on reducing debt, improving working capital by reducing excess inventory and improving cash flow, ultimately driving improved shareholder returns.
“It’s a new day at IEC,” he says.
Schlarbaum grew up in Fullerton in northern Orange County, Calif., and attended college on the West Coast as well. He earned his bachelor of science degree in business administration from National University in San Diego in 1988 and his MBA from Pepperdine University in Malibu, Calif., in 1992.
Prior to joining IEC he spent several years in the electronics industry. He served as vice president of sales for Plexus Corp., an electronics products contract manufacturer based in Wisconsin, and vice president of sales for the eastern region for MCMS Inc. while living in the Boston area.
He joined IEC in 2004 as vice president of sales and marketing. When Schlarbaum came on board, the company was in a downturn and he was charged with helping with the turnaround.
In 2008, he was promoted to executive vice president and president of IEC’s contract manufacturing. In 2010, he was named company president.
Schlarbaum says the promotions were part of a succession plan at the firm.
While he was in a promotion mode, the business also was succeeding. It was growing in both revenues and headcount and landed on Forbes’ 100 Best Small Companies in America in 2011 and 2012.
Despite the growth, Schlarbaum said there were some tensions with management, resulting in his departure because of what he says was his predecessor’s unwillingness to honor the last phase of the succession plan—Schlarbaum’s rise to CEO.
Schlarbaum then went to LaserMax Inc., where he worked as chief operating officer.
Around the time of his departure from IEC, the company took a downturn.
IEC continued to struggle with its Southern California Braiding Co. operation, which it acquired for roughly $25 million in 2010. IEC subsequently had to restate some of its financial statements from fiscal 2012 related to an accounting error at the subsidiary.
It then faced a class-action lawsuit related to the restatements, which was dismissed in 2014.
Poorer than expected financial results, coupled with the loss of certain customers, had some of IEC’s largest shareholders looking for ways to improve.
That included Vintage, which Schlarbaum says approached him about helping with an IEC turnaround.
Returning to IEC
Schlarbaum, who initially thought he would retire from IEC, had some apprehensions about returning to the business. Ultimately, his commitment to the firm and employees helped him with his decision to return.
“I deeply cared for the company and the people,” he says.
A typical day for Schlarbaum now includes meetings with customers and suppliers, working with his immediate staff to develop strategic plans and interacting with the broader workforce to find ways to continue to improve the business.
He likens his role as CEO to that of a head coach. He also strives to lead by example.
The best part of the job is developing his team and working with customers to solve their sourcing challenges, he says. He is least fond of administrative duties.
He is also taking care of old business. Last summer, IEC sold Southern California Braiding for some $2.5 million.
The company also announced late last year it has reached a preliminary understanding with the Securities and Exchange Commission regarding a potential settle-ment of its investigation of IEC’s restatements for fiscal 2012.
As part of the proposed settlement, IEC would pay a penalty of $200,000. The understanding is still preliminary and is subject to change by the SEC, IEC reported.
Schlarbaum now is looking to re-establish IEC and help the business succeed.
This month IEC launched a new website and corporate branding initiative to highlight its manufacturing capabilities in life-saving and mission-critical products. Examples of life-saving products would be infusion pumps or automated external defibrillators. A mission critical product includes encrypted satellite communication systems that are used, for example, to secure cockpit communication for military aircraft.
High-growth areas include the medical manufacturing sector, Schlarbaum says. He also sees growth potential in IEC’s current offerings, as well as acquisition opportunities if they arise.
Offshoring remains the biggest industry challenge, he says, but notes the landscape is changing as more companies opt for domestic suppliers for better quality and on-time delivery.
James Jenkins, a partner at Harter, Secrest & Emery LLP, has known Schlarbaum for seven years. The two met through business but have since become friends.
Jenkins describes Schlarbaum as a flexible thinker, open to new ideas, who knows both IEC’s customer base and its employees.
“I’m pretty certain there is nobody on this earth better suited to guide IEC into the future than Jeff,” Jenkins says.
Jenkins notes that Schlarbaum is a good listener whose drive is tempered only by his team mindedness.
“He has a strong sense of fairness and empathy for those around him and a strong desire to succeed,” Jenkins says, adding he believes people enjoy working with Schlarbaum. “His motivational skills reflect a leader who is willing to share the limelight of success while squarely accepting responsibility when the results are not what were expected.”
He also is fun to be around and is not afraid to laugh at himself, Jenkins adds.
“What you see is what you get with Jeff,” Jenkins says, further describing Schlarbaum as genuine and honest with no hidden agendas. “It’s this style of leadership that draws employees and customers to Jeff.”
Terry Wegman, a vice president and area director with Avnet Inc., a Phoenix-based electronic components supplier, has known Schlarbaum since 2010.
Wegman says Schlarbaum has excelled at surrounding himself with a talented senior management team made up of people with diverse backgrounds.
He is also accessible and compassionate.
“When meeting Jeff you cannot help but be caught up in his enthusiasm for his love of the industry and his company’s potential,” Wegman says.
Wegman also spoke of Schlarbaum’s character.
“When he commits to something, you know he is going to make every effort to make it happen,” Wegman says.
Off the job
Schlarbaum lives in Victor. He and his wife, Marianne, have two sons, Aaron, 18, and Aidan, 12, and a daughter, Mia, 16.
When not working, he most enjoys spending time with his family. Among the activities they share are fishing and golfing.
Schlarbaum is also a New England Patriots fan and avid reader, particularly of business books.
A favorite is “Smart Tribes: How Teams Become Brilliant Together” by Christine Comaford. Schlarbaum and other IEC managers read the book and discussed how the ideas in it could be used at the business.
On the job, Schlarbaum is committed to IEC.
“There was a time when I didn’t think my future included IEC,” Schlarbaum says. “Now I think it’s in my DNA.”
Title: President and CEO, IEC Electronics Corp.
Education: B.S. in business administration, National University, San Diego, 1988; MBA, from Pepperdine University, Malibu, Calif., 1992
Family: Wife, Marianne; sons, Aaron, 18, and Aidan, 12; daughter, Mia, 16
Hobbies: Golfing, fishing, reading; New England Patriots fan
Quote: “It’s a new day at IEC.”
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