This reality scored a direct hit last week when we got a call from the CEO of our contract manufacturer (domestic, not overseas). Their credit lines were pulled by their bank (one of the big ones) because they had violated some terms of their loan agreement. While in the past, this type of thing was met with a “let’s work it out” type of attitude from the bank, instead given the credit crisis, that attitude disappeared. Consequently, they closed the facility where our product was being built.

As a result, we needed to immediately pull all our inventory, test fixtures, and packaging out of their facilities. To say the timing was terrible is a grave understatement. Our products were literally on their assembly lines, on schedule for our early October shipping deadlines.

It’s hard to describe the feelings this sudden crisis created. First there was the enormous frustration of having to cope with another manufacturing delay. Closely coupled was the harsh realization we now risked losing the confidence of our loyal customers that we’d ever get these units out the door. To that end, let me describe what we’ve done and are doing to make sure this setback has minimal impact.

Our product team, having gone through the process of spinning up a new contract manufacturer (CM) not too long ago, is well prepared to make this next move happen quickly and smoothly. We have already identified, contracted and engaged a new CM who has committed to hitting the ground running. This CM is a family run business, a bit smaller than the one we’d been using, is debt-free with strong financials. While of course there are no guarantees, I feel strongly that they are the right fit for the job we need to get done right away. They know the stress we’re under and have signed up to the task of helping us move rapidly.

This switch will create a four week delay in our shipping schedule. Not good news, but hopefully not terminally bad either. Many of you who are reading this have been waiting for a long time for your BUGs and I can only say everyone here at Bug Labs is working like mad to get them to you. We all deeply appreciate your patience. We will get through this setback.

I will continue to blog about our progress to make sure you stay informed. If you have any questions, concerns, frustrations or suggestions I would love to hear from you. You can email me at peter (a) buglabs dot net.