Layoffs at startup
By JOE FERGUSON Sun Staff Reporter
Posted: Saturday, November 19, 2011 9:00 am
In this file photo Jon Mrkonich, left, and Tom Rainey of Motor Excellence stand behind a bicycle powered by a prototype electric motor. (Jake Bacon/Arizona Daily Sun)
A fledgling manufacturer of electric motors in Flagstaff has had to make significant layoffs even before it fulfilled its first big order.
Motor Excellence laid off a total of 16 employees earlier this week, roughly a third of its entire staff.
President Jon Mrkonich said the company needed to downsize part of its research team in order to focus on delivering its five-inch motor for a European-based electric bicycle manufacturer.
It will continue to conduct research into a small, prototype motor that could be used in human prosthetics.
The company had more than doubled its staff over the last year, reaching a total of 56 full-time positions before this week's layoffs. It also reduced the hours of another employee.
Mrkonich said the eliminated positions were primarily tied to research into other possible applications of the existing technology, including several prototype motors being used inside a retrofitted Lotus Elan sports car.
"Large propulsion and generation are the two things we are not going to be pursuing right now," Mrkonich said. "We got good results from the prototypes we developed, but there are only so many things we can push forward at one time."
Those technologies would be put on hold as the company focuses on securing a major contract with an electric bike manufacturer, he said.
The layoffs were split among several types of personnel, including five engineers.
The company could, however, begin hiring a different type of worker -- primarily assembly line staff -- in a matter of weeks.
Mrkonich confirmed the company's e-bike customer -- which has production facilities in Taiwan and distributes its product in Europe -- has an agreement in place with the Flagstaff manufacturer based on a final prototype. He said the customer will be in Flagstaff next month to tour the facilities.
Manufacturing of the five-inch motor could begin here in Flagstaff in the next 30 to 60 days, Mrkonich said.
"We will soon be hiring for the factory," he predicted.
The layoffs will not affect a $962,000 grant the company received as part of the 21st Century Grant Program coordinated by the Arizona Commerce Authority in 2009.
The grant, which used federal stimulus funds to promote energy-efficient and renewable energy products manufactured in Arizona, required the company to hire 16 workers.
At the time, the company had a total of only 19 employees. After the layoffs this week, the company currently has 39 full-time employees.
Mrkonich said some of the employees let go had been with the company for two years.
"That was a very hard decision for us," Mrkonich said. "We said goodbye to some friends yesterday."
Joe Ferguson can be reached at 556-2253 or jferguson@azdailysun.com.
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