Siltek Asia-Pacific has sent a shockwave through the ranks this morning with the sacking of approximately 50 people, reducing headcount by almost 50 per cent.
The radical move follows the shock resignation on Friday of CEO Hugh Evans, who disagreed with Siltek's board of directors over the future direction of the company.
The distributor's massive cleanout also includes the closure of its Melbourne warehouse, signalling the end of the company's bid to become a broad line distributor and thereby competing with the likes of Tech Pacific and Ingram Micro.
Bruce Harvey, Siltek's Asia-Pacific chairman who has assumed the role of CEO, told ARN: "we can't get big, so we will get niche, we certainly don't want to get out".
"There is no way at this size we can compete with the likes of Tech Pac and Ingram Micro," he said.
Harvey said the sackings were designed to save the company and were in line with its plan to resume its role as a niche distributor.
"We have to let really good people go, we just can't afford to keep them on," he said. Siltek previously had a staff count of around 138.
The company is now taking its eye completely off the retail market, with many of the redundancies from sales, brand management and administration teams focused on that sector.
Also gone are a number of senior managers, however Harvey would not release names without permission from the individuals involved.
ARN sources claim the list includes marketing manager Tania McNaught, PCezy manager Jenni Swistak and retail manager Belinda Hobbs. In addition, Siltek has shut its human resources department, sacked some telesales account managers and former Prion business development managers.
A source said the company has shut its Melbourne warehouse, leaving sales and marketing director Michael Bosnar surrounded by about eight salespeople. In its heyday, Prion had around 80 people in Melbourne working with Bosnar.
Harvey said there would be no further official staff cuts, but conceded today's events may be the catalyst for further staff resignations.
"If there is going to be any more, it's going to be [due to] non-performance issues," he said.
In addition, another source said Siltek risks losing its top five vendor partnerships as a result of the shake up.
The source, who asked not to be named, said Siltek is on verbal notice with many vendors that have been the backbone of its business, such as HP and Seagate.
"The snowball effect would be that the top five vendors may start putting Siltek on notice," the source said.
The vendors could not be contacted at press time.
Bruce Harvey, Siltek's Asia-Pacific chairman, confirmed Siltek is no longer distributing Toshiba in line with its decision to move away from low-margin retail business.
However, last Friday he denied the company would lose its relationships with HP and Seagate.
Harvey said Siltek would move away from HP's retail business, but remained committed to its high-end products. He said Siltek has also renewed its focus on Seagate. "Seagate is very much one of our preferred vendors going forward."
Harvey said discussions with vendors are expected to be completed by tomorrow.
Meanwhile, he said Siltek will not terminate retail accounts, "but will not be providing [retailers] with the 1 and 2 per cent margins they have been used to".
Photograph: Former Siltek CEO Hugh Evans.