Note 2 - Strategic Actions

12 Months Ended

Dec. 31, 2016

Concentration Risk Disclosure [Text Block]

(2)	Strategic Actions

The Company completed a number of strategic actions during

2015

and

2016,

in response to the nonrenewal of its supply agreement with Dana Holding Corporation (“Dana”) effective

January

2015,

the subsequent downturn in the commercial vehicle market beginning in the

fourth

quarter of

2015

and other economic factors impacting the Company during last

two

years. Actions taken during

2015

and

2016

include: the initiation of the exit of the Broadway Plant (see Note

3),

(ii) the CSS sale (see Note

4),

(iii) the Toluca Sale-Leaseback (see Note

5),

(iv) the sale of the Company’s manufacturing facility in Morganton, North Carolina (see Note

6),

(v) the relocation of its Sypris Electronics operation to a new facility (see discussion below), (vi) reductions in workforce at all locations, and (vii) other reductions in employment costs through reduced work schedules, senior management pay reductions, deferral of merit increases and certain benefit payments. Using a portion of the proceeds generated from asset sales noted above, the Company paid off all of its most senior debt in

August

2016

and has received the benefit of cash infusions from Gill Family Capital Management, Inc. (“GFCM’) in the form of secured promissory note obligations totaling

$6,500,000

in principal through

2016.

During

2016,

the Company also initiated the process of qualifying production for certain oil and gas industry components in Mexico that were previously produced solely in the United States. Qualification of production for the

first

group of these components was completed for the Mexico facility during

2016.

During the

fourth

quarter of

2016,

the Company completed the relocation of its operations for Sypris Electronics to a

50,000

square foot leased facility in Tampa, Florida. Sypris Electronics previously leased a facility also located in Tampa of approximately

300,000

square feet for its operations which also included the CSS business. All manufacturing operations for Sypris Electronics will be performed in the new facility which will result in a significant reduction in rent and related operating expenses effective

January

2017

as compared to

2016.

Relocation costs were expensed when incurred during

2016

and certain assets not retained after the relocation were charged to expense during the

fourth

quarter of

2016.

The Company made several strategic decisions to migrate away from certain of its traditional Tier

customers in the commercial vehicle markets throughout

2016,

while seeking to replace these customers with longer-term relationships, especially among the heavy truck, off-highway and automotive original equipment manufacturers (“OEM”s) and others who place a higher value on the Company’s innovation, flexibility and core commitment to lean manufacturing principles. Among the customer programs not being renewed was a supply agreement with Meritor Inc. that expired on

January

2017

and was produced at the Company’s Louisville, Kentucky automotive and commercial vehicle manufacturing plant (the “Broadway Plant”), and the Company similarly anticipates a reduction in certain portions of its business with Eaton

. As a result of these decisions, the Company anticipates a significant reduction in its commercial vehicle revenues (See Note

3).