EK Waterblocks: Liquidity shortage and mismanagement

[FlyingPotato_is_taken]

 

Summary

Gamersnexus followed up on a LinkedIn post by a former employee of EK Waterblocks and uncovered significant problems within the company:
- Employee wages not paid on time
- Business allowances not paid or not paid on time
- Pressure from EK management to employees to sign inferior contracts (e.g. removing sales dividends) 
- Suppliers not paid on time
- US branch and HQ (Solvenia) fighting each other to the point where the US branch sourced some items from the supply chain instead of ordering them from HQ

- excessive inventory (of some SKUs) binding capital/liquidity

- EK has fired some manager(s)
- EK is confident that it can resolve the current liquidity crisis.

 

Quotes

My thoughts

The writings have been on the wall for a long time. Customer service quality has noticeably deteriorated.

 

Sources

https://www.youtube.com/watch?v=b73xG1HlFhY

 

[SansVarnic]

Regardless of being the best in the business, if you fail due your own incompetence then you fail. It sucks for us, but life moves forward. 

[Poinkachu]

29 minutes ago, FlyingPotato_is_taken said:

- US branch and HQ (Solvenia) fighting each other to the point where the US branch sourced some items from the supply chain instead of ordering them from HQ

So, Artesian Build ver 2.0 ?

[leadeater]

So confirmed? YouTubers destroying companies

 

Spoiler

not watched video yet

 

[Lurick]

1 minute ago, leadeater said:

So confirmed? YouTubers destroying companies

 

  Reveal hidden contents

not watched video yet

 

I concur with that conclusion!

[Donut417]

Watching a little of the video. It sounds like the owe the state of Texas money and the fact that some people havent gotten paid or had their time altered is a big violation of both state and federal labor laws. EK is going to get sued.

[Shimejii]

A company overcharging for their parts and having their quality drop significantly in the past 4 years is struggling to do basic business things? Say it aint so!

 

Hopefully people start learning more of these companies are scummy. It will be interesting to see how the EKWB fanboys that try to defend them on this.

[FlyingPotato_is_taken]

2 hours ago, leadeater said:

So confirmed? YouTubers destroying companies

 

Not a review. YouTubers only destroy companies with bad reviews. /s

[RejZoR]

That's pretty rough. I always looked at EK with pride since they were the apex of custom cooling and being from small country of Slovenia to make such huge impact on industry, it was quite something. Hearing this stuff is very rough and saddens me that they went this way.

[Fasterthannothing]

Wow that's really sad! Literally going to be the end once they go under. I mean between this and FrozenCPU closing as well as computer components coming maxed out from the factory watercooling is basically dead. Really sad I mean I remember how thrilling watercooling used to be and if you had a full on liquid cooling system you were the ultimate PC building enthusiast.

[Caroline]

Chaotic neutral.

 

Sorry for the few honest workers that might have a job there but I hope they crash and burn for ripping off users because there are no competing options. Overpriced as fuck, I remember a bag of 10 orings for like $20 when you can get them by the hundred at any retail for less than half of that.

 

The grave is waiting for EKWB and Secret Lab. NZXT is too big to collapse by itself, might need to man the harpoons, some made up harassment charges involving founders or CFO perhaps, one of the nastiest cards to play but it's not as nasty as selling cases with no air intake for $250.

[Hezkezl]

Not being paid for MONTHS as an employee is terrible, and nobody should have to deal with that... I hope EK winds up making things right to all of the employees, and then to the vendors they also owe a ton of money to. Employees should come first.

[StDragon]

Alibaba is looking like a good option about now.

 

Spoiler

Feeling lucky?!

 

[atxcyclist]

Sounds like having many dozens of bespoke designs for custom supplier GPUs and high-end motherboards, things that will be low-volume sales, yet EK has to have larger production runs of each SKU made to keep production costs down, is an unsustainable practice.

[QuantumSingularity]

I was about to purchase over €1000 of custom loop parts from them in just 2 weeks at the beginning of May to start my custom loop build, but with that news breaking out i no longer have the desire to do so. The question about warranty coverage (if the company sinks) aside, there is the bad taste of sliminess in doing business. But they were so good for so long, that i can't help but wonder if some of their competition sabotaged them by having a mole in the higher management positions. Someone deliberately kept their policy of outsourcing manufacturing instead of having it inhouse. You can't simply miss the ever increasing numbers of the expenses. You either have to be a complete and actual idiot to not see the trend when looking at the graphs or you do it on purpose to sink the company. 

 

As for the US vs EU office - sadly this kind of interactions is not that uncommon. Most EU offices really see the US offices as lazy, because of the difference in the work flow scheduling. The 9 - 5 day with 30min or 1 hour launch break in that time is more like 8 - 5 in Europe. Some companies and offices (mainly the tech ones) have the practice of including the commute to and from work in their work hours, which is ok in the EU where you simply hop on a train, a metro, a bus or even if you drive a car and you are rarely more than 10-15 minutes away, but many people in The US spend an hour or more each way, which when added as an overtime to the already seen as the lazy 40-hour work week, pisses off not only the managers, but the rest of the employees as well. My current employer doesn't include the commute in the work hours, BUT we get the fuel paid based on the average consumption of our cars and the distance to and from our workplace which is a compromise everyone is happy with.

[leadeater]

2 hours ago, QuantumSingularity said:

You can't simply miss the ever increasing numbers of the expenses. You either have to be a complete and actual idiot to not see the trend when looking at the graphs or you do it on purpose to sink the company. 

There are a lot of people that think the expense, and risk, of having your own manufacturing is too great a cost and that contracted manufacturing is cheaper or lower risk. This isn't necessarily  wrong either, there are a lot of situations where this is more than true however for EK they simply don't have the sales volume along with just having too much products for them to be in this group that would benefit from it.

 

There are a lot of EK products that should actually be made to order but they can't do that because they don't "make" their products. Anything high volume, if they even have that, sure contract out but bespoke things like motherboard/GPU full cover blocks for non-reference designs that really does need to be made to order or on a similar scale to that.

 

There are some smart things EK have done, like my PowerColor Liquid Devil GPU that comes with a pre-installed branded full cover GPU block.

[MarkPol88]

10 hours ago, Caroline said:

might need to man the harpoons, some made up harassment charges involving founders or CFO perhaps

Are we really that far down a drain that people think that faking harassment claims is proper way to fight with company you do not like?

Fuck me...

[FlyingPotato_is_taken]

@atxcyclist Modularity is the solution:

 

Difficult to manufacture parts like the cold plate should be designed as separate part/unit and reused across the product palette.

The uncritical/easy to fabricate parts can be out sourced to who ever is the lowest cost for small production runs or made in house.

Milling followed up by combining the dozens of raw SKUs and sending them to good/high quality electroplating facility. They are probably similar enough that they can run them as one batch keeping the cost down.

If they get mixed during the electroplating step either use an automatic sorting machine (they are awesome; in a nutshell throw a bin of parts at it and it will identify and sort the part with image recognition and or structured light) or sort it by hand.

 

34 minutes ago, leadeater said:

There are a lot of EK products that should actually be made to order but they can't do that because they don't "make" their products.

That's not true. It is an case of knowing the right guy.

Last week I meet somebody who is willing to work on low volume and even one of custom LCDs including reflective type. A lot can be done if you know who to call.

 

36 minutes ago, leadeater said:

There are a lot of people that think the expense, and risk, of having your own manufacturing is too great a cost and that contracted manufacturing is cheaper or lower risk.

Upfront investment is significant. They probably looked at roughly $200k investment. With the current financials of EK I doubt they could get a loan/finance for the machines and they don't have the cash to purchase it either.

[leadeater]

1 hour ago, FlyingPotato_is_taken said:

Upfront investment is significant. They probably looked at roughly $200k investment. With the current financials of EK I doubt they could get a loan/finance for the machines and they don't have the cash to purchase it either.

That isn't/wasn't a today decision, that was 5-10 years ago. EK has been around for a very long time and also didn't have so many different products. They had the opportunity to build manufacturing capability and choose not to.

 

They have yearly revenue over 5 million USD and it's been that amount for a good while, they'd get a loan no problem, or would have.

 

1 hour ago, FlyingPotato_is_taken said:

That's not true. It is an case of knowing the right guy.

Last week I meet somebody who is willing to work on low volume and even one of custom LCDs including reflective type. A lot can be done if you know who to call.

It's not the case of knowing the right guy. Not when you're EK. You can get something made to order and you can go and try and find them but it's a much different situation for precision products like what EK has that sells to anyone in the world.

 

Sure you could but then you are in Billet labs price range not EK.

 

Would you pay ~$500 USD for a full cover GPU block or $240?

 

Literally the problem they have today is they "know a guy", "he" costs too much. If you employ the person making the product and the machines then you know the costs, you know the investment cycles, you have choices and controls. Outsourcing manufacturing comes with a pretty basic understanding, no business will do anything not for a profit. It's not always that simple but it's good to remember their profit is your cost, potential cost reduction can come from there so long as you can TCO it cheaper.

 

You also can't know 30 guys in different places to make a wide range of products, that's quality control hell. We may talk about EK being low volume but it's not "know a guy" low.

 

When I say some products should be or essentially be made to order I see that as viable if EK is the one manufacturing it because they understand, designed and have the responsibility over the quality of the end product. They also have the flexibility to utilize employee time when and how it suits so a person that has the job role and experience of making a select few product when necessary isn't doing nothing when they aren't doing that specifically.

 

TL;DR I'm not saying EK needs to or should in house manufacture everything but nothing at all probably isn't right for them either.

[RejZoR]

12 hours ago, Fasterthannothing said:

Wow that's really sad! Literally going to be the end once they go under. I mean between this and FrozenCPU closing as well as computer components coming maxed out from the factory watercooling is basically dead. Really sad I mean I remember how thrilling watercooling used to be and if you had a full on liquid cooling system you were the ultimate PC building enthusiast.

While overclocking almost isn't a thing anymore, to really peak the full potential of components, good cooling is required. I mean, Ryzens will clock themselves as high as they can until they hit 90°C these days. But if you hit those 90°C really quickly, you're leaving a lot of performance on the table. If you can keep it a bit below that limit, it'll perform at its 100%. And it's not really that different with old Ryzens either. If they go near thermal throttle, the boost will slightly decrease, losing maximum potential. So, water cooling still makes sense. Also there is noise. Even AiO's can soak a lot of heat before they need to kick up fans so you have a much more lazy fan curve that's easier on ears.

 

I honestly never understood EK's approach to all the super expensive, super custom "this fits this exact model only" approach to be profitable. I'd understand if they made the best AiO's in the world by building all in one solution with stronger pump and their signature CPU blocks that can fit many CPU's and they'd just be selling extra socket plates to adjust to new ones, basically creating a dominance in AiO segment where everyone's basically the same. But all the super expensive full cover blocks that only fit super expensive motherboards that are bought by 1000 people worldwide, I don't know.

 

Same goes for graphic cards. Too many too specific boards that require too many specific blocks. And when you're talking 500€ a full cover block, I'd then just rather buy a new graphic card instead of squeezing those few extra FPS from old one, noise or not factored in.

 

They really need to narrow down and optimize because they've gone so wide with their offerings I don't think it makes any sense anymore. Best would be to focus on CPU's more as they are much more universal and maybe try to convince graphic card makers to standardize their GPU designs so more universal water cooling could be fitted to graphic cards. Hell, even go as far to make them CPU AiO friendly, so you could just buy 2x CPU AiO and slap one on CPU and another on GPU. That kind of universal approach that would in the end benefit EK too as they wouldn't have to make all the expensive full cover blocks down to specific revisions of a single graphic card from a single graphic card maker.

[leadeater]

35 minutes ago, RejZoR said:

and maybe try to convince graphic card makers to standardize their GPU designs so more universal water cooling could be fitted to graphic cards.

They have full cover blocks for reference board designs and custom ones, I've typically brought reference GPUs so I know I should be able to get a full cover block and not solely from EK, although I only have EK parts.

 

Custom board designs I think are fine if they come with a water block already, that makes sense to me as the potential buyer pool is higher since you don't have to take apart a GPU and put the block on and the cost is either covered in full or large part by the GPU AIB who will want to get those GPUs sold and will have to margin it out on their component share and not on the GPU block aka they have almost all the risk.

 

Also "universal" GPU blocks did or do exist, full cover was mainly preferenced for aesthetics followed by VRM/power cooling.

[Doobeedoo]

Not getting paid in time let alone months should instantly have any company under inspection and microscope. Can't believe we're still in time where people can't even feel safe to get paid under contract, sad. 

[leadeater]

55 minutes ago, Doobeedoo said:

Not getting paid in time let alone months should instantly have any company under inspection and microscope. Can't believe we're still in time where people can't even feel safe to get paid under contract, sad. 

Here intentional non payment of wages is a criminal offence, Theft by Employer. More countries should adopt that if not already. 

[Donut417]

10 minutes ago, leadeater said:

Here intentional non payment of wages is a criminal offence, Theft by Employer. More countries should adopt that if not already. 

The problem is, corporations are generally seen as a person in the eyes of the law. So, you cant put Walmart for example in prison, with the exception that you can prove the management team did something highly illegal. Same thing applies to civil actions. If you sue a corporation, the only assets at risk is the ones owned by the corporation, the management team and shareholders are generally protected.

 

I know here in the US, both Federal and State Departments of Labor can collect unpaid wages. I think they also make the employer pay extra to the individuals as well as make them pay a fine. Again this is a civil action, so only assets of the corporation are put at risk. Thats why people use corporations in business, the worst that can happen is the corporation goes bankrupt and you are not left holding the bag.

[leadeater]

1 hour ago, Donut417 said:

The problem is, corporations are generally seen as a person in the eyes of the law. So, you cant put Walmart for example in prison, with the exception that you can prove the management team did something highly illegal.

Not paying wages is, it's literally a criminal offence. That's our law. It's also a crime for a business to not pay taxes. Also here Health & Safety Volitions can be held personally responsible to managers if serious or systemic.

 

Corporate crimes are still criminal offences, whether or not a person does or does not, could or could not go to jail.

 

Criminal offence != jail or potential of jail.

 

1 hour ago, Donut417 said:

Again this is a civil action, so only assets of the corporation are put at risk.

That doesn't make it a Civil Action. The fact that only the State/Fed can do this typically makes it criminal. You might want to re-check if that is actually Civil or Criminal.

 

Quote

Wage theft is criminalized under Penal Code 487m PC. This law protects employees from unscrupulous employers who fail to pay lawful wages. Recent legislation now enables the state government to prosecute instances of wage theft as grand theft if the underpaid wages exceed $950.

https://www.egattorneys.com/wage-theft-penal-code-487m#:~:text=Wage theft is criminalized under,the underpaid wages exceed %24950.

 

Quote

All forms of wage theft are against Illinois law — and the laws of nearly every other state, along with the federal government. Yet many employers still commit wage theft, often because they face few consequences when they get caught, according to Uribe

https://www.cbsnews.com/news/owed-employers-face-little-accountability-for-wage-theft/#:~:text=All forms of wage theft,get caught%2C according to Uribe.

 

I think you are confusing the issue of only being able to hold the company itself, it's assets etc, accountable and liable. For one that is kind of the point and secondly individuals can be liable for corporate actions. Like the safety issue, if the company refuses to pay for safety equipment and you are in charge of safety and your force your direct reports to work then "you" are liable as well as the company, it's your responsibility and obligation to have the employees not work until they have the required safety equipment.

 

Enforcement of laws tends to be more the problem than something like this being illegal, laws after all are worthless if not enforced.