Raychem buyout: What it means for employees, community

By RENEE MOILANEN

It will be a new era for Menlo Park-based Raychem Corp. when it switches hands this fall and becomes part of industry giant Tyco International Ltd. -- a move that will mean job cutbacks for one of Menlo Park's largest employers, and absentee ownership of a company with strong community ties.

In a $3 billion stock deal announced last week, Bermuda-based Tyco bought Raychem, which employs about 3,000 people at its Menlo Park and Redwood City locations. The deal -- which should take effect by September -- brings together two leaders in the electronics manufacturing industry, who can now bring an improved and expanded product line to buyers, said Raychem spokesperson Scott Wylie.

Raychem is a leading worldwide manufacturer of electronic components with revenues of $1.8 billion last year. Tyco, operating mostly from the east coast, is one of the world's leading manufacturers of fire and safety systems, electronic security systems, and underwater communications systems.

"It represents a positive move for Raychem," Mr. Wylie said. "The Tyco product lines are very complementary to ours, so we'll be able to offer a broader product line. It will allow us to grow more quickly," Mr. Wylie said.

In the last few years, Raychem's profits have lagged, blamed on an ailing Asian economy and a slump in the electronic components market, Mr. Wylie said. With profits lower than expected, the company has been working to improve its productivity, which has meant corporate restructuring in some cases, he added.

A 10-year Raychem employee, who did not want to be identified, said the company seemed to shift its focus when CEO Richard Kashnow came aboard about five years ago, cutting research and development and failing to develop its product line.

"The company was not interested in developing people and products; it seemed it was just readying itself for acquisition. I wouldn't be surprised if that's why (Mr. Kashnow) was brought on board," the employee said.

Mr. Wylie, however, touts the Tyco buy-out as a way to boost Raychem's growth, creating new jobs and more long-term opportunity. But before this long-term growth takes root, short-term cutbacks may be necessary.

Employee layoffs "will certainly be one of the byproducts" of this merger, Mr. Wylie said. Many of Raychem's day-to-day operations will be taken over by Tyco, rendering these services unnecessary at the Menlo Park location. There will be overlapping jobs between the two companies, Mr. Wylie said, but it's too early to tell how many people will be laid off and from which departments these layoffs will come.

One 25-year employee, however, estimated that 1,000 people could lose their jobs. The employee, who did not want to be identified, said that many Raychem workers are "scared to death," not knowing their futures. "There are a lot of mean-spirited people that Kashnow put in high places, which means that vendettas will be carried out" against those employees considered outspoken or unfavorable from a company standpoint, he said.

Paul Cook, one of Raychem's founders, said that he is "terribly disappointed to see (Raychem) disappear as an independent company" even though he thinks the sale will make Raychem a "great force" in the manufacturing industry.

Mr. Cook, a Woodside resident who now heads up DIVA Systems Corp. in Menlo Park, built Raychem from scratch about 40 years ago, transforming it from a Redwood City warehouse to a billion-dollar international corporation. He has not been active in the company for almost 10 years.

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