What’s the Deal with Delly?

Gayla Delly left Benchmark with no notice last week. Why?

Changes at the top of Tier 1 and 2 EMS firms don’t happen often. Before Friday, in fact, Benchmark had had just two chief executives in its 30-year history.

Cary Wu founded the company as part of a buyout from medical device manufacturer Intermedics in 1986. He remained in charge until December 2011, when he promoted Delly, the company’s longtime head of finance, to the top spot.

Highly dependent for years on the high-end computing sector, especially IBM, Benchmark had been trying to balance its portfolio via acquisitions. With its acquisitions of Suntron and the EMS operations of CTS, both in 2013, the company attempted to broaden its reach into the high-reliability industrial, medical and aerospace/defense markets. It then snapped up industrial communications OEM Secure Technology in 2015.

Many bigger EMS acquisitions are slow to be accretive. The large amount of fixed assets and (typically) lower capacities at the acquired company mean layoffs and restructuring costs will follow. Still, investors are impatient and the deals were met with criticism in some quarters.

Much like Sparton and its now-departed CEO Cary Wood, Benchmark faced strong opposition from a loud activist investor who accused the EMS company of poor fiscal management. (Interestingly, unlike many of its similar-sized competitors, Benchmark has typically been patient with its M&A strategy, choosing to keep its debt levels low.)

The intensity of that criticism, which was public in the spring, had quieted down during the summer after the investor won two board seats. On its quarterly conference call in late July, Delly went to far as to deny any strategic changes in the direction of the company following the seating of the new directors. This makes the timing of Delly’s departure all the more curious.

Last Friday, the announcement came that Delly was being replaced as president and chief executive with veteran electronics executive Paul Tufano, effective immediately. Tufano is a Benchmark board member who has spent more than three decades in the technology and telecommunications industries, most recently as chief financial officer of Alcatel-Lucent. He also has a background in EMS, having been executive vice president and CFO of Solectron. It’s possible the move implies the company will refocus its sights on computing and telecom. We shall see.

Neither Delly nor the company has yet commented on the change.