Quantum Fuel Systems Technologies Worldwide Inc. will shed its 95,000-square-foot headquarters in Irvine by early next year as part of a recently formulated consolidation plan.
The company has about $33 million in annual revenue but struggled to find a profitable niche in a variety of automotive and renewable-energy markets. It plans to consolidate all operations on a three-building campus in Lake Forest.
Quantum recently signaled its intent to exit its Irvine headquarters in a recent regulatory filing. Executives sketched out the plan for the Business Journal last week.
Management, finance, marketing and administrative personnel will move in the next 30 to 60 days. Fuel-tank testing operations will take six to nine months to transfer.
The relocation will end Quantum’s presence in Irvine, where it first established its headquarters in 2001 after the company was spun off from Cerritos-based Impco Technologies Inc.
Sublease
Quantum plans to sublease the Irvine property, which is projected to save $1.4 million annually. The lease expires there in November 2015, according to its annual report filed last July.
Quantum’s campus in Lake Forest houses its automotive-parts manufacturing operation.
A 60,000-square-foot building employs about 55 people who make drive systems primarily for Anaheim-based Fisker Automotive Inc. and other hybrid automakers.
A 30,000-square-foot building, which employs about 45 people, houses its fuel system division that makes carbon fiber composites and high-pressure tanks that store compressed natural gas and hydrogen fuel for cars and trucks. Another 60,000-square-foot building is subleased.
The Lake Forest leases are set to expire in May 2015.
The consolidation is part of a cost-cutting strategy announced last month, prompted by the May 10 resignations of former Chief Executive Alan Niedzwiecki and Chairman Dale Rasmussen. The resignations were tendered and accepted by Quantum’s board following a discussion on the direction of the company, according to regulatory filings.
Interim Chief Executive Brian Olson and the board have singled out executive compensation and other corporate overhead expenses as a primary area to cut costs. Some company observers had criticized the $725,000 and $600,000 salaries for Niedzwiecki and Rasmussen, respectively.
“It is an area in the business we want to address,” Olson said.
Quantum has said it aims to trim about $4.1 million annually through the consolidation, eliminating “unnecessary” and “duplicative administrative expenses,” trimming the board from seven to five members and streamlining the organizational structure. Another $2.1 million in annual savings is projected through executive salary reductions.
Since it was established in 2000, Quantum has tinkered with many business lines beyond its primary revenue source—the engine, transmission, fuel tank and other parts that make hybrid vehicles go.
The company has acquired wind farms, developed propulsion systems, energy storage devices and alternative fuel technologies, among others.
• Headquarters: Irvine
• Business: Automotive parts supplier
• Founded: 2000
• Ticker symbol: QTWW (Nasdaq)
• Market value: About $28.4 million
• Notable: Refocusing on core operations, getting out solar-panel production
Vision
That led some analysts and company watchers to question the vision and direction of the company. It appears Quantum is refocusing efforts and resources solely on the automotive sector in the wake of the executive shake-up.
“This is an automotive company, and we’re highly focused on moving it forward on those lines,” said Olson, who served as finance chief before he was promoted to the interim top post.
That means scrapping the company’s short-lived plans to produce solar panels in Irvine and concentrating its business on the emerging natural gas and hybrid vehicle market, where it garnered nearly all of its $5.9 million in sales in the recently ended quarter.
The company supplies Fisker with hybrid drive systems and is seeing fuel storage system sales increase as adoption grows for vehicles running on natural gas.
Quantum plans to grow this business segment by expanding manufacturing for compressed natural gas and hydrogen storage systems, as well as boosting sales and marketing for those lines, according to regulatory filings.
The push comes as Fisker recently announced the sale of 1,000 Karmas—its flagship luxury hybrid that carries a base cost of roughly $100,000—and adoption increases for natural gas vehicles in the public sector and commercial fleets as the cost discrepancy between natural gas and oil widens.
Quantum has had few successes outside of Fisker.
Last year it inked a $14 million contract with the Michigan-based Dow Chemical Co. and Florida Power & Light to convert and supply a plug-in hybrid electric drive system specifically for Ford F-150 trucks. The first pilot model was introduced last month.
Quantum’s drive system allows the truck to run on electric for the first 35 miles and then switch to hybrid drive mode, capable of achieving 100 miles per gallon depending on the drive cycle and charging frequency, according to the company.
“Natural gas is growing by leaps and bounds, and the Fisker program has the potential to be high growth,” Olson said. “That’s opening a huge opportunity for fleet conversions and for our technology to allow fleet users to obtain necessary range.”
