Pittsburgh Tribune Review April 23, 2008
Ford City company files for bankruptcy
Ford City-based Caracal Inc. filed for bankruptcy with plans to liquidate, after losing its $1.2 million-a-year contract with the Navy, a sign of tightening budgets during wartime, the company said.
"Our commercial product sales were not enough for us to stay in operation when we lost our largest account," said Andrew Chomos, CEO of the 3-year-old company that made semiconductor wafers of silicon carbide. "The U.S. Navy was 90 percent of our customer base."
Caracal filed for protection from creditors Monday under Chapter 7 of the U.S. Bankruptcy Code. Chomos said Tuesday the military has scaled back research programs in order to spend more on the war effort, and that led to the termination of his company's contract for 2008.
Defense policy analyst John E. Pike, director of GlobalSecurity.org in Alexandria, Va., said the all-electric ship project "comes and goes," shifting in priority on the Navy budget. "Anything related to shipbuilding is going to be in a really tight space these days," he said, and research and development spending in general is flat.
The company, based in a former PPG Industries Inc. plant, secured funding in 2006 and 2007 for research and production of semiconductor wafers for the Navy's project to develop an all-electric powered warship. Caracal last year patented a layering technology that enables its semiconductors to handle high voltage levels.
"Anything categorized as research or experimental by the Department of Defense has been under heavy cutbacks," Chomos said, adding other Western Pennsylvania companies with defense contracts could "take it on the chin" as a result.
A spokesman for the Navy could not be reached for comment.
Innovation Works provided about $800,000 in state money to Caracal, named for an African cat. The organization funds startup businesses in Western Pennsylvania.
Chomos said Caracal's product development team tried without success to build sufficient commercial demand for the wafers, which are about the size of a music CD. They could be used in applications ranging from lighting to hybrid cars, he said.
Caracal has about $1.6 million in debts, he said, and the owners opted to begin the liquidation process to make its assets more attractive to buyers, rather than continuing to run up debts with vendors.
"There are some interested companies out there," he said, and investors hope someone will acquire the assets and continue operations in Ford City.
Caracal's employment was cut from 12 early this year to seven and may be trimmed further, he said.
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