Friday, April 22nd 2022
EKWB Lays Off 25% of Workforce, Blames Lower Watercooling Sales
EK Water Blocks, possibly the most notable manufacturer of DIY PC cooling solutions, has downsized a quarter of its staff in response to a sharp drop in sales. This affects over 60 of the 200+ tech jobs in Slovenia, the home country of EKWB, something it proudly flaunts. EKWB sees its sales principally split in half between the North American and European markets. The company's market-presence in Asia is limited at this time, although it is now a reinvigorated area of interest. The company noticed quarterly sales-drops in steps as big as 20 percent since October 2021, according to Slovenian press reports.
The company is faulting these sales drops on the COVID-19 pandemic, specifically its economic impact, spike in PC hardware prices, and people spending less on premium/novelty hardware that EKWB principally specializes in—DIY liquid cooling solutions. The company also noted the impact of the war in Ukraine causing various commodity shortages for manufacturers in Europe. Matjaž Krč (CEO, EKWB) in a statement even blamed the sociological impact of COVID-19, specifically gaps between pandemic waves that enable people to travel and enjoy the outdoors—not wanting to spend on things that keep them indoors, such as gaming.It's pertinent here to add some context to this situation. EKWB had observed consistent financial growth over the past five years, including the pandemic quarters leading up to Q4-2021. The company was awarded by Slovenian chambers of commerce for its consistent growth and fiscal prudence. The company even expanded its payroll in 2021, by recruiting 64 new employees.
TechPowerUp spoke with EKWB and received this official statement from the company:
TechPowerUp: What was the time period that this 25% reduction is based on? Some ex-employees are claiming closer to 70 personnel laid off recently, and even more over the past couple of months.
EKWB: As mentioned, the 25% reduction happened as a one-time measure to optimize our operations. We grew rapidly in 2020 and 2021, recording more then 30% growth year to year. There was of course some fluctuation during this period, in 2021 4% to be exact. Which is really low compared to benchmarks in our industry. To put things a bit more into perspective: EK took part in Gallup poll of employee engagement survey in 2021 and we are in 6th percentile on a global level (only 6% of companies globally have more engaged employees than EK). We were and still are striving for best working environment. Shortly, EK was and still is one of the best places in the world to have career.
TechPowerUp: What would you say to those who will ask why not cut down on marketing events such as booths at PAX East etc?
EKWB: We had to adjust company to demand while structure company for growth. In terms of vision and strategy, nothing changed. We are dedicated to our vision of elevating computers for the better world. EK is a strong global brand and it is normal to be present in worldwide events such as PAX. Compared to larger hardware players, our presence is always more creative and we are creating significant impact with modest investments.
As said before, our presence on the global market will remain strong.
TechPowerUp: Going through LinkedIn earlier, it seems most of the people let go were R&D engineers/technology personnel. Will this affect future product plans? There don't seem to be any business/department managers let go.
EKWB: The reduction of employees was done almost proportionally in every department (with focus on future growth), R&D is our core domain and most of outstanding innovations are coming from this core, so it remains an integral part of EK.
(end of questions)
This downsizing is unlikely to threaten the company's existence, as it appears to be making business changes to stay relevant to the market. For starters, despite being a DIY water cooling components specialist, the company is making further inroads on the highly saturated pre-assembled all-in-one (AIO) coolers market, with entrenched players such as Antec, Cooler Master, Corsair, and Thermaltake all fighting for market share. It even showed off certain air-cooling solutions in recent EKWB Expo online-events, and this is on top of the enterprise and OEM business it does. Certainly change is a must as the DIY cooling consumer market is seeing several smaller brands disappear, and others having fallen prey to debt defaulting. Regardless of how you feel about this, losing jobs is never something we want to see, and we wish everyone who was laid off the best for their future endeavors.
The company is faulting these sales drops on the COVID-19 pandemic, specifically its economic impact, spike in PC hardware prices, and people spending less on premium/novelty hardware that EKWB principally specializes in—DIY liquid cooling solutions. The company also noted the impact of the war in Ukraine causing various commodity shortages for manufacturers in Europe. Matjaž Krč (CEO, EKWB) in a statement even blamed the sociological impact of COVID-19, specifically gaps between pandemic waves that enable people to travel and enjoy the outdoors—not wanting to spend on things that keep them indoors, such as gaming.It's pertinent here to add some context to this situation. EKWB had observed consistent financial growth over the past five years, including the pandemic quarters leading up to Q4-2021. The company was awarded by Slovenian chambers of commerce for its consistent growth and fiscal prudence. The company even expanded its payroll in 2021, by recruiting 64 new employees.
TechPowerUp spoke with EKWB and received this official statement from the company:
During the first quarter of 2022 EK, the leading computer liquid cooling solutions provider, observed signs that consumer spending was starting to decline in response to global events. Despite forecasting a reduction in demand for EU and USA during our 2021 Global Summit, the onset of conflicts in Ukraine saw sales drop below these expectations.As a follow-up, we also got responses for a few quick questions we asked the company when we first got whiff of the development:
In response to these trends which indicated moderate willingness to spend, EK is taking early precautions to streamline our operations in Slovenia. Regretfully this involved a reduction in the number of employees by approximately 25%. Further plans were also initiated that will see EK enter new geographical markets and sales channels with more outstanding and innovative products.
Now more than ever EK is committed to delivering the quality and experience our loyal customers demand. We sincerely hope our actions will permit us to do this long into the future.
TechPowerUp: What was the time period that this 25% reduction is based on? Some ex-employees are claiming closer to 70 personnel laid off recently, and even more over the past couple of months.
EKWB: As mentioned, the 25% reduction happened as a one-time measure to optimize our operations. We grew rapidly in 2020 and 2021, recording more then 30% growth year to year. There was of course some fluctuation during this period, in 2021 4% to be exact. Which is really low compared to benchmarks in our industry. To put things a bit more into perspective: EK took part in Gallup poll of employee engagement survey in 2021 and we are in 6th percentile on a global level (only 6% of companies globally have more engaged employees than EK). We were and still are striving for best working environment. Shortly, EK was and still is one of the best places in the world to have career.
TechPowerUp: What would you say to those who will ask why not cut down on marketing events such as booths at PAX East etc?
EKWB: We had to adjust company to demand while structure company for growth. In terms of vision and strategy, nothing changed. We are dedicated to our vision of elevating computers for the better world. EK is a strong global brand and it is normal to be present in worldwide events such as PAX. Compared to larger hardware players, our presence is always more creative and we are creating significant impact with modest investments.
As said before, our presence on the global market will remain strong.
TechPowerUp: Going through LinkedIn earlier, it seems most of the people let go were R&D engineers/technology personnel. Will this affect future product plans? There don't seem to be any business/department managers let go.
EKWB: The reduction of employees was done almost proportionally in every department (with focus on future growth), R&D is our core domain and most of outstanding innovations are coming from this core, so it remains an integral part of EK.
(end of questions)
This downsizing is unlikely to threaten the company's existence, as it appears to be making business changes to stay relevant to the market. For starters, despite being a DIY water cooling components specialist, the company is making further inroads on the highly saturated pre-assembled all-in-one (AIO) coolers market, with entrenched players such as Antec, Cooler Master, Corsair, and Thermaltake all fighting for market share. It even showed off certain air-cooling solutions in recent EKWB Expo online-events, and this is on top of the enterprise and OEM business it does. Certainly change is a must as the DIY cooling consumer market is seeing several smaller brands disappear, and others having fallen prey to debt defaulting. Regardless of how you feel about this, losing jobs is never something we want to see, and we wish everyone who was laid off the best for their future endeavors.